Leadership Essentials by Filippo Passerini

Filippo Passerini

Leadership Essentials A Practical Manual for Personal Effectiveness and Extraordinary Business Results

ABOUT THIS BOOK Leadership is a blend of science and art. This manual, which reflects my four decades of business experience, provides readers with the tools to develop the techniques that can enhance the science part of leadership. Through empirical and “tried and true” research, the manual provides the models that can increase our effectiveness as leaders in business. I have structured this text into re-applicable frameworks and models. My intent is not to re-invent the latest “silver bullet” but rather to provide applicable and helpful tools, and possibly generate some reflections and insights. Wishing you a pleasant and enjoyable read.

ABOUT THE AUTHOR Filippo Passerini is a world--class business and digital technology strategist, with over three decades of business-building career with Procter & Gamble. In his tenure, he developed extensive business leadership and digital technology experience, as well as broad international experience. (He lived and worked in Italy, Turkey, the UK, Latin America, Greece, and the United States.) For twelve years, he served as Group President of Global Business Services (GBS) and Chief Information Officer (CIO), leading P&G’s most global organization, and overseeing technology and business services operations in over 70 countries. Today, he is globally recognized as a thought-leader in technology-enabled business transformation. He has a proven legacy of building high-performance organizations and pioneering new, progressive operating models to drive scale and business innovation. His strategies, principles, and ideas have been the subject of numerous books, articles, and Harvard Business Reviews. His organizations, as well as business models, have often been recognized as best-in-class in their business domains. He currently resides in Brooklyn, New York where he serves as a consultant, educator, board member, and global operating executive to countless companies and institutions. Filippo is a proud husband, father, and grandfather and an avid chess player.

Acknowledgments As the expression goes, there is nothing

Dozens of colleagues have contributed to

new under the sun. Our thinking is often the

shaping my leadership awareness and allowed

elaboration of valuable materials that we come

me to practice and refine my skills. I had

across repeatedly in our daily life. I believe that

the privilege, during my tenure at Procter &

in the end, it is difficult to precisely determine

Gamble, to “stand on the shoulders of giants.”

where and how our insights originate.

I want to thank all of them, wholeheartedly, for the conversations that inspired some of the

In that vein, the content of this manual is

content of this manual.

the result of several sources. The 7 habits of Highly Effective People is a particularly

A few frameworks described in this book likely

memorable book to me, and I hope that some

have multiple authors. The “5 E’s” model, for

of its elements are reflected in the manual.

example, exists in different shapes and forms

The Monitor Company also, with its strategy

(including a good articulation by the London

process, had a major influence in my analytical

Business School). The same is true for the

thinking. Much of the content in the Strategy

“Personal Leadership Styles” and the “VUCA”

Model paragraph is an elaboration of the

world. Contextual Intelligence is a subject

process they brought to Procter & Gamble.

upon which a lot of research has been done and many articles published.

I am very grateful to Roger Martin, who I met initially through Monitor – and now author,

One of the beauties of knowledge sharing is

consultant, and former Dean of the University

precisely this: trying to carry the baton to the

of Toronto’s Rotman School of Management –

next runner, knowing they will take it further.

for the intellectual stimulus and friendship over the years. One of his books, Opposable Minds,

Finally, and most importantly, I want to thank

has been a source of inspiration to me.

my wife Lucia, the companion of my life for 43 years, as well as my children Marta, Chiara,

I want also to express my most heartfelt

and Emanuele. They have been a continuous

appreciation for JMW Consulting, with whom

inspiration of leadership at its essence.

I worked while at Procter & Gamble, for their contents on extraordinary results and a “language of possibilities”. It’s fascinating how we make connections in our minds, to derive insights that forge our way of thinking.

About This Manual For over three decades, I had the privilege to

be clearly communicated and received, be

work for The Procter & Gamble Company in

relevant, and be re-applicable.

six different countries, three continents, and in several leadership positions.

In many ways, teaching has been a very rich and enriching experience. My business

At Procter & Gamble, leadership is considered

background allowed me to fully appreciate

one of the most critical skills to master in

how to best transfer my know-how from the

order to perform effectively and successfully,

empiric to applied models, from concrete work

both in the business and in leading people.

to the concepts that govern specific behaviors

As a result, I had the opportunity to learn on

and best practices. The former makes it real;

the job – every day, day in and day out – from

the latter allows replicability.

outstanding leaders. Said differently, empiric experience alone can I made a number of mistakes but also

be interesting but anecdotal. Models alone can

learned considerably along the way, gaining

be theoretical and may lack the connection to

practitioner experience. In addition, interacting

business reality. The combination of the two is

with people in a highly multicultural business

extremely powerful.

environment and managing organizations in over 70 countries added to my formation.

I have been invited to “write a book” dozens of times. I don’t believe I can add anything

Over the years, I was also fortunate to teach

new to the hundreds and thousands of books

at Masters in Business Administration (MBA)

already written. However, over the years, I have

programs, Executive MBAs, and a few other

generated a considerable amount of content

Master’s programs: first and foremost, for

(over 1,000 slides, case studies, videos, etc.).

over fifteen years at POLIMI Graduate School

I thought it could be helpful to unfold much

of Management in Milan, followed by courses

of it into a short, concrete, and applicable

and lectures at Columbia University in New

narrative.

York, INCAE in Costa Rica, and Toronto University’s Rotman School of Management.

Hence the idea of a “manual” or “toolbox” for people interested in something simple and

The teaching experience forced me to

concrete.

structure my knowledge. I had to think through and organize it so that it could

Preface As is true of all the skills we learn in life, from

If we do not have the where clear, the direction

driving a car to playing an instrument or a

is irrelevant. Therefore, I strongly recommend

sport, leadership is a blend of science and art.

we start with personal goals. We must be

Our personal style is connected to the artistic

careful not to do too much too fast, though.

components; the scientific elements can be

That could easily overwhelm or demotivate us

learned.

if we stumble early on.

In my experience, there is more science than

Rather, it is all about consistency and a

art in leadership. Our style is (or should exist)

relentless focus on personal goals, practice,

in addition to the technique. This is good and

feedback, more practice, perhaps some

liberating news: our leadership skills are not

adjustments to the goals, and practice again…

the result of how we are born but what we

one step at a time.

want to become. The beauty of this is twofold: first, no matter Setting a personal path for our growth and

what our starting point is in our leadership

development is important. And a path (or a

skills, we all can improve; and learning,

journey) starts with the destination of where

constantly getting better, and investing in our

we want to go. The passage below, from the

professional and personal growth is a beautiful

book Alice in Wonderland, illustrates this idea

journey.

well: Secondly, the reward is in the journey itself. In

Alice: Would you tell me, please, which way I

addition to likely reaching our aspirations, a

ought to go from here?

deliberate path to professional development is

The Cheshire Cat: That depends a good deal

extremely fulfilling.

on where you want to get to. Alice: I don’t much care where. The Cheshire Cat: Then it doesn’t much matter which way you go. Alice: ... So long as I get somewhere. The Cheshire Cat: Oh, you’re sure to do that, if only you walk long enough.

III

Deliberate is this manual’s keyword and foundational idea and the concept it intends to convey. While there will be plenty of trials and errors, as is true of learning any new skill, being intentional in what we do makes a quantum difference in the results.

I hope some (possibly several) of the frameworks, models, and suggestions illustrated in these pages will prove helpful to you. They came from experience, and they worked for me. Remember: There is no limit to how much we can improve. The last mile in execution counts, a quest for excellence is rewarding. People who know and practice more do better. Wishing you my very best for the continued fulfillment of your goals and aspirations.

Chapter I - The Foundations Skills Learning Process Leadership As A Habit Can Leadership Be Learned?

Chapter II - opposable thinking Contextual Intelligence Leadership for Extraordinary Results

Chapter III - positive influence The 5 E’s Of Leadership Active Listening Leadership Styles Giving & Receiving Feedback

2 3 5 7

10 11 17

24 25 27 33 39

Chapter IV - Operating Effectively

Time Management Negotiation Techniques Public Speaking

45 55 71

Summary Chapter V - Analytical Thinking

“North Star” Questions Mindset And Process

81 85

Chapter Vi - business transformation

Change Management Going Digital

91 105

Chapter Vii - Innovation Framework

112

Foundational Elements Frugal Innovation

113 121

Chapter ViiI - business management

128

Framework Strategy Model Business Performance Tracking

Works Referenced

129 131 151

160

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Chapter I - The Foundations

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Section 01

Skills Learning Process This manual provides a “toolbox” of techniques

Learning skills efficiently and effectively is a

and models, with the intent to increase our

3-step process:

leadership effectiveness in the business. At its core, business is about one thing: making

• first, someone has to share the right

(and possibly best) way to execute the

decisions and driving plans to completion. To accomplish that in business, we need support from others: our manager, people from our organization, our colleagues, and our partners. In turn, this requires leadership skills to make

skill;

• second, it is all about practice, practice, practice;

• third, we need immediate feedback

until we can correct ourselves (and thus

the interactions, which come in different forms

continue to improve).

and through various channels, productive and rewarding for all.

This is how we learn to drive a car or play a sport or an instrument. We can also learn

Thousands of books describe leadership

by observing others without having a solid

attributes, and hundreds of models and theories have been developed. All of them have some merit and, of course, there is always something to learn from each one.

approach has two downsides: it takes much longer, and we may not necessarily learn the skill the right way.

However, based on my experience of 38 years across businesses and organizations of all sizes, the challenge is the applicability of these models to specific situations. Hence, the idea of a “recipe book”: simple, pragmatic, and usable.

foundation of know-how. However, this

That is why there is usually an instructor next to us in the initial stages of learning: to give us feedback. And it’s unlikely that someone has learned to drive a car or play a sport by reading books. These pages aim to provide practical and immediately applicable (and hopefully memorable) guidelines, techniques, and use cases.

leadership essentials

LEARNING SKILLS IS A 3-STEP PROCESS: first, someone has to share the right (and possibly best) way to execute the skill; second, it is all about practice, practice, practice; third, we need immediate feedback until we can correct ourselves (and thus continue to improve). leadership essentials

Section 02

Leadership As A Habit “The Human Being is not an act, but a habit,”

We refer to him as a great leader not only

said Aristotle. Striving for excellence, self-

because he set a “bigger than life” vision and

awareness, and a relentless quest to improve

people followed him but also because he

are not isolated actions but repetitive and

delivered on his promise. Otherwise, today

sustained behaviors. And like any habit,

we would think of him not as one of the

according to Aristotle, we are (become) what

leaders who changed human history but as

we do and aspire to be.

an eccentric man driven by an unattainable dream.

Leadership is the ability to define an aspirational goal, inspire others to want

The same is true of President Kennedy when,

to achieve it with us, and deliver on our

in 1963, he declared that “by the end of the

commitment. All three aspects must

decade, the man will be on the moon.” It was

materialize for leadership to be true. And, per

a tremendous aspirational and inspirational

Aristotle, excellence comes with consistency.

goal that mobilized resources, energy, and focus. But it is considered a breakthrough

Let us consider Gandhi’s legendary declaration:

accomplishment because it was achieved.

“India will be free because 100,000 Englishmen cannot simply control 350 million Indians if they refuse to cooperate: peaceful, no violence, no cooperation.”

leadership essentials

leadership defined: A future beyond what is predictable now Results that will realize that future An environment that will sustain the future

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Section 03

Can Leadership Be Learned? One critical question is: can leadership be

So, why do some people believe that

learned? That is, can leadership skills be

leadership cannot be learned? In addition

acquired, or is it something innate and

to possibly setting the wrong objective for

unchangeable, like the color of our eyes, our

ourselves – the absolute best – which can be

height, or the size of our bones.

disempowering, we also confuse leadership with charisma.

Different people answer this question differently for various valid reasons. In my

They are very different. Although charismatic

experience, it all depends on two variables:

leaders have an inherent advantage, we need

what we include in defining leadership and

strong leadership skills, not personal charisma,

what objective we set for ourselves.

to succeed in business.

Some leadership attributes are more innate

I have seen many charismatic people who are

than others. For example, envisioning the

not influential leaders and vice versa.

future and new possibilities is less accessible to improve upon than, for instance, developing

People gifted with charisma alone initially get

our active listening skills.

strong traction as people like them and are inspired by them. However, they cannot always

However, we can improve on every element

follow through and deliver.

of our leadership spectrum. The objective we must set for ourselves is not to achieve

By contrast, influential leaders are not always

the absolute best but rather a relentless

or necessarily charismatic. Yet their ability to

commitment to continuous improvement.

set continuous, visionary goals, effectively

While the former can be frustrating and

engage and motivate all parties, and follow

unrealistic, the latter is about a constant focus

through to deliver, positions them to succeed

on excellence.

as leaders.

The desire and commitment to be the best

This differentiation is good news and is

we can be, one step at a time, day in and day

liberating because, unlike charisma, leadership

out, repeatedly trying when we fail, drives a

skills can be learned (at least for the most

different motivation, attitude, and mindset.

part).

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Undoubtedly, some skills require more work

That said, it is worth reflecting on inspiring

than others as some abilities are more innate,

leaders. They may not be the most eloquent

but we all can improve from our starting point.

people we know, but they are true to themselves: they have found a balance, not

Again, it is not about perfection; it is about

between life and work, but between being

how much we can improve. That should be our

and doing. This is the kind of leadership worth

realistic and attainable objective.

aspiring to.

“A leader knows the way, goes the way, and shows the way.”

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Chapter II - opposable thinking

leadership essentials

Section 01

Contextual Intelligence It is worth investing in our ability to

Context matters...

understand the context in which we operate. These include the external and interpersonal

Our mental routines are trained to detect the

factors – social, economic, technological,

context of a situation, but only to an extent.

demographic, and competitive – in which

Developing an additional sense for it makes

we live. In part, assessing our context occurs

us go the extra mile in developing contextual

naturally; however, developing a conscious and

intelligence and leadership style. Two mental

deliberate awareness elevates our leadership

habits help in this regard:

efficacy. For example, we all have dozens of apps on our mobile devices and likely use them more frequently than the browser app. The app contextualizes the content we are interested in and takes us straight to it, without needing multiple click-throughs and additional waiting time.

1) Staying in the moment 2) Turning information into insights It’s fascinating, and sobering, to observe how distracted we are by the past and the future: what we just left behind, what we have to do next. Being here and now makes a huge difference.

The wealth of content on the Internet, virtually unlimited, would be inaccessible – and therefore useless – without a search engine to retrieve it. Content without context is like power without control. The search engine contextualizes the Internet content for us. We evaluate its efficacy by the accuracy with which it executes: query -> context -> relevant content. To conclude on a lighter note: if we see a tiger a few meters away from us, our immediate reaction might be to run away. This is a good response if we are in the jungle, not in a zoo.

leadership essentials

“We exaggerate yesterday, we overestimate tomorrow, and we underestimate TODAY.” John C. Maxwell

One critical element is the increasing

The same is true for us, individually and

complexity of the world in which we live. The

collectively. To stay relevant, we must evolve

speed, or velocity, in which we operate is

and change continually. Therefore, we need to

accelerating and the uncertainty is pervasive.

invest in and acquire new skills continuously.

Indeed, four forces play a crucial role in

When we approach context to extract

influencing the world, the way we make

knowledge from it, the knowledge can be

decisions, and the way we assess changes

transferred and reapplied to different work

in our environment: Volatility, Uncertainty,

situations.

Complexity, and Ambiguity. This is referred to That is why contextual intelligence – the ability

as the VUCA world.

to extract lessons and learn from every single experience, transform knowledge into insights

businesses and leaders tasked with decisions

to be “reused” in new contexts, and act when

in a dynamic environment. Companies need

circumstances and events surrounding the

to continually find new ways to stay relevant, a

context change – is a differentiating leadership

prerequisite to retaining control of their future.

attribute.

Aware

t Acu

es en t

e nd

Contextual inteligence se n

of the past

rstanding

ut he f ure ft

These forces pose significant challenges for

r se of the p

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The contextually intelligent leader displays

Future minded: forward-looking mindset and

knowledge of how to do things, but more

direction setting for where the organization

importantly, what to do.

should head;

Knowing how to do something is often

Change agent: courageous and proactive in

the result of education, training, and the

raising challenges and challenging questions

application of experience. Knowing what to do

to lead and make change happen;

results from awareness and foresight – of the past, present, and future – and increases our

Critical thinker: making connections and

influence in the business and the organization.

integrating different opinions and information

It allows us to act appropriately and effectively

to drive action; and

even when there is uncertainty and ambiguity, and when cause and effect are not predictable.

Intentional leadership: awareness of

One of the hallmarks of contextual intelligence

taking deliberate action toward continuous

is multicultural leadership, which is rooted in

improvement.

cultural sensitivity. Multicultural leadership is the ability to detect and influence the motivations and attitudes of people involved in a situation (project, decision, change, etc.). Other hallmarks of contextual intelligence include:

personal strengths and weaknesses and

A description of the VUCA forces: Volatility: Rapid and drastic changes, characterized by violent shifts. Making decisions in a volatile environment is highly challenging, given the instability generated by a sudden change. Speed of response and the risk of overreaction must be carefully understood and balanced.

1904

I.Q Intellectual Inteligence

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Uncertainty: Lack of clarity about the present

VUCA forces tend to transform problems

situation and future outcome; previous

into dilemmas. The difference between the

solutions to seemingly recurring problems are

two is not always apparent or obvious but it

dubious or no longer effective. Under these

is significant. Solving dilemmas as problems

circumstances, agility and flexibility are critical

often leads to suboptimal solutions.

skills to possess. A problem is characterized by choosing Complexity: Issues are not separate or

between two (or more) options: A or B. The

compartmentalized; their interdependency

faster we determine the better (or best) option,

leads to a number of potential decision-

the more effective our decision process is. It

making factors. The ability to think analytically

is typically linear thinking, and the goal is to

and to discern and navigate the most relevant

converge as fast as possible.

variables is a crucial competency. In a dilemma, the better solution between A Ambiguity: The environment can be

and B is often a third option: C. This is usually

interpreted from multiple perspectives,

the result of an integrative process between

resulting in a lack of clarity about the meaning

A and B. Converging too fast or too soon on

of an event. It is important to diverge,

one OR the other may lead to a compromise

evaluating all the possible options before

or to a suboptimal outcome. Dilemmas require

converging too soon and too fast.

endurance to live with uncertainty for the time needed to find a synergistic integration of A and B.

a timeline of inteligence typologies

1960

2010’s

E.Q

C.Q

Emotional inteligence

Contextual Inteligence

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Story time

Let’s imagine that upon returning home in the evening, after a long day of work, you need to relax for 30 to 45 minutes. The most enjoyable and effective form of relaxation for you is watching TV while eating potato chips. However, you are very health conscious: you want to stay fit and are concerned about your cholesterol. This choice is more complex than a problem; it’s a dilemma. Suppose you immediately choose between the two options. In that case, you will inevitably compromise: either you stay healthy but don’t relax, or you relax but accept eating extra calories and a high-cholesterol food. It’s a win-lose. You could instead reflect on possible alternatives. This implies that you live with the uncertainty for a while and resist the temptation to come to a conclusion as fast as possible (which sometimes makes us feel better). So, you could look for fat-free potato chips. Or increase your physical activity to compensate for the extra calories (i.e., burning fat and increasing your “good cholesterol,” HDL, by exercising more). Or you could experiment with different, healthier foods while watching TV to assess if the degree of relaxation you get is sufficiently satisfying. This third option might not be perfect, but it will most likely be better than either one of the first two. This looks like a win-win. You choose popcorn, a slightly healthier snacking alternative, instead. There is, however, a potential risk in dilemma-solving, which we must watch out for and prevent: by searching and waiting for option C to emerge, we may decide too late (i.e., it becomes too close to dinner time) or procrastinate unnecessarily, which could have negative and unintended consequences. Therefore, we must devise ways to avoid this conundrum. For example, establishing a deadline, after which diverging and looking for a win-win solution, we must converge and decide. Or define and separate the “need to have” requirements from the “nice to have” ones.

leadership essentials

One important conclusion is that the

of dimensions: approach, goal, time, etc.

process of reaching a solution for problems

The table below illustrates the comparison

versus dilemmas differs across a number

between the two:

approach

goal

decision process

time

execution

belief

how to learn

Problem

Dilemma

Operational, with emphasis on

Strategic, with an emphasis

Quickly reduce the options to the

Reframe the options to explore

Focus on speed. Decide, the

Focus on reflection. Decide,

Oriented toward short-term relief; go fast

Oriented toward long-term success; go slow initially so you

Execute the chosen solution and

Prototype rapidly; learn from

Certainty is possible, with trust in

Acceptance of uncertainty;

Learn via rule-based training in

Learn via immersive experiences

Judging too soon

Deciding too late

data in search of certainty

two best possibilities

quicker the better, on the best available solution

on foreseight in a context of uncertainty

and manage complexity

recognizing there is no “best” solution, but still with the courage to act

can go fast later

avoid failure at all costs; fix issues quickly

reason and analytics to get there

problem-solving methodologies

failures; try out many scenarios; experiment

intuition is a valid contributor to decision making

and principles-based simulation

downside risk

leadership essentials

Section 02

Leadership for Extraordinary Results 1. What do you stand for? Although success in leadership is defined in several ways, there are two simple and intuitive

A LEADER PEOPLE WANT TO WORK WITH/FOR:

dimensions to it: i) business and organizational

Demanding & Caring

results, and ii) moving people to support our

Deliberate, Calm, in Control

plans while contributing to the best of their abilities. The goals must go beyond business-as-usual for this framing to be true; otherwise, it would

Enables and Empowers others, Execute

not require a strong leader. In short and simple terms, we can think of success in leadership as follows: 1.

Ability to deliver results beyond what’s predictable

Lead in a way that people want to work with/for us

Committing to incremental results, or results that are not significantly different from those achieved in the past, does not require superior leadership skills. For example, if our business has been growing revenues at +5% for the past several years, and we commit to the same result for the coming year, it is pretty much to be expected (unless, of course, market conditions or the competitive landscape have changed for the worse).

leadership essentials

DIFFERENTIATING BUSINESS GOALS: Breakthrough, versus incremental Behind a Vision: clear and compelling Strong Value delivered (measured, tracked)

Leadership Foundation

Integrity

Authenticity

Generosity

•

Reliably honoring one’s word

•

Demonstrating values in action

•

Being up for something bigger than one’s ego

•

Holding oneself and others accountable

•

Being forthcoming about mistakes and failings

•

Assuming everyone wants to contribute their Greatness

A strong leader goes beyond predictable

Change management skills play a substantial

results to change the game in unexpected

part in one’s ability to mobilize others. It is

ways. People who possess these skills show a

not about hierarchical authority but credibility,

strong ability to operate at the intersection of

trust, and respect. That is what wins the hearts

what is needed and what is possible. It requires

and minds of the people who work with us.

a sense of timing and emotional intelligence

None of us, no matter how good we may be,

to strike the right balance between what is

deliver results by ourselves. We all depend on

relevant and compelling for the business and

others; the more the results are considered

what can realistically be achieved – even if

“breakthroughs,” the more we rely on others.

it requires a sea change. In other words, a deliberate intervention is required, but the conditions – technology, capabilities, systems, and processes – already exist or can be created.

leadership essentials

2. A model for breakthrough results Delivering extraordinary results begins with breakthrough goals. A great first question is:

The latter is about vision, values, declarations, or what we “stand for.” The mindset with which we approach and

“what has to be true for that to be possible?“

set business goals also play a significant

This means building our plan “backward”

prophecy on our attitude. Using extremes

(reverse-engineering) and practicing a mindset

role. Language may exercise a self-fulfilling to contrast and compare, we can think of

and language that is focused on possibilities.

constraints and possibilities.

As we engage others to develop or support

A mindset of constraints typically approaches

results beyond what is predictable, language and mindset matter. Our language, relative to this domain, can be divided into two broad categories: language that refers to things and

new business opportunities (or challenges) as an extension of the past: a place to get to. Whereas approaching the work with

language that makes things happen.

possibilities is about starting with the end in

The former is about criticism, judgment,

determine what has to be true for the goal to

mind and reverse-engineering the process to

explanations, and justifications (why “things

be attained: a place to come from.

can’t be done”). In other words, complaining.

“spectator”: in the stands Observing the game Assesses the actions and resultus Separate and distance from risk

“PLAYER”: ON THE FIELD Playing the game Impacts action and results Accountable and at risk

leadership essentials

Start with current best practice

Outcome

Goal

Starting Point

Time

reimagine what’s Possible

Outcome

Breakthrough Goal

Use framework and solution assets

Where are we now?

Time

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People who develop an ability to reimagine

declare and commit, which can accomplish

what is possible do not limit themselves by

extraordinary results. It’s about creating novel

past standards. They have the courage to

approaches and models.

Story time

The integration of Gillette into Procter & Gamble, following its acquisition, is an excellent example of a breakthrough approach. The cost reduction from synergy savings originating from the consolidation of processes and systems was estimated at $ 1.2 billion per year, impressive value creation for the P&G shareholders. By past standards, integrations of this nature may take several years. At the time, Gillette had 29,000 employees, over $12 billion in revenue, and operated in over 80 markets worldwide, which created significant complexity. The goal was to drive synergies by integrating and consolidating commercial operations (salesforce, order-to-cash, etc.), financial systems (record-to-report, procure-to-pay, etc.), distribution logistics, manufacturing, and office facilities, as well as possible overlapping positions. At over $3 million per day in cost reduction, every day mattered. The commercial integration was completed in less than 18 months across all Gillette and P&G markets worldwide. By any measure, this was an unprecedented accomplishment. Had we developed our goals and plans based on best available practices or past standards, we would have probably added more resources, “pushed” more, and done our best as always. And the result would have been incremental: possibly an acceleration versus the base plan, but not the leap we were able to deliver by reimagining what was possible and setting a breakthrough goal. By asking ourselves, “what has to be true for us to deliver the commercial integration in half of the time?”, we had to invent a novel approach to project management, a new model, tools, and capabilities. The first step was forming the project’s leadership team: we intentionally selected the best people for the job(s) rather than relying on resource availability.

leadership essentials

As we connect the triangulation between

consider is “left brain” versus “right brain.”

setting breakthrough goals, extraordinary

We must cultivate the latter to be able to lead

results, and the mindset with which we

people and drive results in unconventional and

approach these, an essential element to

inspiring ways.

left brain Logic Analysis Lists

right brain

Numbers

Analogies

Linear

Pictures

Head

Passion Metaphors

Imagination

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Heart

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Chapter III - positive influence

leadership essentials

Section 01

The 5 E’s Of Leadership There are hundreds of leadership models.

While those are undoubtedly important

Models based on acronyms present a risk of

attributes to possess, to be an effective leader

being incomplete or simplistic: there are often

requires focusing on execution: operational

trade-offs between ease to remember and

excellence, a relentless drive to complete the

accuracy. The “5 E’s” model, however, provides

last mile, systemic learning from previous

the essential attributes of leadership in a

experiences – successes and failures alike –

memorable and straightforward summary.

and continuous improvement of everything we do.

In my experience, possessing these five skills truly makes us effective leaders:

Interestingly, while our appreciation of the 5 E’s might be, in ranking order, top-down

• Envisioning • Energizing • Engaging • Enabling • Executing

(as visualized in the graphic on the next page), the reality is that business results are delivered and sustained by their application bottom-up. Enabling and Executing are often underappreciated, yet, strategies come to life only through quality execution. In fact,

We are seemingly attracted to leaders who display a strong ability to envision and “lead from the front.” These are leaders with positive

strategies and execution are two sides of the same coin. The former without the latter is a theoretical exercise.

energy who are able to generate it in others and mobilize teams to action.

leadership essentials

the 5 e’s model at a glance Envisioning

energizing

engaging

enabling

executing

•

Envisions future possibilities

•

Recognizes opportunities

•

Forms a clear vision of what can be achieved

•

Energizes others to realize the vision

•

Creates an environment where people are motivated

•

Role-models the desired behavior

•

Engages others in developing and owning vision and strategies

•

Leverages across-organization collaboration

•

Enables self and others to achieve the vision

•

Leverages strengths and removes barriers

•

Executes plans to deliver the strategies

•

Holds self and others accountable for results

•

Ensures individual work-plans are aligned to the vision and strategies

leadership essentials

Section 02

Active Listening Active listening is a foundational leadership

Active Listening skills improve our ability

skill. It is critical in its own right and crucial for

to communicate effecitvely. They can be

enabling other competencies (e.g., negotiation,

summarized in asking for clarification and

giving and receiving feedback, dialogue, and

asking for confirmation.

more). It is virtually impossible to be a strong leader There are three simple truths when we

if we do not connect with people at the

communicate with others:

emotional, intellectual, and personal levels.

• We all tend to think we’re pretty good at it

Clarification and confirmation play out in the following scenarios:

• Even good communicators aren’t as good as they think they are

• The overestimation of our ability

to communicate is magnified when interacting with people we know well

We are not sure of what has been said; or We can’t understand why it has been said

Our first reaction is to disagree, refuse or ignore; or We have to commit ourselves to do something; or

Ask for CONFIRMATION

Ask for CLARIFICATION

We aren’t sure we fully understand

leadership essentials

Conceptually, active listening skills are

and become automatic responses to familiar

elementary. The primary challenge consists in

situations we encounter.

integrating them into our language. We say “thank you,” “please,” good morning,” and

For active listening to become second nature,

“how are you” without needing to consider the

these are some of the expressions that we

context or appropriate response; these words

must internalize and therefore incorporate into

and expressions are second nature to us

our language:

clarification

confirmation

What do you mean by …? Tell me more about that …? Why do you say that …? Could you explain …? Could you tell me more about it… ? Could you be more specific/precise…? What does that mean exactly…?

Are you saying …? In other words …? Your suggestion is …? So you feel that …? Do you mind repeating that, please…? What you are submitting is…? Let me see/check whether I understood you correctly… (reformulate)…

Two other interesting and effective categories

responses. They tell the speaker you are

of questions are open-ended and probing.

listening, and you want to learn more.

Open-ended questions encourage elaboration

Probing questions are intended to help the

by the other party, rather than “yes” or “no”

presenter think more deeply.

open-ended

probing

What is it like to ____? How did you feel when ____? Can you tell me more about ____? How do you ____? What do you like about ____? What are your thoughts about ____?

Why do you think this is the case? What do you think would happen if...? What sort of impact do you think...? How did you decide...? How did you determine...? How did you conclude...? What is the connection between... and...? What if the opposite were true? Then what?

leadership essentials

The value of Active Listening materializes at

On the flip side, when the other party

three levels:

disagrees with our position, and we are left with the impression they did not understand

First, it increases the quality of the

what we meant – nor made an effort to do so –

communication and, therefore, the likelihood

it generates a strong emotional disconnect.

of better understanding. The following simple techniques help create a Secondly, asking for understanding creates a

better environment for active listening:

bond with the other person by showing our respect and interest in their point of view. This is very important, especially if we disagree with their position: our push-back will be better received and accepted if we show we truly listened and understood what was being said. Finally, paraphrasing shifts the responsibility

• Make eye contact • Use non-verbal language • Paraphrase using your words • Don’t interrupt, let people finish • Stay in the moment, avoid distracting

for accurate comprehension from us to the other party to ensure complete and accurate understanding (“do I understand correctly that…?”; “let me repeat what I heard and, please correct me if this is not what you meant…”).

Active listening Make eye contact Use non-verbal language Paraphrase using words Don’t interrupt, let people finish Stay in the moment, avoid distracting actions 29

leadership essentials

actions

Story time

A number of times, when speaking at a conference or to a vast audience, I have not understood a question being asked of me. The large room or its acoustics, the distance of the person from me, or a host of other factors make it difficult to grasp the exact words. We can do one of two things in circumstances like these: ask the person to repeat the question or try to answer it to the best of our (partial) understanding. In the latter case, answering the wrong question always leaves a negative impression, which is best avoided. What’s more, people often times don’t feel comfortable, especially in large groups, to raise their hand again to indicate that we didn’t actually answer their question. As a result, we don’t have the opportunity to repair our mistake. If we ask to repeat the question, which is of course the more obvious option, most of the time the person will repeat it with the same words, same tonality, and naturally within the same conditions of the room. It may get embarrassing; how many times can we possibly ask to repeat the same question and, more importantly, will that help us understand any better? Active listening is very powerful in these kinds of circumstances. By saying, “I am not totally sure I understood the question completely; please tell me if I am not answering it…”; or “Let me try to answer your question to the best of my understanding…” we create an opportunity for clear communication. At this point, the responsibility for an accurate and complete communication is reversed: the other party has to confirm correct understanding and communication.

leadership essentials

Story time

You and I are respectively the Marketing and Sales Senior Vice Presidents. We are in charge of launching a new product. We are meeting to have a strategic discussion on the go-to-market plans. We are aligned, based on our previous experiences, on several points: i) it should not be a national launch, as a “big bang” may be risky, ii) we should launch in a phased approach, to learn and improve our plans, iii) we must maximize the return-on-the-investment of our marketing budget. You feel that we should launch by customer size and profitability. That is, starting with the biggest customers by revenue, and those with the highest profit margins. This way, you articulate, we maximize the value of our in-store marketing material, fixtures, and merchandising. Should we halt the launch for whatever reason, we will have at least maximized the return on our marketing investments. I understand your rationale, but I am in a very different place. I believe the smaller customers would feel neglected and, more importantly, this would be a discriminating approach. I believe we should launch by market (in limited geographies) across all customer segments. If my immediate answer to your position is something like “no… no… this would not be fair to the smaller customers”; or “come on… this is not in line with our principles…”, we will inevitably get into a tete-a-tete. You will probably respond with a similar style and tone. We stop listening to each other and the decision will most likely end in a win-lose. By contrast, if I apply active listening, I could ask you: “I am not sure I am where you are; help me understand your second point better: could you please elaborate on it…”; or “what about the smaller customers; how do you think they will feel and react?”; or “can you please help me understand how you are thinking about the inevitable perception of discrimination…”. In the end, I may still disagree with you – and likely will. However, this kind of interaction leads to a greater number of benefits while not requiring much time at all: First, you feel heard, so any push-back from me will likely be better received. Secondly, you feel respected, which contributes to our emotional connection. Lastly, you are not left with the negative impression that I disagreed without understanding your point or without having made an effort to understand it. It doesn’t take much to use active listening, and it goes a long way in building our leadership effectiveness and presence.

leadership essentials

Section 03

Leadership Styles We must invest in developing self-awareness

1. Personal Styles

of our natural strengths and weaknesses.

The word “style” is subject to different

A deep understanding of our strengths and

interpretations. Most people consider

weaknesses, especially in this area, is critical as

style innate, a characteristic that cannot be

it informs the full picture. That enables us to

changed. Unfortunately, this view may lead

intentionally build on and/or evolve from our

to a dangerous self-fulfilling prophecy. Often

natural inclinations.

we have a vague idea of our style. It typically originates from the feedback we have received

The graph below illustrates four different

or self-perception, which are frequently based

personal styles.

on limited data points.

Directive

(high)

Participative (Embracing)

Persuasive (Rational)

Decision making process is shared through two-way communication. Usually consensus management approach.

Dialogue and active listening to get ideas and support. Discussions are factual. Alignment (not consensus) is the goal. (high)

Delegating (Empowering)

Directive (Authoritarian)

Built upon trust. Specifically, from objectives to individual tasks, must consider the maturity of the person.

One-way communication of goals and expectations. It may drive high speed execution, but at the expense of quality.

Relational

leadership essentials

2. situational styles

There are only 5 Situational Styles, applicable

Each interaction with others happens in a

keep in mind that a situation is not a meeting

in virtually all situations. However, we must

unique context or situation. The effectiveness of our leadership is hampered when we apply the wrong style to a specific situation.

or an event; it can change multiple times within the same interaction. The 5 Situational Styles are:

A situation is a combination of dynamics, personalities, objectives, hierarchical relationships, possible biases, and “background conversations.” Playing an instrument, practicing a sport, or driving a car requires flexibility and agility to change styles as the situation changes: where to turn or stop the vehicle or how to ski, depending on the terrain. The same is true for the different interactions in which we find ourselves.

• Persuasion • Assertiveness • Bridging • Attraction • Disengagement In the next section, we will evaluate each style within the context of a situation that determines the applicability – and necessity – of each.

The inherent challenge is that we all are born with one or two favorite styles, and we tend to use them even when the situation may require a different one. It would be like turning the steering wheel to the right when the bend in the road is on the left. The results would be questionable. The environment determines the situation, the context, the circumstances, and conditions that make it such (we will elaborate on this later). Therefore, it is crucial to possess the entire arsenal of Situational Styles, understand what they are, and when to use each of them. In my experience, this augments our effectiveness as leaders by orders of magnitude.

leadership essentials

Persuasion

Assertiveness

(tonality: Positive)

(tonality: Direct)

What: exercised through proposing and

What: personal judgment of the other

reasoning. It is about the articulation of

person’s position and ideas. Stating

logical ideas, suggestions, and facts that

expectations, needs, and requirements,

support our position. The tonality must be

using incentives and/or various forms of

positive

pressure

When: the atmosphere of the discussion

When: there is a tangible risk or potential

is open to rational analysis. We must be

for loss if objectives are not met or results

viewed as competent and knowledgeable.

are not delivered. You are in control of

The situation is not emotional or

the reward system and are in a position to

competitive

incentivize or penalize

Most business meetings start with this style.

This style is almost at the opposite end of the

People get together to discuss a problem or

spectrum of Persuasion. The situation requires

an opportunity and collectively find the best

intervention, and we must be decisive. We

solution. Some internal dynamics or “politics”

cannot risk wasting time, prolonging the issue,

may be at play, but we want to do what is right

or letting it happen again.

for the business. Assertiveness is a challenging style to apply The situation is such that we are willing to

well. It requires straight talk and short

listen to those who know more, have more

sentences, staying calm and in full control of

experience, and have subject matter expertise.

ourselves, and careful consideration of the

Therefore, this is not a hierarchical style. The

words we use. If we give the impression that

ability to influence the discussion, and the

we have lost our temper, we defeat this style’s

outcome, originate from our knowledge.

whole purpose and effectiveness. People will think we are in a bad mood and that the need to address the issue will go away.

leadership essentials

Unlike Persuasion, we need to have some form of control. The most intuitive and most apparent is hierarchical authority, but it is not

Bridging

the only one. Our power may originate from

(tonality: Embracing)

our credibility, our reputation, or the keen and genuine interest we manifest for others’ wellbeing or success. While this style cannot always be used with our boss or peers, a medical doctor can be assertive with her patients, as can an attorney, or financial advisor, with their clients. In these situations, leverage comes from trust, credibility, and the client’s perception that the provider is solely acting in their interest and

What: involving, listening, and creating an atmosphere of participation. You are seeking a contribution. Empathize, admit mistakes, and use active listening and relationship building techniques

for their own good.

When: you need commitment and are truly

In all cases, though, a form of control is

down negative reactions or anger. Your

needed in the Assertive style.

open to others’ ideas. It is useful to temper personal style is important This is a broadly applicable style because situations for Bridging are many and frequent. It is most appropriate with peer colleagues where we cannot, in most cases, apply an Assertive style. Bridging is about finding common ground or “breaking the ice” with new teams or when we want to establish a more personal bond. For this reason, salespeople frequently and skillfully apply it. A proper technique in Bridging is to first look for points of agreement. Once those are closed, we can focus on areas that require further discussion, thus avoiding possible and unnecessary back and forth.

leadership essentials

a) Why the ambitious goal we are envisioning is essential for the business and the value that achieving it will

Attraction

generate (we all want to do what is right

(tonality: Visionary)

for the business); b) What the potential is of delivering such a goal for the organization (we all want to be part of a highly respected organization, recognized for the impact

What: generating excitement for new

it makes on the business);

possibilities and a better outcome. The

c) Why this is important for the individuals

focus is on common ground, common values, and areas of agreement

involved, and what each one will gain

When: you want to create team spirit, a

but realism; extraordinary goals usually

sense of purpose, and enthusiasm. You and

entail extra efforts and sacrifice).

from it (this is not about “selfishness,”

others share similar interests and hopes Attraction is particularly appropriate when we want to build a sense of “one team,

It is essential to be specific about the value for each of these three dimensions: a) For the business, it will typically be

one dream.” This style is not hierarchical.

measurable results;

However, the risk is coming across as naïve or unrealistically optimistic rather than grounded

b) For the organization, it is visibility,

in a rational foundation.

reputation, and credibility; c) For the individuals, in addition

To this end, I have found the following

to possible financial rewards, it

approach very helpful: first, start with recognizing opportunities; second, formulate a future vision that grows out of existing and/ or attainable new capabilities; finally, articulate the value at three levels:

leadership essentials

is the opportunity to learn, grow professionally, and develop skills that make us more competitive, internally and externally.

In reality, there are two primary situations in which this style is hugely productive and should be used:

Disengagement (tonality: Rational)

a) The discussion is getting personal or too “heated” and risks becoming dysfunctional. This situation may lead to emotional damage among participants; b) The debate might have started with

What: temporarily or permanently

Persuasion and has been productive so

discontinuing the discussion to avoid

far. However, it has reached the point

discomfort or an unproductive conflict.

that the data needed to make further

Data is not available for a factual decision

progress is missing. It will inevitably shift from a discussion based on facts to

When: the atmosphere has become

personal opinions, if carried on.

dysfunctional and continuing the debate may create damage. You need a break to think or take other actions

It is always wise for a leader to prevent discussions from evolving into finger-pointing, biased, or dysfunctional. Hence, in such a

Disengagement is applicable in situations

situation, the appropriateness of using the

where we have some form of control or authority. We decide and communicate that

Disengagement style.

the discussion is temporarily (or permanently) suspended and will be resumed at a later time. It is important to state when (if) the discussion will continue and if any action is required before then. It is an under-utilized and often neglected style due to the common perception that deferring is procrastinating; leaders do not want to appear as indecisive or hesitant.

leadership essentials

Section 04

Giving & Receiving Feedback In most organizations, giving and receiving

We normally receive more accolades than

feedback is not an easy task. It is perceived as

criticism; otherwise, we would not last long in

judgment or the “necessary but unpleasant”

our job. However, as much as we appreciate

aspect of the annual performance evaluation

those, it is fair to say that any negative

for many people. It feels like going to the

feedback stays with us much longer. As a

dentist for a root canal!

result, it has a stronger influence and “power” to make us change and improve.

Actually, feedback is a true gift. It is arguably the primary source of information for

I still distinctly remember the moments when

our continued professional development.

I was told I missed the mark, that I should act

Moreover, its value is irrespective of the style

differently in certain situations or manage

or empathy (or otherwise) with which it is

certain areas of my work better. I can vividly

given to us. We can always capitalize on it and

recall the discussions and words used for some

take full advantage of the data we are offered.

of these instances, even some 20 to 25 years later.

The good news is that we fully control our attitude and our ability to separate substance

I would not say I liked each one of them and

from possible negative feelings. I would go

did not feel good about the discussion for a

as far as to say that turning feedback into a

while afterward. But they did help me improve,

learning opportunity is a valid indicator of our

and that is what matters. Years later, I can say

professional (and personal) maturity.

that I am truly grateful for that feedback – although, in a few cases, it lacked empathy or

It goes without saying that positive feedback

was unpleasantly delivered.

is more pleasant and possibly more motivating at first than the opposite: hearing about the

Providing feedback effectively is an important

areas where we should improve, do better, or

trait of a leader and is highly valued by

learn about our mistakes. However, positive

the recipient. Those who provide feedback

does not necessarily equate to more valuable.

effectively develop a good reputation for

In fact, in my experience, it is often quite the

themselves. This is one of the tools we

opposite.

have to help others improve and one of the ways to show we care for their professional

leadership essentials

development. It’s also an opportunity to

heard throughout the year does not reconcile

continue to build our personal relationships

with their rating.

with our colleagues. This disconnect is a bad outcome for all Strong leaders are caring and demanding. The

involved and, importantly, does not do much

combination of these two elements is a perfect

to help people improve – which is the ultimate

foundation, in its simplicity, for building high-

objective of feedback.

performance organizations. At the opposite end of the spectrum are those leaders who do

Independently of whether it is positive

not set high standards and expectations and

or negative, feedback generally has

tend to be “nice guys.” In fact, as a result of

commonalities that make it more or less

this behavior, they may fail to stand by their

effective to the person receiving it. It is worth

people during challenging times.

reflecting on the following questions:

In my experience, we all would like to get more

What made us feel good about it? What made

feedback on our performance and to receive it

it helpful, constructive, and, as we think back

more regularly. I have constantly heard people

to it, still brings good memories? By the same

lamenting erratic or insufficient feedback,

token, what sparked the feeling that left a

which frequently translates into a “surprise” at

bitter taste in our mouths?

the formal assessment discussion: What they

Providing feedback effectively is an important trait of a leader and highly valued be our colleagues. leadership essentials

A few common characteristics apply to both

Getting defensive generates two unproductive

giving and receiving feedback. We are in full

consequences: a) we reinforce the conviction

control of the former and can only partially

in the critics that they are right, and b) usually,

influence the latter.

we stop listening, so we do not get the data needed to understand exactly what the issue is and what we can do to remediate it.

Good and Bad Feedback

The best thing we can do to “turn an issue into

This is what makes feedback “good feedback”: 1.

Timely, provided when the situition occurs, not after several weeks or months Offered with a strong and genuine interest in continuous improvement and growth

Specific, focused on facts and data, as opposed to generic and high level

Calm, delivered with empathy and a clear message of “we are in it together”

By contrast, in addition to the opposite of the characteristics above, “poor feedback”: 1. 2.

identify the one thing we can improve upon, do it, and follow up later to confirm we have taken the feedback to heart. This approach has served me very well in my career. In doing so, we send a strong message to our feedback providers that we trust them and want and can continuously improve. In other words, we are people worth investing in. There is a natural tendency, for obvious reasons, to focus in some detail on the dos and don’ts when giving feedback on improvement areas. With positive feedback, we tend to be more generic. I have observed that too many

Venting with frustration due to performance issues or bad results

times, we tend to glance over it quickly: “good

Criticism is directed at the person rather than at the action or performance

report,” etc. I have learned that it is equally

job,” “well done,” “nice presentation,” “good important to be specific on what people did well, as it amplifies the value.

Feedback is exaggerated – typically in response to push-back by the recipient

I have trained myself to spend quality time

Not actionable and vague, leaving the recipient feeling disempowered

long, but some specificity and enough detail to

When we receive feedback, getting defensive is the worst thing we can do. It is challenging to stay calm and listen, especially if we believe it is inaccurate or unfair, and yet it is critically important.

an opportunity” (possibly the only one) is to

providing positive feedback. It does not take articulate why we value the work goes a long way in motivating people. For example, at the end of a project review, it’s sufficient to say “Your ability to drive action fast, despite the challenging atmosphere sorrounding this project, is truly remarkable.

leadership essentials

Thank you for that”. Or when successfully

Finally, a few final guidelines for the critic and

closing a contract with a new client: “This is

the recipient of the feedback.

an important milestone for us, and clearly your professionalism and passion have made a big difference”. Again, it does not take much, and it is a trait of strong leadership to take the time to offer an additional touch.

guideline for the critic

guideline for the criticized

Understand and explain why you are offering criticism

Recognize the value of constructive criticism

Walk in the recipient’s shoes

Work hard to avoid becoming defensive

Offer criticism of the person’s behavior, not of their character

Understand the perspective of the person offering criticism

Direct your criticism to the present rather than the past

Transform criticism that seems directed at your “person” to specific behavioral issues

Emphasize your perceptions and feelings

Listen actively (use Active Listening skills: confirmation and clarification techniques)

Be available to discuss consequences, not offer solutions

Insist on valid criticism

Keep judgments tentative; avoid critical overload

Communicate clearly how you feel and think about the criticism

leadership essentials

Chapter IV - Operating Effectively

leadership essentials

Section 01

Time Management Quoting Thomas Edison, “Time is really the

While this is all valid, there is a straightforward

only capital that any human being has, and the

reality: If we find ourselves working primarily

only thing he can’t afford to lose.” Time is the

on “the urgent” versus “the important,”

great equalizer: across the world, everyone has

something is wrong. In all of my career, I have

access to 24 hours per day, every day. There is

learned that no one has majorly impacted

no doubt that some people accomplish more

the business by working on urgent but

than others within that same timeframe. The

unimportant matters.

differentiator is time management. Facing up to this reality is vital for our This is one of the skills where we tend to find

performance and the value we can create, as it

“good” reasons for not being able to manage

frees up the time to focus on what matters the

our own time: “my manager always has urgent

most.

requests for me,” “clients call all the time, and I need to respond immediately,” “I always want

The name of the game is to gain control of

to be available for my people,” and so on.

our time as much as possible. To achieve that, anticipation is an extremely powerful strategy.

leadership essentials

This could mean going to our manager with

planned for 30 minutes, 60 minutes, 90

proposals, ideas, and plans before she comes

minutes, etc.? In other words, how many

to us with requests, or blocking time on our

meetings are scheduled for the exact time

calendar to think and plan.

needed? Most of us would answer not very

many. The seven habits and practices that follow have helped me tremendously to increase the scope

When we plan a task – writing a memo,

of my responsibilities over the years, therefore

preparing a proposal for a client, working on

generating more throughput within the same

a financial plan, etc. – we often do not think in

hours of work.

advance how much time we want to allocate to it.

I fully appreciate some of these may be controversial, others not intuitive, or even

While we are not suggesting we plan our

generate some defensiveness.

time down to the individual minute, there is a difference in incremental time: 15 minutes, 20

I ask that you go through them with an open

minutes, 40 minutes, etc.

mind, identify those where you have the biggest opportunity and focus initially on one

What is worse is that we let others book time

or, at most, two. Once you are satisfied with

on our calendar! (With the exception of our

your progress, start working on the next one.

boss, where that may be inevitable). These are all time-killers. We will inevitably waste it if we fail to consider and use our time

The 7 “What-Counts“

as a scarce resource. I developed the habit in my organization of asking people, when they wanted to book time

1. Focus on Minutes, not Hours

with me, how much time exactly they would

Most people default to hour and half-

need. That became a significant productivity

hour blocks on their calendar; avoid

intervention for my colleagues and myself.

that. Establish the time needed for a task and stick to it. This is especially true for

Having to reflect on the purpose of the

meetings.

meeting, its flow, what and how much material to use, etc. led to much better use of our time.

Most of us spend our work time in meetings,

Planning is always very important, and people

and we tend to plan our meetings in round

who plan more perform better.

numbers. How many meetings have you attended, or scheduled, that were NOT

leadership essentials

The reality is that if we find ourselves spending 2. Stay in Control: Fight the “Urgent”

than slipping into a reactive mode. Avoid procrastinating at all costs. Little things that have to be done right now may get in the way of what is important if the two do not coincide. This is a problem, as urgent actions may have little impact on the

is our intellectual capital. To come to full fruition, we must have quality time to think, plan, analyze, and engage in dialogue with others. It is true that we cannot control everything but the more important question, and the only one

business.

that matters, is: what can we do to be (more) in control?

All the exceptional results we have accomplished in our career, which made

For example, how can we schedule our day

a quantum difference in the business and

so that we free up the capacity to think about

possibly our professional development, were related to important business matters, objectives, and strategies. At times they may also be urgent but not always and not necessarily.

big ideas? If we must respond to clients’ call during certain hours, can we perhaps block out quality time for ourselves in the morning or the evening? The four quadrants to the right can help us

The issue is that we are often consumed by fire-fighting urgent tasks, ranging from unplanned calls, last-minute requests, or a sudden problem that requires our immediate attention. These detract our focus from what matters the most and makes the difference for the business or the organization.

intersect importance and urgency in priorities and tasks. The top-right and bottom-left quadrants are obvious: tasks in the red usually will not get our attention, and focus on the green comes naturally.

Our ability to stay focused enables us to work on what is important and drive stronger results. However, if we are (or if we get)

The blue and yellow quadrants constitute the subjects of the above discussion. The blue is highly desirable and requires deliberate

frequently distracted, all of that becomes

attention for effective time management.

extremely difficult. When we lose time to unimportant tasks, we often tend to feel victimized by circumstances

tasks, something is not working for us. In the end, the reasons are immaterial. Our currency

Anticipate what you have to do rather

external to us.

most of our time on urgent but not relevant

The question then becomes how to think about the urgent and the important tasks. A few criteria are illustrated in the image on the next page.

leadership essentials

Important & Not Urgent

Important & Urgent

Not Important & Not Urgent

Not Important & Urgent

Urgency & Importance: less easy than it may appear

Which tasks are Urgent:

Which tasks are Important: (WHAT)

(WHEN)

• When is the deadline? • What are the consequences of delays? • Is my activity in the critical-path for others?

• Is it a critical activity for the project? • What is the impact of the output? • What relevant resources are involved?

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What we are discussing here is the completion of each task without procrastinating or leaving 3. Never Touch Things Twice

them unfinished.

Touching things twice is a huge waste

A good technique for activities requiring

of time. As soon as something gets our

extended time, or multiple components, is

attention, we should act on it, delegate it,

breaking them down into individual, smaller

or discard it.

tasks. This can be done mentally or by taking a few notes.

Take a frequent and straightforward task to illustrate this critical concept: reading a communication, i.e., an email, a memo, or a text message.

For example, suppose you are preparing a presentation. In that case, you might organize it into the following discrete tasks: 1) identify

We open it and read it. Suppose that an action is required (answering a question, gathering some data, involving other people, etc.).

objectives, messaging, and flow, 2) identify data required, the format of the data, and possible visualization, 3) draft opening and closing slides, 4) develop remaining slides, 5) review and iterate.

If we fail to act on it at that very moment and instead move on to something else, it becomes a time-drainer. When we get back to it, we will have to read and process it again. This duplicates our efforts.

Our effectiveness in time management is made of dozens and dozens of big and small things. Each one of them counts.

Most of the time, these activities are completed in several steps because we need to gather information, align the stakeholders, or simply reflect more through the various stages of the execution. This is totally fine, of course.

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However, this is not the multi-tasking issue that we highlight here. What we are saying is 4. Do NOT Multitask

when we end up doing things simultaneously,

Multitasking is a time-management killer,

management with negative effects. Moreover,

unlike common wisdom may suggest. It also has a negative impact on quality.

in parallel: we put a burden on our time the quality of what we do deteriorates. For example, answering an email on our

We tend to confuse having to do several

smartphone while listening to someone in a

things every day with executing them

meeting should be avoided at all costs. We

simultaneously.

stop being present, get distracted, and end up losing focus on both tasks.

Of course, each day we have to manage a number of different things, juggling multiple and sometimes conflicting priorities. Moreover, the ability to balance our work and personal tasks has evolved into having to blend them. This is demanding and something that we cannot control in many ways.

Of course, there may be emergencies, and special circumstances can always emerge but, for the most part, it is a bad habit. It also demonstrates disrespect for others and displays a lack of self-control. It is a lose-lose all around.

“Research (Stanford University) shows that multitasking is less effective than doing a single thing at a time. People who multitask cannot give both tasks that same undue attention, recall information, or switch from one activity to another.” leadership essentials

Whichever personal process and discipline you decide to use, stick to one. Plan and schedule 5. Plan in Advance

your work in advance. Leaving tasks to the last

Avoid waiting until the last minute to work

done – a presentation, an offer for a client,

on your priorities. It puts pressure on us. While the adrenaline rush may feel good, it is dysfunctional. Avoid pressure at any cost. Get organized and plan in advance.

minute may give us the final boost to get them a financial analysis, a research assignment, a business plan, etc. – but, in my experience, it will inevitably impact the quality of our work. At the very least, we will likely not have the

Some people write down a to-do list every evening to keep an orderly schedule of their work the day after. Others keep a weekly

time to review it one last time. And remember, those who prepare more do better. The other consideration is pressure. This

schedule. There are a variety of ways to maintain self-discipline and stay in control of our priorities. All of them are effective as long as they work for us. This is a simple principle to use.

is neither good for our health nor for our performance. Avoid putting yourself under unnecessary pressure. Everything that can be done to anticipate what is coming and stay in control will serve us well in the short and long

I never did that but always kept a rigorous

haul.

calendar and an updated list, in my mind, of what I needed to accomplish. The list is dynamic, as is our work, and helps me stay focused on the “North Star” of what is important.

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we must demonstrate our dedication to the schedule. In addition to helping our own time management, we help those we are meeting

6. Stick to the Schedule Meetings can become time wasters. They can also be frustrating for the attendees if the leader does not drive them effectively and efficiently.

with and show them respect. This is greatly appreciated and valued. There are several techniques to support us. First, it is critical to have a detailed agenda

Most of us spend the majority of our workday in meetings. These can be one-to-one, small groups, large settings, informal or formal discussions, to name a few. Of course, the purposes and objectives of each are different, too: decision making, information sharing, team collaboration, training, coaching, and more. Meetings are an essential component of our time management. Too many meetings start late and/or finish late. There are situations in which the topic at hand requires extra time for discussion or something happens that no one could foresee. That is fine. The issue is when accepting a loose deviation from the schedule becomes the norm.

with the allocated time for each topic and the discussion leader for each; this drives accountability. Highlighting the objective of the topic – decision making, information sharing, updating, etc. – is also helpful. Finally, at the start of the meeting, it is good practice to briefly state expected outcomes and the rules of engagement. While this is more applicable and relevant for meetings involving several people, the principle of sticking to the allocated time applies for one-on-ones as well. If we realize that we are running over the allotted time during the meeting, I strongly recommend pausing and calling that out. We want to make it clear that we are aware of what is occurring. We can then ask the

Often, if we are not the organizer or do

participants, if appropriate, to express their

not hold a more senior position among

opinion as to whether to continue the

the participants, we are not in control of

discussion – thus accepting the extra time

the meeting schedule. In these cases, our

commitment – or reconvene at a later time.

ability to influence the outcome is limited or nonexistent. However, every time we can,

Also, if one of the topic leaders is taking more time than planned, it is acceptable to point it out, asking them to be conscious of the time.

“The bad news is time flies. The good news is you’re the pilot.” Michael Altshuler

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The critical principle here is the intentionality of everything we do. When we display that, we show that we are in control.

7. Say “No” NOW

The same principle applies to presentations. If

Avoid soft and ambiguous phrases such as

we get interrupted by questions or have not accounted for the duration of our speech, I strongly recommend acknowledging that we will exceed the scheduled time. Otherwise, people will assume that we are not aware of what is happening around us. This perceived lack of self-awareness is not good for us or for how we come across.

Saying ”no” to a request drives clarity of directions, if (in your heart) we believe that is the likely outcome I believe all of us have received requests that we know we will not be able to satisfy and yet answer in an ambiguous way. Instead of saying something definite, e.g., “no, I am sorry” or “what you are asking is most likely not going

We can say something like, “I appreciate the interest in the discussion and the many questions. However, as a result, we are taking more time than planned. I suggest I finish

to be realistic,” we kick the proverbial can down the road, delaying the decision. This habit is a consequence of human nature.

the slides, then we can….” Or, “We have a choice to make, given the strong interest for this particular point (slide), we can invest the remaining time to discuss it, or…. “

Most of us have difficulty saying “no.” At times, we feel sorry for the other party or prefer to be seen as amenable. Other times we prefer to avoid a discussion or confrontation, even if

In all cases, we must strive to be intentional in everything we do and demonstrate that we know what we are doing and why.

“I don’t think I can” or “I’m not certain.”

temporarily. However, this is a time drainer. It harms our effectiveness and the other person’s, as they have been waiting for our response. What makes matters worse is that we may unintentionally set overly optimistic expectations. When the time finally comes to state our position, the other person may feel disappointed or let down.

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“Research shows (University of California, S.F.) the more difficulty you have saying no, the more likely you are to experience stress, burnout and even depression.”

It has taken considerable focus and discipline

Of course, we must always be respectful of

for me to learn this. In the beginning, my

others and preferably gracious, but we should

reaction to a request for capital investment,

also strive to be straightforward and avoid

to approve a new project, or to make an

setting unrealistic expectations.

organizational change, etc., was the typical one: “let me think about it, and I will get back

There is absolutely nothing wrong with saying

to you.” Often, I knew all too well that I would

“no” immediately, and in fact, there are

eventually say “no” due to budget constraints

benefits to time management.

or other requests. By taking this stance, I was doing myself a double disservice. I had to remember to get back to that person – an additional task to keep in mind – and most likely with a negative response anyway.

leadership essentials

Section 02

Negotiation Techniques 1. What is it, how it works

2. Definition

Negotiation has an implicit connotation

For our purposes, negotiation can be defined

of contractual or commercial transactions,

as follows:

especially for business people. Yet negotiations have a broader and more pervasive role in our

An interactive and iterative process

daily lives. I have concluded that we negotiate

whereby, through discussion, the goal is to

in pretty much everything in we do.

influence the behavior of others to:

When we discuss where to go on vacation with our partner, family, or friends and we have different preferences, it is a de facto

• Reach a satisfactory agreement • Preserve advantageous relationships

negotiation. A conversation with our boss

The latter point may not be immediately

regarding performance to be recognized or

obvious, but is intrinsic to most negotiations.

receiving a salary increase is a negotiation.

Often we hold back because we are worried

We are negotiating when our kids ask to stay

about crossing a line: we know we could

out late, and for their safety and our sanity we

damage the relationship, with negative

would like them to return early.

consequences and long-lasting effects. This is true in business and personal negotiations

Unlike dialogue, in which the goal is to

alike; an aspect we will explore more later.

understand the other party’s ideas and position, negotiation is about winning regardless of whether we may ultimately agree. It differs from exploring possibilities or

3. Approaches

finding common ground. While these are valid

The negotiation process takes into account

negotiation strategies, negotiation skills are a

opinions, individual needs, interests, and

means to an end.

differences in background and culture. It can be divided into two broad approaches: Win-Win and Win-Lose.

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In Win-Lose, the strategy is ‘Driving a hard bargain,’ ‘Beating off the opposition,’ and compromising through haggling (giving/ making concessions to get something in return). Each side hopes that compromise will be in their favor. This approach requires strong assertiveness skills.

The process of negotiation takes into account opinions, individual needs, interests, and differences

Win-Win requires resolutions that allow both sides to gain fairly and equitably. The goal is

in background and culture.

to find an agreeable solution to differences that satisfy both sides. This approach requires strong emotional intelligence. We should be aware that Win-Lose may turn a negotiation into a conflict and damage long-term relationships. Furthermore, one could argue that its intellectual honesty is questionable: both sides try to hide their real views and mislead the other. Win-Win is effective and appropriate when we want to maintain the relationship. In this case, it is essential to understand the other party’s needs, desires, and fears. In addition, we aim for the result to be based on an objective standard or be viewed as fair. Exploring different options at the beginning of a negotiation is always beneficial and applicable to both approaches. In other words, diverging before converging.

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4. The concept of Power

Finally, we must consider that power is

One pivotal element worth exploring in

party perceives its existence.

dynamic, and its leverage exists if the other

negotiations is power. That is our leverage to force the course of action toward our desired

To illustrate these two points, I will provide

outcome.

a few simple examples. Most car dealerships

Power can be defined differently depending

we go to a car dealership on December 31st,

must reach a quota by the end of the year. If

on the context: the ability to act or produce an effect, the position of ascendancy over others, etc. For our purposes, we will define power as

the ability to force the other party to behave in a certain way. From now on, we will use the word “power” to signify power in negotiations

the car dealer has virtually no time left to reach their quota for the year, so every car sale may make a difference. If so, we have a lot of leverage. However, it is situational. The next day is a new quarter and new fiscal year, so their willingness to make a special price may

or contractual power.

no longer exist.

Power is a more sophisticated concept than it

Another example. We just established

may appear at first. There are two qualities to power that must be acknowledged: 1. 2.

manufacturing operations in a new country. We need to import raw and packaging materials. The country has cumbersome and

We typically underestimate how much power we have,

lengthy customs procedures, which hinder the production flexibility we need.

Balance in the use of power is extremely important.

Only one supplier has developed the processes

Overuse of power may cause resentment, while underuse may lead to suboptimal results. That is, we may have achieved a better outcome without crossing the line if we had used more of it.

and capabilities to expedite the import procedures. That gives them significant power in negotiating the contract to supply what we need. All of a sudden, a new supplier enters the

Knowing this, three essential questions to ask ourselves upfront are:

market. They have developed the same capabilities and ability to expedite imports. Instantaneously, the first supplier loses all of its leverage.

What power do I have?

What/how much power should I use?

How will power help or hurt the relationship?

Thinking and planning in advance is always advisable: as you may recall, people who prepare more do better. 57

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Timing is important in negotiations, as power is a situational advantage. We must be aware of it and size it.

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5. Sources of Power Internal Alignment:

In the light of the pivotal role power plays in negotiations, a critical question is: what can augment our negotiation power, and what can we do to increase it? In other words, what are the sources of power? These are some of the most relevant and effective ones:

Those who have been involved in team negotiations know well how easy it is to tell if the other team is or is not aligned. This could be for various reasons: interpersonal

Planning:

dynamics, internal politics, different goals or inconsistent reward systems, personal styles, or just lack of planning and preparation. Whatever the reason may be, it generates a Whether we are negotiating individually or as

competitive disadvantage.

part of a team, preparing in advance increases our chances of getting the most favorable

In some negotiations I was involved in, I

outcome. Good planning techniques include

immediately detected a lack of alignment

simulating the other party’s response to our

within the other team. For example, some

proposals or position to better prepare us for

members felt a sense of urgency to close and

different scenarios.

finalize an agreement, while others were more inclined to negotiate for the best possible

It could go as far as role-playing with some of

outcome.

us pretending to act and think – to the best of our knowledge and imagination – like the

That created a disconnect among them and

other party, and others playing our side of the

underlying friction that my team and I could

negotiations.

take advantage of.

I have found this approach to be highly

This dynamic is to be avoided, and preparation

effective. People quickly immerse themselves

and planning help.

in their respective roles, and unique ideas and insights emerge. As part of planning, we could also prioritize our goals and strategies, including defining our “line in the sand” beyond which we are not prepared to go.

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Reputation:

Knowledge:

People, companies, or organizations that have

Personal and collective knowledge is a source

earned a reputation for themselves of fairness,

of competitive advantage in negotiations. As

integrity, and professionalism have an inherent

always, people who know more do better.

advantage in negotiations. That creates an environment of openess and trust – or, at a

This is also why preparation and planning are

minumm, it prevents starting the negotiation

so important.

with distrust. I distinctly remember two occasions in which It would be naïve to expect the other team to

we renewed an existing agreement at the end

lower their guard. However, that may make

of their terms. While the other team members

the climate of the negotiation more positive. It

had changed since the contract was initially

goes without saying that reputation puts the

signed, most of my team was the same.

responsibility on us: We must prevent anything that may compromise our reputation and

As we went through tricky negotiation points,

credibility, at all times.

I could state that what they proposed was not in line with the original intent and spirit of our

I have negotiated large outsourcing contracts,

agreement. Without the historical knowledge

worth billions of dollars with very large

to refute my statement or affirm something

technology and services companies. Procter

different, we had a strong advantage.

& Gamble has always been impeccable in any relationshiops, and has developed a stellar reputation over the decades; that has always helped me greatly.

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Competition:

Alternatives:

It’s intuitive that a strong competitive

Alternatives are somewhat similar to

environment, or the absence thereof, changes

Competition but have a different angle. If

the negotiation dynamics and landscape.

we are limited by one course of action, we inevitably reduce our degrees of freedom. As a

If our negotiation counterpart faces viable

result, we lower our negotiation power.

competitors, that’s to our advantage. We have potentially more choices. Their awareness of

Therefore, the strategic question we have to

this is just as important as the existence of the

ask ourselves is: Is there a different approach,

choice itself.

business model, solution, or play that would allow us to reduce our dependency on the

By the same coin, if we have competitors who

negotiation results? It may not be possible, but

can offer comparable products (services) for

it is always worth exploring alternatives.

equal or better price, that poses a challenge on us. In this situation, we must do all we can

For example, say we are discussing a contract

to prevent “commoditization” of our products.

that is critical to achieving our goals for the

A commodity is all about price and reliability,

year.

which leads to pressure on profit margins (of course, this is different in monopolistic

Whether consciously or not, this inherent

markets).

pressure influences our behavior. Is there a way to diversify our goals? Or to compensate

“De-commoditizing” our business is not easy

in other ways? Can we create a situational

to do, but I have seen excellent examples of

advantage that allows us to buy time?

that. Like in a chess game, if our king is under check, Providing additional value to clients that

the only move we can make is to protect it.

goes above and beyond our core products

Alternatives allow us to think more clearly and

(services), in the form of knowledge,

play to win rather than playing defense.

responsiveness, support, or anything relevant to them, increases our leverage.

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Story time

I was on the Board of Directors of United Rentals Inc, global leader in construction equipment rental. Cranes, escavators, pumps, forklifts, etc. are commodity products. Our competitors buy pretty much the same equipment from the same manufacturers. As long as the machines work well, the key differentiator is pricing; and, of course, from a customer standpoint, the lower the better. United Rentals is run by outstanding leaders, with highly talented people. They have devised a hightouch strategy with our customers, providing services to differentiate our offering. These include training on safety (a critical priority in the construction sector), on-site services (equipment refueling, maintenance) and, most importantly, on-time delivery and pick-up of the equiptment. United Rentals has not only significantly grown the business over the years, but also increased customer loyatly and commanded premium pricing. This is a simple yet great story and strategy of how to differntitale in a highly competitve environment and commodity business.

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In summary, stronng negotiators:

6. Skilled Negotiators It is instructive to analyze effective negotiators’

• Use option exploration twice as much as average negotiators

skills, techniques, and behaviors. There are

• Emphasize common ground three times

several common traits.

more - which builds the relationship

Strong negotiators:

• Use a range for setting limits to generate

Think longer and deeper in advance

Use role-playing and reverse roles

Plan in a more structured way

Communicate more effectively

more flexibility - as opposed to single numbers

• Avoid irritating comments - that damage the relationship

• Use fewer counter-proposals - spend more time listening for an in-depth

The last point is critically important, and where Active Listening becomes a foundational component, as the table to the right illustrates.

understanding

• Use fewer arguments per issue - demonstrate focus without

A few characteristics of strong negotiators stand out. They tend to use Active Listening much more; they diverge first to explore options; they create an atmosphere of inclusion (“we share a similar intent… we want to make it a win-win…”); and they ask plenty of questions to gather information. These are typically open-ended questions, and they repeat their counterpart’s statements as questions: “are you saying that…”, “do I understand correctly that you are proposing…”, “Based on what you just said, what would the implications be if…”

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overwhelming or using trivial arguments

average negotiators

skilled negotiators

option exploration

2.6 options/issues

5.1 options/issues

questions (% of total comments)

9.6%

21.3%

asking for understanding (% total)

4.1%

9.7%

summarizing (% total)

4.2%

7.5%

common ground (bridging style)

11%

38%

setting limits

Fixed points

Uses ranges

planning

Sequential Focus

Issue based

irritators

Over 10 per hour

Negligible

counter-proposals

Over 3 per hour

Less 2 per hour

arguments

Several per issue

Few per issue

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7. Principles of Persuasion Concession

There is no doubt that some individuals are more persuasive than others. Persuasion is a valuable attribute in business and life and a crucial differentiator in negotiations. Ultimately, negotiation is about persuasion.

People typically feel obligated to Much of our ability to be persuasive, or

reciprocate when someone makes a

otherwise, has to do with our personal style,

concession. Use this feeling of obligation to

emotional intelligence, empathy, and other

get concessions back.

personal characteristics. However, as is true for all leadership skills, there is a lot that we can

Examples:

learn and improve.

If you agree to a multi-year contract, what can Below I have outlined a few key principles:

you ask for in return? If you agree to minimum volume guarantees, what can you get in return? (e.g., extra services, more flexibility in deliveries, lower price.)

Self-interest

In summary, never make a concession without obtaining a concession in return.

We normally act in our own self-interest, which is expected. Try to articulate to the other party why what you want is in their best interest. Examples:

Why is lower/competitive material price in the supplier’s best interest long-term? Why should suppliers share their best ideas and/or intellectual property with you? (i.e., what is in it for them. It may sound counterintuitive but it is compelling.)

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Rationale

Association

People are more easily influenced when

People want to be part of a positive

a reason is given for a request. Always

association and contribute to a noble

provide a rationale for any request. Help

purpose. Always maintain positivity and

them follow your logic by articulating it.

make your position a positive one.

Examples:

What rationale can be given for lower prices or

How can you positively position a request

better service levels? (e.g., growing the market

for price reductions from suppliers or more

together.) What reasons can you give for

flexibility in the response time?

justifying a competitive inquiry approach? How can you positively position no volume Explaining ourselves and the reasons that

commitments to suppliers? (e.g., there is no

guide our request also shows respect, which is

reason to put pressure on us. We want to sell

always important and appreciated.

as much as possible; we need to be enabled, not be constrained by numbers.)

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8. Cultural Factors

Knowing, understanding, and relating to

Culture can be defined in a number of ways.

effectiveness.

the other party’s culture enables personal

Per the Merriam-Webster Online Dictionary

• The customary beliefs, social norms, and material traits of a racial, religious, or social group

•

Therefore, detecting the culture of our counterpart – whether an individual or a company – gives us an advantage. We can think of four vectors to situate the

The integrated pattern of human knowledge, belief, and behavior that depends upon man’s capacity for learning and transmitting knowledge to succeeding generations

• The set of shared attitudes, values,

goals, and practices that characterizes a community

cultural behaviors we experience in others:

• How people relate to authority • Group vs. individual orientation • Masculine vs. feminine • How people deal with uncertainty Let’s look at a number of pairings that

For our purposes, the third definition is the

characterize different attitudes:

most relevant. A community can be a nation, an ethnic group, or a company.

Competition

Cooperation

Egalitarian

Hierarchial

Respects Authority

Challenges Authority

Deadline Intensive

Time Not An Issue

Casual Behavior

Formal Behavior

Authorative Decisions

Consensus

Stated Agreement

Implied Agreement

Change Is A Threat

Change Is An Opportunity

Avoids Uncertainty

Accepts Uncertainty

Emotional Responses

Controlled Responses

Honors Agreement

Negotiates All The Time

Automatic Trust

Earned Trust

Results Focused

Process Focused leadership essentials

By contrasting and comparing the behavioral

For example, if your client is formal in their

pairs above, the importance of our

behavior, takes pride in honoring their word,

counterpart’s culture becomes clear, both at

and is process-focused, refrain from showing

the individual (nationality, ethnicity, etc.) and

up casually dressed, taking shortcuts in the

company level. Reflecting on it with our team

discussion, or probing their commitments. That

is a good time investment.

would be unnerving to them.

If you are in a subordinate position (e.g.,

The way people deal with uncertainty,

supplier to a client in a highly competitive

their disposition towards change, and the

environment), do not underestimate subtle

way they relate to time are also important

elements that may seem minor at first.

considerations. Being aware of what behaviors we can expect in a negotiation – and what the other party expects – gives us a competitive advantage.

9. Negotiation styles Effective

Outmaneuver opponent, excel at claiming value for themselves, risk taker, win/lose negotiator

Too trustiful, desire to be liked/get along with others, display a naive/too friendly behavior

Too demanding (arrogant, obnoxious), attacking, argumentative, too rigid (take-it-or-leave-it attitude)

Aggressive

Cooperative

Ethical, good, fair outcome, excel at both creating and claiming value

Ineffective

leadership essentials

Tactic Aspects:

10. A few final guidelines The keys to negotiation are planning, communicating effectively, and cultivating

• Tactics should fit your style • Watch for sudden changes in body

language rather than the body language

knowledge of the subject.

itself Finally, a few suggestions on the commercial and tactical aspects of negotiation:

• Don’t leave important details until the

last minute (time pressure is the biggest disadvantage in a negotiation)

Commercial Aspects:

• Do not reveal your deadlines unless

• Be the one to write the contract (“power of the pen”)

absolutely necessary

• Try to always negotiate face-to-face:

this permits seeing and hearing (phone

• Consider naming the first price to

establish an anchor; make low offers, but refrain from “insulting”

• Avoid “dividing the difference equally” unless you plan to from the beginning

• Use small increments of change when altering prior positions

• In collaborative negotiations, develop options that meet both party’s needs

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or video negotiations only allow limited seeing and hearing; e-mail negotiations do not allow either; reverse-auction lead to commoditization)

The Keys to negotiation are: Planning Communication Skills Knowledge of the Subject

leadership essentials

Section 03

Public Speaking The fundamental questions of public speaking

1. Framework

are:

“There is no such thing as presentation talent…it is called Presentation Skills.”

What is the best way to formulate and structure our content, so that it is easy to communicate and understand, and

Which techniques can we employ to make our delivery impactful, so that the audience is engaged throughout.

David J.P. Phillips, Author “How to Avoid Death by PowerPoint”

The two critical elements of public speaking The worst thing that can happen in public speaking is losing touch with the audience. Many of us have experienced these kinds of unpleasant situations. Public speaking – be it a presentation in a small setting or a keynote to a large audience – is often a source of anxiety and preoccupation.

relationship with the audience is a prerequisite. When I ask people to self-evaluate their public speaking skills, some key indicators are adequate preparation, attention to time, knowledge of how to structure supporting materials (e.g., slides, memos, etc.), and strong presence.

The ultimate goal of public speaking is to communicate our message so that it is clear, easy to follow, and memorable. If we lose contact with our audience, that will not happen.

are content and delivery. Building an engaging

Feeling at ease with public speaking and possibly liking it is an advantage. But it would be dangerous to correlate those feelings to our effectiveness or consider them a measure of our performance. In fact, the opposite can be true: it may lead us to get a bit “amatorial” and underestimate the importance of thorough and professional preparation.

leadership essentials

By contrast, most people are afraid of

2. Delivery: “Physical Tools“

the stage, which is perfectly normal. An astonishing research paper I came across

Ther are the five “physical tools” that can

years ago reports that 41% of people’s total

aid our presence and establish an engaging

fears are public speaking. The remaining 59%

relationship with the audience. These tools

of fears are about everything else: heights, insects, flying, diseases, deep water, loneliness, financial issues, etc.

are relevant for groups of all sizes, from two to several hundred people (only eye contact is limited to about 40-50 people).

Even if these numbers are, to an extent, over or understated, the story they tell is pretty clear: public speaking can be a big deal. More importanty, it is an activity that most business people are called upon to do.

Energy Level Gestures

Posture

Voice +

Eye

Pauses

Contact

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Energy Level:

Eye Contact:

Energy, like passion, is contagious. There is

Look at one person at a time, establishing a 1

virtually no limit to how much positive energy

to 2-second eye contact, which is sufficient to

we can express. It helps engage the audience

establish a relationship. Address the person

and keep the attention high.

you are looking at, as it will keep their interest alive.

Stay in the moment. Get rid of all thoughts and feelings that are not relevant to your

Before speaking, identify someone in the

presentation. Instead, focus entirely on the

audience who responds more actively to your

objective.

eye contact. Start with them first, as it will give you confidence.

Arrive well in advance to the venue so that you can check every single detail is planned and in

Occasionally, check in with how the audience

order. Little glitches (e.g., tech issues, lighting

respond. If the energy goes down, increase

issues, etc.) build anxiety, and you risk starting

it through volume and emphasis, or stop

from a deficit. It is also worth considering to

your presentation to involve them (e.g., ask a

familiarize yourself with the room setting (e.g.,

question).

seating assignments, podium, stage, etc.). Tonality and Pauses: Posture: Project confidence, conviction, enthusiasm. Adopt a sturdy and confident posture. More

Speak up so that everybody can hear you.

importantly, pay attention to the screen: do

Imagine you are talking to the most distant

not walk in front of it. Approach it when you

person in the room: that helps project your

need to show something but then return

voice.

to your original position. Always face the Change tone, rhythm, and volume. Voice every

audience.

bullet point in your storyline slowly and clearly. Do not swing from side to side. Keep your feet slightly apart so that the weight of your body

Do not be afraid of silence. Instead, use pauses

is evenly distributed. Keep your arms naturally

to add further emphasis to the main ideas.

along your trunk and not behind your back or

Pauses are necessary for you as a speaker and

folded in front of you. Do not play with pens

for the audience.

or other objects you may have in your hands, as it will be distracting to the audience.

leadership essentials

Posture: Gestures can clarify and reinforce; let them flow naturally. Sometimes actions are clearer than words, so try to maintain congruence between your words and gestures. Avoid sudden and purposeless movements.

personal presence indicators:

Signals of Low Personal Presence

Signals of High Personal Presence

Unsteady eye contact

Steady eye contact

Speak in fragments, use many qualifiers

Grammatically complete sentences/few qualifiers

Out of breath when speaking/no pauses

Full deep breaths when speaking/pauses Very little head movement when speaking

Moving the head around a lot while speaking

Use silence to capture attention

Avoid/fill silences

Owns the space, stable feet, uses deliberate gestures

Constricted body, swinging, wandering feet Sounds stressed, upspeak at the end of sentences

Sounds warm and confident, down at the end of sentences

leadership essentials

3. Managing the time When presentations go over the allotted time, it does not reflect well on the presenter. In addition to objective reasons, we leave the audience with the impression that we are not

We may say something like, “I certainly appreciate the interest this subject is generating. However, we are running a bit late. We have a choice to make: we can go ahead

planning or managing our time well.

with the other topics or go deeper on this…” It

If we are one of several speakers (conferences,

the other topics I had planned to cover, as they

is also acceptable to say, “Please let me finish

Board of Directors meetings, and so on), not sticking to the schedule creates a domino effect on those who follow. Moreover, some attendees may have other commitments

are important, and I will follow up separately on any remaining questions.” These and other similar interventions show that we are aware, we are in control, and are

immediately after, which puts them in an awkward position (do they leave the room? Show up late to the next commitment? Send a message or make a call to inform others they will be late?).

prepared to take the lead, By the same logic, I also recommend stating at the beginning how we plan to run the session: “I have 20 minutes of prepared comments; please let me go through them first, then

Sometimes we get interrupted with many

we will have 15 minutes for any questions

questions and, as a result, may not finish our speech or rush to complete it, or exceed the time allocated to us. This inevitably puts pressure on us and creates anxiety, which we

or comments you may have.” Or ”Please feel free to interrupt me with any questions you may have, as my recommended actions must

always want to prevent.

be clear.” Or again, “Please stop me with any

A key strategy here is to show that we are

other comments until the end.”

questions for clarification, but please hold any

aware of what is happening and demonstrate that we are in control. Being deliberate in the way we manage the situation mitigates the issue significantly – and may even turn it to our advantage.

In all cases, the leadership principle is the same: We manage with intentionality to stay in control of our session and our time. If there are any deviations, we must immediately take back control.

leadership essentials

(Once again, those who prepare more do

4. Presentation Material

better.)

If we use supporting materials, typically slides, there are a few aspects to take into account.

The slides we use are meant to support

Consider that typically it takes at least 1 minute

will inevitably bore the audience. Also, the

per slide. Therefore, if you have 30 minutes for your session and have prepared forty slides, you will unlikely finish on time (unless you plan

our message, not to be read by us, as it message should be short and limited to one per slide to keep it focused and allow people to read it. When it takes longer, two issues

for some to be a quick click-through).

occur: a) People read at different speeds and

I recommend rehearsing your speech.

reading, they will stop listening. As a result, we

Moreover, I recommend practicing more than

lose touch with the audience, which is what we

once for those who feel less comfortable

must avoid first and foremost.

therefore will not stay in sync, b) If they are

with public speaking: it helps develop selfconfidence and a more robust command of the content. The latter is crucial to avoid reading from the slides, which should be

According to several sources, I also highly recommend using visuals to support our message, as these increase retention by over

avoided at all costs.

40%.

I also suggest rehearsing the presentation

As the saying goes, a picture is worth a

aloud. Everything seems to flow smoothly and logically when we go through it mentally. However, in hearing our voices, we may realize that some words are awkward and cause us to

thousand words. The visual below is meant to reinforce the message that 1 in 5 people lack access to

stumble or repeat ourselves.

drinking water. Look at its beauty: we do not

For many years, I used to hide in my office and

it unnecessary. Also, while the message is

have to say “people” because the glass makes

go through my speaches, repeating them until

heartbreaking, the visual makes it memorable:

I felt totally comfortable.

leadership essentials

Visuals can make a message easier to grasp,

Finally, these are some of the most common

faster to comprehend than reading many

mistakes in preparing presentation materials:

words, and most importantly, memorable.

• Slides are too full and have too much

For the same reason, character font and

text

size play an important role. Keep the slides simple and use characters and colors that harmoniously highlight the message you want to communicate. We can think of the design of materials as

• More than one message per slide • Message not supported by the slide • Choice of suboptimal graphical layout • Lack of coherence with other slides

we would the packaging of a product: the slide’s content is the product and ultimately what matters to the consumer. However, the packaging is part of the equity of the product. It is often what attracts us to a product in the first place.

leadership essentials

Chapter V - Analytical Thinking

leadership essentials

Section 01

“North Star” Questions Four questions have had a major influence

an organizational change, a new client

on my approach to new business ideas and

engagement, or the launch of a new product

opportunities. I have had the fortune to first

or service – is off to a strong start; however, an

conceptualize them, and fully appreciate

unforeseen issue occurs (competing activities,

their value throughout my professional life, in

technical problems, etc.). We are not ready to

numerous activities and projects.

respond quickly and effectively because we did not anticipate the possible setback, and the

Since I internalized these questions several

lengthy response time derails our success.

years ago, they have constituted my “North Star.” They guide my decisions and how I

Investing quality time in thinking through

structure and plan my work. I find them so

and answering the following questions at

powerful that I also use them in my personal

the outset of a new initiative has proven of

life.

immense value to me:

The context is the following: I have noticed that when we fail to perform well or are disappointed by our results, it is sometimes due to not having defined the

What is Success….?

What right do I/we have to Succeed ?

What has to be true to Succeed ?

What could go wrong (thus impeding Success) ?

desired outcome with the necessary clarity and precision.

The first question, “what is success” requires defining the objective we aim to achieve with

We sometimes have high expectations of our business or organization initiatives, but

great accuracy. Specificity is everything here.

these expectations are not based on solid

For example, if we launch a new product

grounds. Moreover, our ambitions are not

or enter a new market, defining success as

always supported by the capabilities required

“growing revenues” or “making a profit” is

to accomplish those results – skills, financial,

far too generic. Similarly, “increasing the

intellectual, differentiating product or service,

business cycle-time,” “reducing inventory,”

etc.

or “increasing profit margin” are too broad.

I have faced and observed several situations where our initiative – whether a project,

Instead, we must go deeper, be more precise and specific.

leadership essentials

Good examples of a specific objective include

Examples of good questions to ask ourselves

“to become one of the top three most

and our team, when a new idea is being

recognized brands one year from now.” Or “to

discussed, are: “Why and in which way are we

be the top rated supplier for our customers,

better than…? (other businesses, competitors,

while reducing inventories by 20%.”

organizations)”, “What skills/capabilities differentiate us and enable us to have a

It is interesting to turn to our personal life for a

high chance of success?”, “What exactly are

moment. If we plan a vacation with our family

we bringing to this project/deal that others

or friends, defining success as “enjoying our

don’t…? (know-how, resources, skills, etc.)”,

vacation time” is not specific enough. Whereas

“What makes us stand out, therefore adding

“everyone has the opportunity to enjoy

more value than others?”

themselves” would be. We are overly optimistic if we cannot answer With the latter objective, we will likely plan our

these questions clearly and compellingly. And

vacation differently: taking into account the

here, too, specificity and clarity are critically

interests and needs of each person, so they

important. If we need too many words to

have the opportunity to enjoy the vacation.

illustrate what right we have to succeed,

As a result, the probability that we all enjoy

I would consider it a red flag. Intellectual

our vacation time – and hopefully becomes

honesty is an obligation we have towards

memorable – is much higher.

ourselves and others, and always serves us

The second question, “what right do I/we have to succeed”, is the reality check for sufficiency. Success (or winning) is about doing, delivering,

well. The third question, “what has to be true to succeed” is about the road map definition.

or producing something better than others.

I find this question truly powerful. It is also

For that to be possible, we must have concrete

relevant in other contexts, such as strategy

reasons to believe that we can indeed perform

formulation and the model for extraordinary

better. If we cannot identify and articulate the

results.

differentiating capabilities, chances are we do not have the right to succeed.

If forces a reverse-engineering process: start from the end goal, and identify all the

A strong leader sets high expectations and

necessary steps by using a reverse path. If the

goals for themselves and their organization,

conditions required to succeed – what has to

but not “pies in the sky.” When that happens,

be true – are not feasible or realistic, we will

the leader is not a visionary but a “dreamer,”

not achieve what we aspire to. And, of course,

which hurts the leader’s credibility and may

it is better to find out sooner rather than

have negative implications on the business.

later, which is another benefit of this critical question.

leadership essentials

Hopefully, the prerequisites needed to

Think of these sessions with the team as

accomplish our goal are in place, in which

a form of brainstorming exercise. I vividly

case we get a reassuring confirmation. More

remember the first time the idea of doing

often than not, in my experience, we need to

such an exercise came up. It then became a

intervene – otherwise, our objective is probably

systemic methodology.

not so ambitious. The intervention could be an investment, additional resources, a dedicated

We were about to roll out a new system

team, new technologies, or whatever “has to

involving considerable changes. The risk

be true” to satisfy our reason-to-believe that

profile was high. Therefore, throughout the

we have “the right to succeed.”

several months of development, testing, and validation, we considered each and every

It goes without saying that if an intervention is

potential problem. Or at least, so we thought.

necessary, the sooner we find out, the better. More often than not, we need time to build

When we gathered the team together before

capabilities and may run out of time. As a

the final go/no-go decision, everything was in

result, our goal will not materialize.

order, well-planned, and thought out. Then the question came up: what could go wrong?

Sometimes we wonder why some leaders deliver strong results so consistently or why

At first, people looked at each other a bit

they take more risks and yet succeed more.

puzzled: We had been working on it for

The answer, in my experience, resides to a

months with regular and frequent reviews;

large extent in these questions.

everything possible had been considered throughout the course of the project. Why

The fourth question, “what could go wrong,” is

this question at this stage…? Everything was

about the risk mitigation plan. It is a relatively

primed for flawless execution.

straightforward point. If we consider potential pitfalls in advance, we can hopefully devise

However, as we began thinking through

preemptive actions to avoid them or, at a

potential vulnerabilities, a number of potential

minimum, be ready to respond quickly.

pitfalls emerged. None of them were major, but each and every detail matters. I am

I am always surprised by what comes up when

positive that exercise helped us avoid a few

we take the time to think through the potential

glitches.

problems that could emerge. It is worth doing this exercise at different stages of a project,

I would strongly recommend creating a space

but certainly at the outset.

for this exercise at any critical juncture. In addition to risk mitigation, it contributes to a culture of excellence in the organization.

leadership essentials

Define Winning

1. What is success...? 2. What right do I have to succeed?

Reality Check

3. What has to be true to succeed?

Road Map

4. What could go wrong (impede success)?

leadership essentials

Risk Mitigation

Section 02

Mindset And Process A number of recent studies indicate that most

What problem am I trying to solve exactly?

How shall I dissect and sequence a complex problem ?

How do I turn the conclusions into decisions and actions ?

companies feel uncomfortable with their analytical knowledge. Critical thinking and complex problem solving have become two of the skills most sought after to build talent. The reason is the fast-paced, complex, and volatile world in which we operate. Often

We can use two different examples to

we have to make decisions with partial or

contextualize and illustrate the analytical

incomplete data, exhacerbated by speed of

thinking mindset. Take a look at these two

execution. The margin of error is widening and

pictures.

the recovery time narrowing.

If we were asked what these pictures represent,

This requires greater accuracy in analyzing

we would most likely say a restaurant and a

new situations, which are often one-of-a-kind.

duck.

As a result, learning and following a robust methodology is increasingly essential; like any skill, the sooner it becomes second nature to

These are simple questions that can be answered quickly without too much thinking.

us, the better.

We can deduce what these objects are

In my experience, three questions help guide

approach would risk over-intellectualization.

the analytical process:

We have often seen restaurants and ducks, and

based on past experiences. In fact, any other

those two pictures resemble them.

leadership essentials

However, we can also look at it more

As we think about it analytically, the question

articulated and sophisticatedly, which is how

presents several weaknesses. A few examples:

we would approach it in a business scenario.

What is the exact definition of “restaurant”? Is it a place where we eat (if so, is a fast-food joint a restaurant), where we sit at a table, or where food is served to us?

What is the time horizon of the question being asked? How many restaurants are in our city, WHEN? At present, last week, or last year?

How do we delineate our city and define its boundaries? Is it the zip code, car plates, the telephone area code, or the municipality?

Restaurant: Imagine I ask the follow-up question, “right, that’s a restaurant. Now tell me 5 different ways to calculate how many restaurants are in your city.” A few approaches come to mind. In a large city, there is probably a restaurant association; we could call them up, as they may know the number of their associates. Or there could be an App that lists all our city’s restaurants. We could also count the number of restaurants in a neighborhood, find out or estimate the number of residents in that area, and

However, the primary reason why this is not

extrapolate the number of restaurants based

a good question, from a business standpoint,

on the number of inhabitants in the city. We

is: What degree of accuracy is needed? Do we

could also extrapolate based on other data

need the exact number of restaurants, or a

points, like the number of people eating out,

good approximation?

frequency, and so on.

This is a crucial consideration because we

There are probably a couple of dozen ways

often need operational and directional data,

to calculate the number of restaurants and

not financial grade data, to make good

answer the question. However, the critical

decisions in business. Ultimately, the latter may

point to reflect on is: Is this, as formulated, a

take a lot longer to gather and vet.

good question?

As we can see, jumping immediately to ways to calculate the number of restaurants may lead us to answer the wrong question. Part of the analytical thinking process is the ability to determine what problem we are trying to

solve exactly, how to frame it and, notably, the question’s intent. As is true of any skill, to some people it comes more naturally, but we all can work on and improve it.

leadership essentials

Duck: Let us look at the analytical thinking

to a determination in the single vs. multi-bird

process differently. Looking at the picture,

pictures:

we said it is a duck because we have seen Attributes:

it several times in our life. It has a duck beak and the colors and the tiny feet of a duck. These attributes are sufficient for us to reach a deterministic conclusion. Pretty straightforward. However, what if instead we look at the picture

• Beak • Color • Shape Attributes:

• Feet (width, color, nails) • Gait (length, pace) • Wings (length, color) • Beak (color, length, tongue) • Feathers (shape, color) • Quack (sound, volume) • Texture (plastic, wood, etc). In summary:

below: From this picture, determining what those flying birds are is more complicated. The key differentiator between the two pictures, the single duck and the flock, is COMPLEXITY. This generates a step-change in our ability to quickly reach a conclusion (decision). The number of birds (volume) and their distance in

How many restaurants are in my city: The question is less straightforward than it may at first appear. It depends on what problem we are trying to solve. How do we know it is a duck:

the picture, compared to the single duck, add

Complexity (and speed) significantly increase

uncertainty to the decision-making process.

the challenge and the need for a much deeper

Also, if the flock image was dynamic, moving

analysis.

rather than still, it would take the complexity to

Finally, I would like to offer a sequence of

a higher level yet. Greater complexity requires

steps and a framework that encapsulates the

higher granularity of the attributes for us to be

end-to-end process, from analytical thinking to

able to be more certain, or even conclusive, in

decision making. Not all steps and suggestions

our response. The table to the right illustrates

are applicable in all situations; however, these

a synopsis of the attributes needed to come

represent a pretty complete set of directional activities to follow and choose from:

leadership essentials

Focus at all times on the business objectives and deliverables

think & plan in advance What, Why, How

Before starting any activities, answer the following questions: specific and short

start with the end in mind Reverse Engineering

turn activities into tasks One deliverable at a time

Divide activities into discrete deliverables; is presents several advantages:

People expect leaders to make decisions; never procrastinate, be decisive

drive decisions swiftly

•

Establish the objectives

•

Determine milestones and deadlines

•

Set the measures that allow you to track progress

•

Whats is the purpose?

•

What do I want to achieve?

•

How do I know I will be successful?

•

Are there any constraints or considerations?

•

Delivers “quick wins“, thus building morale and momentum

•

Progress tracking better and faster; thus avoiding last minute “surprises“

•

Increases focus and flexibility, as well as drives clearer accountability on deliverables

•

Decisions may involve conflicts or dissatisfactions: leadership is not a “popularity contest“

•

Work on building this skill unitl it becomes (like for any skills) “second nature“

•

Avoid paralysis-by-analysis: people expect leaders to make decisions

Stay Focused

Focus on Deliverables, not Activities

“Design Shop“ approach: drives significant effectiveness

Decision making requires intentionality

decision making process 1. 2. 3.

Define exactly the decision to make

Identify the principles that guide your decision

Brainstorm about possible alternatives: diverge first

Evaluate each choice in terms of value and consequences

Converge fast on the decision, including mitigating factors

Put the decision into actions, monitor it, adjust fast if/as needed

Communicate, communitcate, communicate

leadership essentials

Chapter Vi - business transformation

leadership essentials

Section 01

Change Management Several models help guide change management. Each has some merit. One of the better-known archetypes is the 8-step model illustrated below. Different articulations of this model exist.

Benefits are defined and recipients identified Sponsorhip, and leadership are aligned A case for change helps people understand the What, the Why, and the How A strong vision that engages people emotionally

leadership essentials

Internal stakeholders are engaged through change “ambassadors“

People have the right skills and knowledge

Change is managed proactively and plans are in place

leadership essentials

Roles and responsabilities are clearly defined and objectives and budgets aligned

The model below (Kotter’s 8-Step Change Model), built around eight steps too, articulates similar concepts in a slightly different way:

Establish Sense of Urgency

Create the Guiding Coalition

Develop Vision and Strategy

Communicate the Vision

Empower Broad Based Action

Generate Short Term Wins

Consolidate & Produce More Change

Anchor New Approaches in Culture

leadership essentials

1-4: The Climate for Change

5-7: Execution & New Practices

8: Integration & Culture Change

A few words stand out and recur consistently

for my personal and professional growth.

through change management: vision, people engagement, sense of urgency, clear objectives

It starts with strategic intent and principles

and benefits, “ambassadors,” communication,

which, together with keeping things as simple

alignment, early wins.

as possible, act as our guiding “North Star”:

As always in leadership (and leadership skills), the challenge resides only partially in what we do. Instead, our effectiveness largely depends on how we drive, execute, and sequence our work.

Create the climate for change – Engage and Envision

Lead the change personally– Energize and Enable

Operationalize the change – Execute with excellence

Sometimes the hard way, I have learned that the sequence of our activities matters a lot. The “last mile,” or attention to the executional

You will notice the 5 E’s of Leadership represented here. This is not a coincidence, as

excellence of details, makes a huge difference.

the foundational leadership skills are precisely

My organization at Procter & Gamble became

drive the business and the organization.

known for managing change extremely well. I credit that to the talent and professionalism of the people I had the privilege to work with, as well as the model we followed with great discipline.

that: building blocks that support the way we

For each one of those three major stages or building blocks, there are a few additional and more granular suggestions on how to manage change to maximize business impact and the probability of success.

The model illustrated on the following page is the result of my personal experience (as is true of everything in this manual) and the many and sometimes radical changes I have had the opportunity to manage – including several mistakes I made, which proved instrumental

leadership essentials

1. Create the Climate for Change: Engage

Bring out your best emotional intelligence

and Envision

for this step. Make it compelling for them by articulating the value that the change

Create and communicate the future state in a

will bring from their vantage point: what’s

compelling way. Everything starts here.

in it for them. We all want to do what is right for the business, but we also have our

Successful change requires that people contribute their best, which in turn happens when they feel actively involved. Change must be executed with them, not “to them.” When

individual objectives and goals to deliver. In any organization, there is always some healthy tension between those.

the latter occurs, results are suboptimal at

Create a coalition of people who share your

best: our human nature primes us to wait for

vision. Start small and invest in them, so they

change “to happen” or even to play passive

feel as committed and passionate as you.

resistance. This is a recipe for failure.

Then, reinforce the messages consistently and communicate intentionally.

A very effective way to communicate the future state is by painting a picture of it.

Set and manage the expectations. Avoid

Storytelling is a very effective technique to

making it look easy to avoid the initial hurdles;

that end. Combining metaphors, images,

it may make the first steps easier, but it will

and analogies with a rational and number-

most likely backfire as soon as the change you

based explanation of the need for change is a

are driving faces issues.

powerful combination. Avoid also the opposite: underpromising and It is important that the leader leads from the

overdelivering. This is a terrible managerial

front at this stage, setting clear objectives and

style. If your management is not close to your

measurable goals. Finally, I recommend being

business, that may make you look good for

upfront about the challenges and “what-

a short time. However, your results will never

has-to-be-true” to succeed. These could be

be great, and sooner rather than later it will

resources, investments, new technologies or

become evident. Also, your organization will

capabilities, or organizational change. Every

not grow and perform at its best.

time I failed to do so, thus lowering the bar of Stay balanced. Set ambitious but realistic

what is needed to succeed, I regretted it.

expectations on cost, deliverables, and timing. You may also notice the recurring theme

Early on, develop and deploy strategies and

of starting with the end-in-mind: Align key

organizational plans. Invest quality time in

stakeholders on that and win their support

dialogue (in small and mid-size groups, as

as much as possible. It will make change a lot

appropriate), and engage the key people

smoother and remove potential roadblocks

personally. Remember, nothing replaces a

that might emerge.

1-to-1 conversation.

leadership essentials

2. Lead the change: Energize and Enable

Sequencing that way is a strategic choice. However, there is also another school of

Establish a leadership team with a strong sense

thought. Some people believe that starting

of accountability. While accountability will

with the most complex part of the project

(hopefully) extend to several more people, it is

scope will make the rest easier, once

paramount at the leadership team level.

successfully delivered. Conceptually, that is

Without it, not much will happen. The more complex and extensive the change is – number of organizations involved, business

true. Yet, I have very rarely seen this latter approach work. I belong to the first school of thought.

processes, geographies, etc. – the more

Be transparent about possible adjustments

critical accountability is. Accountability is very

during the project (scope, timing, etc.), and

different from orchestration. Sometimes, I

communicate those immediately. Stay in

have seen the two confused with dangerous

touch, be accessible, and act with a sense of

consequences.

urgency.

Choose the right and best people for the

Keep the pace throughout. Many programs

leadership team. It is not easy because those

get off to a strong start, then lose traction.

people are in demand and not sitting on the

There may be several reasons, including lack

bench. This is one of the conditions you need

of a compelling vision, weak value proposition,

to establish. Do not compromise.

or insufficient communication, as discussed

Develop a granular project plan with dates and gates, and clear roles and responsibilities. Establish taskforces/teams with broad

above. However, in several cases, I have seen loss of momentum due to project delays, glitches of various nature, and growing confusion.

representations across organizations. Build momentum with early successes. The proverbial saying “think big, implement small” holds true and is always valid. Identify early

Every time I led or have been part of a breakthrough change process, a key pillar has been a sense of urgency in execution.

wins to build momentum; success breeds

Common wisdom suggests that speed and

success.

quality are in conflict, so we must choose

I have seen – and experienced – failures due to scope creep. No matter the elephant’s size, there is one best (and only) way to eat it: one bite at a time. If your change involves

between the two. My experience is quite the opposite. Speed, supported by a rigorous project plan and escalation process, drives better quality.

multiple phases across several markets,

Remove possible roadblocks and ensure a

businesses, systems, or processes, start with

swift follow-up on any delays or misses. This is

the easiest one. Build the skills, know-how, and

a highly effective way to sustain momentum.

experience, then expand progressively to the more challenging areas of the project. leadership essentials

Story time

During my tenure in Latin America in the mid ‘90’s, I initiated the conversion of our legacy ERP systems (finance, order-to-cash, distribution, etc) to SAP. The project was massive and the change significant, as it involved major business processes and technology transformation. The scope included the entire Latin American market in which Procter & Gamble operated (over ten Countries, from Mexico and Puerto Rico to Brazil, Argentina and Chile), across most SAP modules. The organization was extremely talented, but pretty junior and with no experience of SAP or change management processes. Net, it was a huge undertaking and challenge. The entire program was completed in a record two years time. What’s more, all the data centers in Latin America (one in each country) were virtually shut down; users in Latin America access the SAP application in the US. At that time, this was a technology breakthrough. The tribute goes first and foremost to the people. However, our approach also played an instrumental role. The markets were very different in size and complexity. Mexico was the largest business at that time and therefore the risk profile, had we faced issues, the highest. Brazil was, as it is now, a very complex market, highly legislated, to the extent that SAP had a version tailored for it. We didn’t start there. We started with one of the simplest market, and where the majority of the resources resided: Venezuela. It was a successful implementation and, most importantly, a great learning ground. People involved in that phase led the roll-out in Columbia and Peru, where local resources joined the project and acquired know-how. On the heels of these successes, the “snowball” (the way we nicknamed this approach) of experienced resources and business support continued to grow. When we finally tackled Brazil and Maxico, we had acquired significant expertise and business knowledge. The entire execution was totally flawless. Admittedly, the approach came out of some wise intuition. I didn’t know any better and my experience too was limited. I learned a strategic element of change management, and ever since have applied this model rigorously. This has been a key ingredient of how we have managed extremely complex changes with high-quality outcomes.

leadership essentials

By contrast, when it takes days to intervene,

3. Operationalize the change: Execute with

make the necessary adjustments, or fix

Excellence

problems, the project timeline extends, and Design for behavioral change. Many

interest fades.

transformation programs go well initially, The critical enabler is a granular project plan

behind strong focus, adequate investments,

with dates and gates, detailed deliverables,

and support from the stakeholders.

and people in charge.

However, shortly after, they fall back to the old model, processes, or habits. The issue

It is worth investing time in it because it

is the sustainability of the changes being

saves a lot of time later. In my best and most

implemented.

successful change management projects, the escalation cycle was within a few hours, and

When this happens, the organization will

accountability for the individual tasks was

grow skeptical about the leader’s ability to

extremely clear. That made all the difference.

truly drive change. If this happens a few times, people may even become cynical, which is a very negative state of mind in an organization. Throughout the program’s implementation, I recommend repeatedly stating the behaviors that are expected in an ongoing fashion to sustain the change. Our ultimate objective is to shape the culture needed to solidify what was implemented; culture results from behaviors. Recognize and reward when cultural changes are achieved; make these celebrations visible. Identify interdependencies across the organization as those too, if not properly managed, could derail what has been accomplished. Drive accountability and trust. Hardwire systems and processes, as these establish the new operating model and practices and enforce the new way of working. A good question to ask ourselves is: What are the core capabilities that enable and support the change being made? Identify them early on, as it may take time to build. Some or most of them may already be in place, but chances

leadership essentials

are new capabilities will be needed. These

performance at a new level of rigor. All these

could be new skills, areas of expertise, forms of

capabilities are critical to managing BPO

collaboration, etc. Be intentional in identifying

agreements effectively. In fact, many BPO deals

and building the required capabilities.

fail due to a lack of these processes. I attribute much of our success with our BPO strategy

When we pursued the business process

to the builtout of these new organization

outsourcing (BPO) strategy, we had to develop

capabilities.

the know-how to negotiate and operate complex BPO contracts. We also had to put

Finally, invest time to establish and validate

in place a governance structure to manage

key performance tracking metrics. The saying

the commercial relationship with the new

goes that “we get what we measure.” Having

partners. Finally, we had to track and measure

the right performance metrics is critical to tracking both progress and goals.

Change Announced Anger

Denial

Shock

Holding On, Fighting, Desintegration

leadership essentials

Reward, learn, and renew. Establish

Review what is working and what is not, and

recognition programs to reinforce the results

do so more frequently at the beginning.

achieved from the change. The nature of the

Make adjustments quickly and as soon as

celebrations depend on the company’s specific

needed to maintain a sense of urgency. If any

culture, but generally, the more broad-based

opportunities for further improvements are

the participation, the better.

identified, communicate openly what they are and why, and iterate immediately. An organizational culture that values learning is a great asset and something that a leader should aspire to create.

Acceptance

Bargaining Testing

Depression

Letting go

moving on, reintegration

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Regardless of the model or approach we may

Another source of fear originates from

follow in change management, the “people”

doubting our ability to operate in the new

aspect is by far the most critical. It determines

environment as effectively as before.

whether the implementation of the change will This lack of self-confidence or self-esteem

succeed or fail.

is difficult for us to admit, even to ourselves. The vast majority of people have difficulty

As a result, we express concerns about other

with change. Some of the reasons are well

aspects of the change. This is especially true

known: discomfort with the unknown and the

if the change brings a transformation that

uncertainty that change brings; if the change

implies new and different skills to acquire.

entails a reorganization, there may be fear of job loss; or resentment for a change being

The chart below illustrates the emotional cycle

“forced”, and more.

we typically go through when confronted with change. When we are in a leadership position,

These are understandable human reactions;

it is important to remember that a long cycle

however, they may lead to some form of

time may exacerbate these natural dynamics,

passive or active resistance. People may

ultimately hampering the change we want to

stand on the “sideline,” waiting for a change

bring about.

to happen instead of being active players in making it happen. The result, at best, is a lack of passion and participation; at worst, people will look for ways to prove the change wrong. It goes without saying that this should be avoided at any cost. Involving people early on, communicating frequently, providing detailed explanations about the reasons for change and addressing all the people-related considerations discussed above are essential tasks of a leader.

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“In change management, regardless of the model or approach we may follow, the ‘people’ aspect is by far the most critical”

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1 Create The Climate For Change

Create and Communicate the Compelling Future State •

Paint the picture (using storytelling), ‘lead from the front‘

•

Set clear objectives and measurable goals

•

Be upfront about the challenges and ‘what has to be true‘ to succeed

engage & envision

Organize Change Effort •

Establish a lead team with strong accountability for results, with the right/ best people (don’t compromise)

Lead

•

Develop a granular project plan with dates & gates, and clear roles & responsabilities

•

Define task forces/teams with broad representation across organizations

The Change energize & enable

3 Operationalize The Change

Design for Behavior Change •

Declare the behaviors (culture) needed to sustain the change, recognize and reward when achieved

•

Identify interdependencies across the organization, drive accountability and trust

execute

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leadership essentials

Align Key Stakeholders

Set and Manage the Expectations

•

Make it compelling, articulate the (personal) value for all stakeholders involved

•

Set clear expectations on resource requirements, cost, deliverables, and timing

•

Create a coalition of people who share your vision

•

Invest quality time in dialogue, engage the key people 1-to-1

•

Reinforce the messages consistently, communicate intentionally

•

Develop and deploy early on strategies and organizational plans

Build Momentum with Early Successes

Keep the Pace Throughout

•

‘Think big, implement small‘: identify early successes to build momentum (‘success breads success‘)

•

Establish a rigorous escalation process, follow up immediately on any delays or misses

•

Be transparent about possible changes (scope, timing, etc.), communicate those immediately

•

Leverage the lead team as ambassadors (messages, behaviors, commitments)

Stay in touch, be accessible, act with sense of urgency

•

Remove immediately possible roadblocks, sustain momentum, keep communicating

Hardwire Systems & Processes

Reward, Learn and Renew

•

Identitfy and build the core capabilities, system and processes (critical to avoid relapses)

•

Establish recognition programs for a period, to reinforce the changes achieved

•

Invest time to establish and validate key tracking metrics (highly relevant for the initial objectivis and goals)

•

Review what is working and what is not, make adjustments quickly as soon as needed

•

If opportunities for further improvements, communicate and iterate immediately

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Section 02

Going Digital The word “digital” has become increasingly

As is true for everything in this manual, the

popular over the last several years, in particular

objective is not to introduce a new theory or

in its association with Transformation, Lean,

look at a specific application of digital. My goal

Technology, Customer, etc.

is to offer a few models and frameworks that have worked well for me and hopefully can be

I have noticed that people have very different

reapplied.

understandings and definitions of what digital is all about. The spectrum is quite broad,

Two of those that are particularly relevant are

ranging from online business with customers

the digital journey and digitization of business

to automation of manual tasks, digitization of

processes. The latter is applicable pretty much

the value chain, analytics, etc.

across any industry sector and company size, and something that generates value almost certainly – that is, a pretty sure win.

opportunity identification

value proposition

2 technology solution

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4 stakeholders engagement

The digital journey is, of course, built upon change management and presents some similar elements (e.g., stakeholder engagement, communications plan, etc.), but it also has elements unique to the digital realm. We can take a look at both:

1. Digital Journey: It can be schematically represented in the steps below:

communications plan

proposition validation

6 agile development

8 operations & scale

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I will illustrate each step in terms of what is

I will keep it short and focused, using a “dos

most critical and the related success factors,

and donts’” approach:

based on my experience.

opportunity identification

technology solution

•

Intersection of what’s relevant for the business & doable

•

Technology is an enabler, rarely (if ever) a “silver bullet”

•

Identify a progressive business partner, or one who needs change

•

Choose a proven technology; try something new only if truly worth it

•

Do you need an early win(s) to build credibility?

•

Never assume that better technology = better business results.

Concrete opportunities reside at the intersection of what’s relevant for the business and what we can realistically deliver. I experienced situations where the business opportunity was significant, but the conditions were not in place to make a meaningful impact; or we had strong capabilities, but our business partners didn’t deem the intervention worthwhile. Both situations lead to frustration and waste of resources. Hitting that sweet spot it’s critical. Identify an internal business partner with whom to collaborate, who is progressive and open to new possibilities. Or someone who needs change to her business and therefore is willing to lean forwad. It could be a business unit, market, or a function who needs a major intervention. This is important because your business partner must be fully committed and invested, as much as you are. Assess the credibility of your organization – as well as your own. If it is not yet at the level it needs to be, and you need to further build it, plan for early wins. This is especially important if the majority of the value of the project comes at a later stage. Like for any change, we must avoind losing momentum and fatigue. Early wins keep energy and morale high.

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leadership essentials

Technology can be an important catalyst for digital tranformation. It may provide the “reason to believe” that a step-change is possible. However, avoid over-dependency on it. First, technology is rarely the key differentiator; many more varialbles determine the success or otherwise of a digital project, including transition, adoption, cultural changes, etc. All these are needed to deliver better business results. Secondly, technology, especially if new, may or not materialize the way we were expecting and anticipating. Look first at technology you may already have – check for sufficiency, not for perfection – or a proven one anyway.

value proposition •

This is the core of any successful digital projects; be “obsessed“ by it

•

Articulate it clearly, in a compelling and simple way (before/after picture)

•

Talk business language and business value, don’t emphasize technology

•

Show (at least high level) the transition and business risk mitigation plan

stakeholders engagement

This is possibly the most important aspect of change management, and for digital transformation projects even more so. Of course, this is critical to decide whether the investment is worth it, but also to get the necessary traction and support in the organization.

•

Identify the key stakeholders: business partners, people who benefit from digital innovation, those who are affected or threatened by it,...

•

Nothing replaces one-to-one conversations; be prepared to repeat yourself multiple times

•

Create “ambassadors“ who can repeat your message consistently and with passion

It’s definitely worth thinking who the key stakeholdrs are and, truly, listing them. As the next step, I recommend developing a message per each one of them.

When asking for approval of a capital investment or resource allocation, it’s important to focus the discussion on value rather than cost. The latter “enables” delivery of the project objectives (hence the notion of “investment). When cost becomes the focal point, it’s very difficult to progress passed that. For digital tranformation projects, being a relatively newer domain, it’s even more important to articulate the value propostion. Typically the main vectors are cycle-time acceleration (e.g. speed of products or services to market); elimination of unnecessary touch points in business processes, leading to productivity increase (this is of course where new technologies play a key roel); new capabilities for the business (e.g. analytics and big data). In all cases, the value proposition can be expressed through financial measures (Net Present Value, Return on the Investment, etc), but also in other ways, such us time to market, empoloyee capacity freed up, etc. What matters the most is that the value be intuitive, simple to illustrate and undertand. leadership essentials

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agile development

communication plan •

Develop a holistic communication plan: audiences, content, frequency, success measures

•

Build messages for the different audiences, at different levels (“elevator conversation”)

•

Use short and memorable “mantras” to articulate the business value

A well-thought and well-planned communication plan should be managed like a project: Goals, tasks, deadlines, deliverables, success measures. “Storytelling” is a very good tool to make the message memorable. I also suggest thinking of a few, simple soundbites that people can easily relate to and remember. This is a good way to build a sense of common purpose. Finally, I recommend developing the message in different formats: For example, a 30-second “elevator pitch”, a 5-minute conversation, and a longer and more formal presentation. The benefit of this approach, in addition to having a “tool box” ready for different venues and situations, is that it forces us to distill and articulate clearly the critical points.

•

Maximize probability of success by building iteratively

•

Frequently validate alignment with the business to avoid “false positives”

•

Start with a mockup, then an MVP, a prototype, and a pilot project

Agile development has become very popular over the last few years, and for very valid reasons. While the variety of definitions and executions is pretty broad, the idea and intent are simple and compelling: To reduce the risk profile, of both the project and the investment, by iterating and building out the deliverable progressively – that is, as supposed to a “big bang”. Therefore, the key elements are frequent and regular validation with stakeholders and decision-makers at each stage of development. This way, if there is any dis-alignment on expectations – value proposition, functionalities of the solution, scope, timing, or any other critical factor – we can either promptly rectify, or stop the project before further investments are made. If we are to fail, we better fail cheap. The stages at which to validate the work vary by project. However, I recommend more frequent iterations at the beginning to ensure the project is set on the right course. Starting with simple drawings or an initial mock-up of the solution is, in my experience, a very good thing to do.

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leadership essentials

proposition validation

operation and scale

•

Be prepared to adjust the initial solution (technology and processes) multiple times, if needed

•

Make sure that all the elements of the value proposition are connected

•

Listen for any possible concerns from your business partners; each detail matters

•

Make sure that business model is cohesive and will deliver the expected value

This step is about validating the results of the pilot project. Our objective, at this stage, is to avoid a false positive before we scale and deploy broadly: if the expected value proposition is confirmed by the pilot, and as a result we rollout full-scale but the results don’t come, the implications could be seriously damaging (costs, efforts, resources, and of course credibility). Therefore, rigor is of paramount importance.

•

Many digital projects fail for lack of discipline in execution and the “last mile”

•

Deploy in stages, if possible, starting from the easiest (success breeds success)

•

Invest quality time in monitoring and following-up on results; report on them

Many projects do well for a period of time, then fade away, when old processes and habits return. A digital transformation journey is not any different, in this respect, than what’s required in change management. However, if anything, it’s worth going a step further here in making sure we operationalize the change we have implemented, because most digital solutions require also a cultural change. Therefore, following-up for a period of time, until we are positive of no risk of relapse, is highly advisable.

The critical aspects here are quality and accuracy of the success measures, as well as our ability to listen for any possible concerns from the stakeholders involved. These could be usability of the solution, performance, perceived discrepancy with the initial value proposition, and expectations. Any detail, no matter how small, deserves maximum attention.

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Chapter Vii - Innovation Framework

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Section 01

Foundational Elements Innovation is exciting and vital in a number of

I am not pretending to “invent” anything new

ways. Almost every generation believes that:

here (in fact, I hope I will not). I just intend to offer a few models and frameworks for

1) It has been through rapid and

thinking through innovation based on my

unprecedented innovation in its lifetime;

experience. Innovation has been the lifeblood

2) Innovation at such a rapid pace is not

of the professional culture in which I grew up

sustainable and therefore is poised to slow

and has always been top of mind.

down. Hopefully, the following content will aid our In addition to that, different people have

ability to innovate even more effectively.

different understandings of innovation, and how it differs from invention, ideation, creativity, or about disruptive innovation, incremental innovation, etc.

“Og discovered fire, and Thorak invented the wheel. There’s nothing left for us.“

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leadership essentials

The chart below illustrates the difference

new way of performing a task, something

between the various categorizations of

that fulfills a need or desire, and more. In all

innovation. What stands out for innovation,

cases, it must speak to the target recipient’s

unlike invention or creativity, for example,

heart and/or mind, who therefore finds it

is the notion of value. Innovation is about

compelling.

creating value. This can come in a variety of ways, but in all cases, it has to be something

Often we think of innovation in physical

relevant and meaningful for the customer.

products because it is more evident and immediately visible. However, in a business

Value can materialize in higher performance of

context, it is fascinating to consider and

a product, better experience in its utilization,

explore innovation in additional and broader

broader affordability of an existing product,

dimensions: innovation in services, business

lower cost, new capabilities, a compelling

models, user experience, work processes, better ways to commercialize a product, etc.

framework

Creativity use of imagination to create something (typically from an original idea)

Imagination

Improvement retention of the original characteristics while enhancing some features

Better

invention creation of a novel product (service) that brings a new utility

Patent

innovation implementation of a novel idea that creates value

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Value

114

Below are some of the most commmon types of innovation domains:

Offering

Develop innovative new products or services

platform

Use common components or building blocks to create derivative offerings

solutions

Create integral and customized offerings that solve end-to-end customer problems

Processes

Redesign core operating processes to improve efficiency and effectiveness

customer experience

Redesign customer interactions across all touch points and all moments of contact

organization

Change form, function or activity scope of the firm

While most of us are not in a position to

I strongly encourage all of us to develop an

directly innovate our company’s products,

innovation mindset and learn the necessary

there is a lot we can do in the other areas.

skills.

Process innovation, for example, offers remarkable opportunities to penetrate how our

The innovation process, or funnel, illustrated in

company operates and impact the business.

the chart on the next page, is fairly typical.

It is also something that we all can influence, at minimum within the scope of the work we manage. Solution innovation forces us to stretch our thinking by starting with the customer problem that we want to solve for. Finally, organizational innovation can be a great enabler for business transformation.

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leadership essentials

the innovation funnel

Opportunity Search

Discover Idea Generation

Concept Framing

Prototype & Test

Pilot

Design

Qualify

Commercial Plan

Ready

Launch

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116

The intent is to filter several possibilities

In markets where an offering has reached

through a rigorous selection process, to

full penetration, the market is saturated, and

get a high degree of confidence about

de facto new prospective customers lack,

the proposition, so that it stands a strong

innovation is critical to continue to increase

chance of success when it goes to market.

revenues year in, year out. Under these

Conceptually, the larger the funnel of possible

circumstances, we can continue to grow

innovation ideas at the start, the higher the

the topline by increasing the price of each

probability of ending with something viable

individual unit even if we are limited by the

and relevant. Of course, each industry and

total number of units that can sell. Innovative

business sector follow different filtering

products are required to support higher

criteria and must comply with differing

pricing under constant economic conditions.

requirements in the ideation-to-innovation process. However, the framework holds valid

One of the few other ways to keep increasing

throughout.

revenues in similar market conditions is winning market shares from competitors. Here,

It is also worth reflecting on the importance

too, we need a better offering or comparable

of innovation for the business. That is, as an

offering at a lower price.

engine for growth. That is why innovation is at the core of the For several companies, it is at the core of

business model of many companies.

their business model. Innovation is one of the enablers of premium pricing. A price increase

Several terms and definitions surround

is never easy to justify or make acceptable in

innovation, forming a jargon which at times

the market; better performance of the good

may be confusing. In the following section,

or service, richer functionalities, and a more

we outline a few of the most frequent

engaging or pleasant user experience help

characterizations of innovation:

support the claim that it warrants the premium price.

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leadership essentials

1. Sustaining and Disruptive Innovation:

2. Closed versus Open Innovation

Sustaining innovation consists of incremental

in a “closed walls” fashion to protect their

Until not long ago, companies operated

improvements to the existing core functions of an offering. That is, improvements that focus on making it better to match/stay ahead of the competition or create the impetus to replace something we already have, thus generating new purchases. For example, new smartphone models are typically in this category.

intellectual property and innovation pipeline from competitors. Some still work this way, but many bring innovation in from the outside in various forms. This is referred to as “open innovation.” Open innovation comes with some risk, The extent to which we publicly share our areas

In the case of processes internal to a company, these will be better, faster, cheaper ways to run

of interest and where we seek ideas is a fine line to walk. However, the upside is significant:

the business, but not a true transformation.

we de facto expand our research and

Disruptive innovation involves substantial

constraints of our organization -- including

changes that create a new business or a new

skills, budget, up-to-date know-how, and

basis to compete in existing markets. Changes

expertise.

can be in technology, business models,

development capacity and reach beyond the

processes, cost structure, etc.

Closed and open innovation can be compared

These result in a significant discontinuity

next page.

and contrasted, as shown in the chart on the

vis-a-vis the existing offering or in the way of performing a (new) task to satisfy a new customer’s need. The invention of the smartphone and tablet products fall into this definition.

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118

CLOSED

OPEN

Smart people in our field work for us; employees in our company

We need to work with smart people both inside and outside our company

To profit from R&D, we must discover new things and develop new products

We are open to external R&D; it can create significant value

If we invest in the best research in the industry, we will win

We can benefit from research originated outside of our company

If we create most of the best ideas in the industry, we will win

If we make the best use of internal and external ideas, we will win

We should control and own our innovation process so that we keep it closed and insulated from competitors

We should profit from others’ use of our innovations and consider others’ intellectual property (IP)

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leadership essentials

3. Design Thinking

As we saw in the Innovation Funnel, ideation

Innovation happens when three factors come

inspiration fuels ideation. Iteration intersects

is at the beginning of the process, and

together: relevance for customers, financial viability, and technological feasibility. Design Thinking is a series of steps that help design meaningful solutions at the intersection of

uman) (H

Viab i

which has become broadly adopted – for good reasons – in the fast-paced and complex world in which we operate. At the core of iteration and Agile Development is prototyping. It can be defined as any expression of an idea that tests or explores

lit

B us y(

innovation

iness)

Desirabili ty

desirability, feasibility, and viability.

with the Agile Developmemnt methodology,

assumptions. The idea can be a product, a process change, a new organizational structure, and so on. Prototyping is a wonderful tool for innovation as well as change management. The risk that we want to mitigate presents, in both processes, several similarities: in the event

al)

ic ibil ity (Techn

of failure, better “fail cheaply” and learn a lot. Hence, the need to initially limit the scope: invest in small-scale experimentation

The Design Thinking process starts by

to validate the hypotheses while building

assessing people’s needs or customercentered design. It is rooted in an empathic and intuitive process, which relies on our ability to recognize patterns and construct ideas that resonate emotionally and rationally.

capabilities. Prototyping has tremendously helped my organization and me personally. It has enabled faster validation of innovative ideas through digital mock-ups, as well as representation of

Design Thinking is based on learning by doing. It is experimental and experiential and can be broken up into three distinct phases:

the final solution through working models. We were able to get feedback from our business partners early on and, as a result, improve

Inspiration

or discontinue the initiative swiftly before

Ideation

investing too much, thus reducing the risk

Iteration

profile.

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Section 02

Frugal Innovation Frugal Innovation is an extremely interesting

For our purposes here, our interest is in the

and fascinating model. It brings innovation

approach, mindset, and business philosophy

to market at mind-boggling low cost by

that enable such extraordinary results. That will

leveraging innovating thinking, creative

be the focus of this section.

transfer of technologies across industries, and Frugal Innovation is a replicable model that

scale.

my organization and I significantly benefitted Created initially in India, it can be wrongly

from. Below I have outlined a few case studies:

dismissed as just the result of lower labor costs in developing markets. That would

First case study: The Nano car, by Tata, was

be a superficial conclusion. It is, in fact, an

developed with the goal of a selling price of

articulated and sophisticated model that goes

USD 2,500. This is over 75% less than the cost

beyond mere cost-cutting.

of some of the best-selling cars of their time (when controlled for inflation), as the chart below illustrates

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Model T $19,700

ford

Beetle $11,333

volkswagen

Mini $11,777

british motor corp.

Nano $2,500

tata motors

leadership essentials

Several aspects of this business model make it

Each component has a dual functionality (e.g., Seat riser serving as a mounting for the seat as well as a structural part for functional rigidity)

Half the number of parts compared to

extremely interesting and, more importantly, replicable in numerous contexts, including process changes. First, we have rigorous scope definition and

typical passenger car; length smaller

management. Scope creep is one of the

by 8% than the current entry-level

reasons for cost overages, delays, and possibly

cars, but 21% more space inside

the dilution of the offering or process we want I had the pleasure to test-drive the Nano

to innovate.

at the Tata manufacturing facilities in Pune, Then, we have the definition of the aspirational

India. It drives very nicely. It is comfortable

goal. The Nano car’s goal was not “to produce

and equipped with all the safety requirements

a car at the lowest possible cost” or even “give

without any compromises. In keeping with the

millions of people access to an affordable car.”

project’s intent, scope, and goal, it lacks A/C, a

Rather, it was articulated as replacing two and

sunroof, a radio, and other features.

three-wheelers in India with weather-resistant vehicles. This aspirational goal is magnificent:

Second case study: A second case study is a

Not mentioning “car” increases the latitude for

baby warmer machine for the Indian market.

creativity and innovation; setting what it aims

The application of the Frugal Innovation model

to replace establishes the target selling price.

and approach is different here than the Nano car example but equally effective .

Finally, starting with the end-in-mind triggers reverse-engineering to get to the deliverable

Over the last decades, innovation developed

and new possibilities of innovation. As we can

for western markets has typically been

see below, the dramatic low cost originates

commercialized for developing markets by

from an entirely new and innovative approach,

removing some expensive features.

well beyond cost-cutting. For example: 1.

The intent is to lower the cost to make the

The first use of a two-cylinder gas engine in a car with a single balancer shaft

price of the offering affordable.

Co-creation with vendors and suppliers (e.g., 100 vendors colocated adjacent to the Nano plant)

a baby warmer was developed for Indian

Below is the step-by-step process by which hospitals using Frugal Innovation .

Seeking solutions from non-auto sectors (e.g., mechanism from helicopter seats and windows, dashboard inspired by two-wheelers) leadership essentials

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1) In the first iteration, the manufacturer started with the baby warmer it had developed for and was selling in its western markets (picture 1). The height is adjustable and it enfolds the baby completely, on all sides and the top. It is accessible for doctors and nurses to reach the baby. The warming lamp is integrated into the machine to maximize efficiency. It is too expensive for the India mass market.

2) In the second iteration, the manufacturer eliminated some features to reduce the cost (picture 2). The top cover is removed and the baby looks less protected (though still safe). The cart on which the baby warmer is mounted is separate from the bassinet, and the height is not adjustable. The warming lamp is now separate. It still is too expensive.

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3) Third iteration. Further reduction of features and material (picture 3). The warmer is now minimalistic, but still does its job. The price is still to high.

4) At this stage the manufacturer changes paradigm and turns the approach upsidedown. It starts from the bare minimum of what is needed for a baby incubator (picture 4). It is not pretty looking, but functionally efficient and sufficient for what is needed. This way the manufacturer establishes a price floor. If still too high, the offering is not viable in the market. If the price is acceptable, the question becomes: How much can we improve it by adding features, and still remain within the required price range? The change is substantial and can be summarized as follows: From innovating by “subtracting” to innovating by “adding,” once the minimum requirements are set.

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The Frugal Innovation model is relevant and

Like everything in business, if we can play to

applicable to a variety of projects: Process

our strengths, we do better. Each of us has an

re-engineering, new system roll-outs, and

aptitude best suited for one (or more) of the

upgrades to new technologies. If we establish

different innovation roles or personas. Below

the minimum needed to create value, as

is an illustration of some of the most frequent

opposed to all-encompassing solutions, and

personas and their attributes.

build out from there, we generate innovative possibilities and results.

the anthropologist

the experimenter

the cross-pollinator

the hurdler

the storyteller 125

•

Observes how people interact with products, services, and experiences

•

Reframes problems in a new way

•

Observes with an open mind, empathy, and intuition

•

Sees things that have gone unnoticed

•

Keeps lists of innovative concepts worth emulating

•

Seeks inspiration in unusual places

•

Celebrates the process, not the tool

•

Tests and retests potential scenarios to make ideas tangible

•

Takes calculated risks

•

Models products and services to efficiently reach a solution

•

Shares the fun of discovery

•

Draws connections between unrelated ideas or concepts to break new ground

•

Shows a wide set of interests, curiosity, and an aptitude for learning

•

Brings in big ideas from the outside world

•

Shows open-mindedness

•

Thinks in metaphors

•

A problem-solver who tries to do something that has never been done before

•

When confronted with a challenge maintains a quiet, positive determination

•

Shows optimism and perseverance

•

Changes the status quo

•

Turns errors into opportunities and ultimately, successes

•

Captures the imagination with compelling narratives, hard work, and innovative ideas

•

Uses both oral narrative and other mediums: video, animation, comic strips.

•

Activates emotion and action

•

Transmits values and objectives

•

Helps collaboration leadership essentials

Innovation is both a journey and a destination. I have noticed that a common characteristic of effective innovators is the ability to find inspiration from constraints. This is both an attitude and an aptitude worth cultivating.

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Chapter ViiI - business management

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Section 01

Framework There are several recurring words in the

At a high level, my mental picture of the

business language: Strategies, business model,

business framework can be summarized in the

goals, objectives, mission, vision, operating

visual below:

model, and business plan are probably the most frequent ones. This chapter intends to illustrate the specific role that each of these business elements plays and their interdependencies.

Business Models

sin

Strategy Creation

llig

nte

sI es

Innovation

& s

tic aly

Digital Technology

World & Business Trends

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Starting from the bottom: The forces and

products and services, thinking of innovation

trends that impact the world in which

more expansively opens up unlimited

we operate must be identified, and their

possibilities for transformative processes and

implications must be understood.

models.

As discussed earlier, context matters.

No business can succeed without the right

Strategies, goals, business models, and other

strategies. In my experience, a lack of well-

components cannot exist in isolation from the

thought-out strategies is one of the primary

reality of the world’s major influencers. These

reasons businesses fail.

may – and often do – have a material impact on our business choices, plans, and aspirations.

Lack of timely realization of relevant changes in the market, whether customer needs,

It is worth noting how, from a different angle,

preferences, or competitive landscape, also

this reaffirms the importance of contextual

have a significant impact. Numerous examples

intelligence and staying in the moment.

of companies that have been too slow to

By paying unwavering attention to what is

detect the need for new strategies, and

happening in our environment (markets,

promptly devise them, are before our eyes.

competition, technology, economy, social trends, customer habits), we can set the right

There are also other causes for insufficient

course, stay in control, respond quickly to

or incomplete strategies. One of the most

change, and anticipate what is coming.

common is the lack of the leaders’ knowhow about formulating good strategies. It is

Moving to the second layer, digital

interesting to see how often strategies are

technology’s role in shaping the business has

confused with business plans, objectives, or

constantly been growing. It is often credited

generic aspirations. As is true of anything,

as the driver of competitive advantage. In

possessing the skills and know-how is a

reality, most of the time it is the result of an

prerequisite for success.

innovative, winning business model, with This is the subject of the next chapter. I will

technology as the enabler.

then provide an overview of business models, We have already talked about innovation.

where everything comes together and where

It is worth emphasizing, in the context of

the customer value proposition materializes.

this framework, the interdependency with strategies, as well as the applicability of innovation to business models. Going beyond

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Section 02

Strategy Model Numerous valid approaches exist to strategy

That is why the definition of a good strategy is

creation. All of them have some merit and

the ability to create winning choices.

improve the probability of devising good strategies. However, the one described

In illustrating this strategy model, I will go

below, created by the Monitor Company, is,

through the following sequence:

in my experience, most effective: It forces the necessary intellectual rigor to produce strong outcomes. Procter & Gamble adopted it over 30 years ago and has used it ever since. Several other companies also apply this model, and in all the cases that I know of, it has contributed significantly to formulating effective strategies. The model’s premise is that building strong

a. The overall strategy/framework (5 block model) b. The sequence of steps to make strategic choices:

• A simple strategic analysis • The typical strategy process • The suggested process: choice structuring

strategies is about making winning choices. Therefore, if there is no choice to be made because, by default, there is only one thing we

c. Attributes of a high-quality strategic choices and their obstacles

can do, there is no strategy to begin with. This concept may sound a bit abstract or simplistic. Both perceptions are valid. The truth is that a simple axiom is of paramount importance: Many strategies fail because (the required) choices are not made, and therefore the outcome is a weak or non-existent strategy. Other times, we think we developed a new strategy when we had no other choice in reality.

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1. The Framework This visual illustrates the strategy model. In this section, we will briefly discuss the five blocks that make it up.

strategy = winning choices

What is winning? What are winning goals?

Where to play?

How to win?

What core capabilities or strengths are required to win?

Which people, organization, process and measures enable winning execution?

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A company’s strategy is defined by the

This is time well spent and worth investing:

multiple and varied choices of where to play

Once what constitutes winning is well defined,

and how to win.

it represents the “North Star.” It follows that broad, aspirational goals, such as growing the

Where to play refers primarily to the

business, generating a profit, etc., are far too

geographies, customer segments, distribution

generic. Again, clarity and specificity of the

channels, and product lines in which the

strategic choices start here.

company chooses to compete. The bottom two building blocks support the

How to win are those choices that differentiate

where to play and how to win strategies:

the company’s products or services versus

Capabilities and systems, organization and

its competitors, thus providing a competitive advantage. In other words, the elements that make the customer choose the company’s

processes. The former makes the strategies sustainable in the long haul; the latter supports execution and operations.

products or services. These are the two

Even good strategies fail due to a lack of

core blocks of the model and the strategies

robust processes and systems that support

themselves.

ongoing performance.

The first block is about a clear and crisp

Tracking in-progress results to make swift

definition of success. That is, what is winning

adjustments if something goes off track is part

or, in other words, what is the aspirational

of these foundational blocks.

goal? This articulation must be very precise. It may take a while to crystallize the right concept and words. This should happen through an iterative dialogue among all the people involved. In this process, given its importance and variety of possibilities, it is wise to allow time to diverge before converging.

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2. Sequence of steps An initial strategic analysis that can inform more detailed strategy work is represented in these four quadrants:

Simple strategic analysis

Industry Attractiveness

Value Equation

•

Which segments?

•

Which channels?

•

How structurally attractive?

•

How customer value?

Competitive Position

•

What are the capability advantages?

•

What is real cost comparison?

Competitor Reaction

•

How will competitors react?

Reflecting on these questions and gathering

These questions are not always sufficient

the necessary data to answer them may be

to secure a robust strategy foundation, but

highly informative and productive. These seven

they are necessary. Here as well, I would

questions point to the essential variables that

recommend having quality and deep

robust strategies must address unequivocally

discussions within the team. In some cases, we

and precisely.

can only hypothesize (e.g., the competitor’s reaction) or develop scenarios to be further validated (e.g., customer value, segments). But this is a great starting point.

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In moving onto the sequence of steps to make strategy choices – that is, choice structuring – it is interesting to contrast and compare the typical process to the one suggested by the model we are illustrating. The difference is subtle yet profound:

typical process

Study Lots of Things

Broad, ambiguous direction to work team

Review Findings

Binders of data produced

Develop Options

Pressure to converge on doable options

Forecast Financials

Focus on producing attractive financial projections

Seek Alignment of Key Managers

Many meetings before the “real meeting“

Put a Fine Polish on It

Lots of compromises made

Seek Approval of Senior Management

Sell, sell, sell

Iterate

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The typical choice-making process focuses on

Often pre-meetings take place to gain

generating management buy-in to execute

alignment, where compromises are made

the plan. The team works on studying lots of

to finally pitch a plan that took lots of time

things – in most cases without a clear plan and

and energy to generate. This process is not

lacking direction. Lots of data is generated.

advisable.

Findings are translated into options, which are then evaluated for their financial merits.

The alternative is choice structuring, as illustrated below:

the process of strategy

Issues

Barriers exist

5. Design Valid Tests

1. Frame Choice

Convert issues into at least two mutually independent options that moght resolve the issue

2. Brainstorm Possible Options

Broaden the list to ensure consideration of an inclusive list of options

3. Specify Conditions

For each option, specify the conditions which must hold true for the option to be a good strategic move

4. Identify Barriers to Choices

Determine which of the conditions you feel least confident constitute a barrier

No barriers, or barriers addressed with existing data

6. Conduct Analysis

7. Make Choice

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For each key barrier, design a test that is deemed valid and suficient for generating commitment Conduct hypothesis-driven analysis, testing the conditions with the lowest confidence first Review analytical tests against key conditions and make informed choices

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• Step 1: An issue is framed as a choice

The upper flow leads to our position in the

between at least two mutually exclusive

market (types of segments, distribution

alternatives, that can address the issue

channels, our capabilities). The lower layer

or capitalize on the opportunity. Make

leads to our position vis-à-vis the customer

sure you consider out-of-the-box

(attractiveness of the segments in terms of

alternatives.

size and growth, customer preferences, cost structure).

• Step 2: Broaden the possible

alternatives. Options should be inclusive and diverse. Break down generic options into specific options that are more

INDUSTRY ANALYSIS

VALUE ANALYSIS

Segmentation

Channel

What are the strategically distinct segments?

What attributes constitute channel value?

Structure

End-Customer

How structurally attractive are the segments?

What attributes constitute endcustomer value?

actionable.

• Step 3: Create an exhaustive list of

conditions that people on the team would have to accept to believe each option is valid. Each condition should be necessary.

• Step 4: Identification of the conditions leads to possible barriers that must be overcome for the choice to be viable. To uncover sooner rather than later possible show-stoppers, start with the most demanding ones.

• Step 5-6-7: If there is no barrier, or if

the barriers can be overcome, the choice is valid and viable.

Between steps 3 and 4, reverse-engineering techniques come in very handy. An excellent question to ask ourselves is, “what has to

be true for this condition to hold true and, therefore, for the option to be a good strategic move?” This question forces intellectual clarity and drives alignment within the team. The visual on the right shows the reverse engineering technique applied to the strategic analysis model illustrated at the beginning of this chapter.

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ANALYSIS OF RELATIVE POSITION

COMPETITOR ANALYSIS

STRATEGIC CHOICE

Capabilities

How do our capabilities stack up against competitors?

Position A with Advantage Y

Prediction

How will competitors react to our actions?

Or...

Costs

How do our costs stack up against competitors?

Postion B with Advantage Z

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3. Attributes of high-quality choices Finally, we will analyze what makes a choice a high-quality one. First, the primary strategic choices are exclusive. A decision to go in one direction

By contrast, these are some of the main obstacles to good strategies: 1.

Choices are not properly framed or are not sound – the logic applied is substandard;

The process of getting to the choices takes too long. As a result, the choice is no longer valid; it has become obsolete or has lost some traction in the organization.

precludes setting off in another. If multiple options can be pursued simultaneously, we are not pursuing a proper strategic choice. A few additional criteria to keep in mind for a high-quality choice:

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It must be made between at least two viable options;

It must specify what the company will and will not do as a consequence;

It is the product of sound logic applied to accurate data, which must be broad and valid. This implies thorough planning of the data needed and how to source them;

It has to be easily communicated to different audiences and at different levels of detail. A good and simple way to think about that is a 30-second “elevator pitch,” a 3-minute conversation, and a 20-minute presentation;

Some steps can be taken immediately. Strategies lose momentum if nothing happens relatively soon from the time they are announced – the expectations built in the organization may be disappointed, resulting in diminishing support.

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4. Illustrative case study

What option do we have?

Let us use a plausible case study to exemplify

We can reduce our prices to match those

the deployment of the strategy model.

of competitors or could stay the course by

Your company, Gamma & Iota (G&I), is

former case, we would impact our margins and

moving into a niche/premium segment. In the profit if we fail to change our cost structure.

facing pricing pressure. A growing number of competitors are coming up with products

In the latter scenario, we will most likely

(or services) of comparable performance

end up with lower sales. Therefore, while

at 15-25% lower prices. Market shares are

these options address the business issue,

eroding. Worse still, the market is pretty much saturated.

both of them present significant downsides.

It is worth noting that the need for new

required to make them acceptable.

An intervention to our operating model is

strategies often manifests itself as a business issue. Although devising new strategies when in a position of strength would be far more effective, the reality is that companies often respond to a crisis. Of course, we have a significant issue. Consider how the strategy model unfolds:

Issues

1. Frame Choice

Convert issues into at least two mutually independent options that moght resolve the issue

2. Brainstorm Possible Options

3. Specify Conditions Barriers exist

5. Design Valid Tests

4. Identify Barriers to Choices

No barriers, or barriers addressed with exisiting data

6. Conduct Analysis

7. Make Choice

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We should consider other options to have a

Now we can specify (in a simplified way) the

more inclusive list. What else could we do?

conditions that must be true for each option to be a good strategic choice. As you may recall,

We could launch new products (or services),

this is the reverse-engineering process, which

try to grow the market, or even enter

is very powerful in establishing intellectual

into new markets. All these options could

rigor.

compensate for the volume and topline loss that our business will likely face under current circumstances.

Issues

Also, we now have five options in total, which

2. Brainstorm Possible Options

make for a pretty good variety of alternatives. For each option, specify the conditions which must hold true for the option to be a good strategic move

Barriers exist Issues Broaden the list to ensure consideration of an inclusive list of options

Barriers exist

5. Design Valid Tests

1. Frame Choice

2. Brainstorm Possible Options

5. Design Valid Tests

3. Specify Conditions

6. Conduct Analysis

4. Identify Barriers to Choices

3. Specify Conditions

4. Identify Barriers to Choices

No barriers, or barriers addressed with existing data

7. Make Choice

No barriers, or barriers addressed with existing data

6. Conduct Analysis

7. Make Choice

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1. Frame Choice

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Option 1: Lowering prices to match those of

Option 2: Hold our prices and become a

competitors.

premium brand.

Can we develop a new activity system capable

Will the lower sales volume and the resulting

of operating at an overall lower cost, to secure

lower scale of operations deliver comparable

the same or comparable profit margins? Will

business results? How big is the premium

our production processes, R&D, and overhead

market, and do our products (or services) have

expenses support that? The answers to these

a strong enough equity to perform in that

questions are not immediate or obvious. We

segment?

need data to validate this option. Here too, this leads us to the question, “what By asking ourselves, “what has to be true for

has to be true for us to qualify our products (or

that to be possible?”, we reverse-engineer the

services) as premium, or expand that customer

required actions based on the end objective,

segment?” We have a viable strategy if we can

and we envision alternative models for labor

overcome the possible barriers and answer this

and materials cost, a leaner organization

(reverse-engineering) question satisfactorily.

structure, etc. Then, based on valid and

Otherwise, we will have to eliminate this

complete data, we can perform scenario

possible choice too.

analyses and simulations of the new activity system. Only then will we be in a position

This process continues until we find the most

to conclude with a high degree of certainty

promising strategic choice among those we

which choice is best. Otherwise, we are not

have identified. It is systemic, based on sound

discussing facts but opinions - a potential

logic, rigorous, data-based.

pitfall for strategies. If, in the end, all the obstacles can be overcome and the conditions satisfied, we have a viable strategic choice. Otherwise, this option must be eliminated.

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5. Responding to digital disruption

Block Strategy

Milk Strategy

We see an increasing number of companies

Invest in Disruption Strategy

under pressure from competitors who leverage

Disrupt the Current Business Strategy

digital technology to develop innovative

Retreat into a Niche Strategy

Redefine the Core Strategy

Exit Strategy

business models. The music, photography, and video industries are just some examples of the radical disruption and transformation we have seen in the more recent times.

From a timing standpoint, the graph below illustrates at which stage the different

Therefore, if our business faces digital

strategies are most impactful and effective.

disruption, how can we respond? Seven strategies documented by the IMD business school are worth considering in such cases. Let us look at each one, their applicability, pros and cons, and best timing for each, as well as a few classic examples:

MI LK

EST INV

E EFIN RED

T RETREA

EXIT

DISR UPT

Strategic Focus

BLOC K

when to implement the 7 strategies

Time Disruptive threat is recognized

Disruption begins

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Core business is disrupted 146

Block Strategy

Milk Strategy

defintion

examples

advantages

Use all means to inhibit the disruptor: patent infringement, copyright infringement, get regulators to ban them, etc,

Music (Napster), payments industry (Paypal)

Relatively low costs to preserve markets. Builds on current strengths and relationships. Can be very effective.

Apple iPhone, Nespresso

Core business can be profitable for much longer if managed carefully.

Microsoft (Skype, Minecraft), Cisco, Amazon

Prepare for the disruption head on. Avoids the need for strong internal innovation.

Try to extract as much value from the core business while preparing for the inevitable. Three components: 1. Harvest: maintain margins as high as you can for as long as you can, 2.

Elevate: Add features and promote brand to raise the perception of value for the average consumer, 3.

Invest in Disrutption Strategy

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Rationalize: plan for coming cuts and layoffs and be prepared to execute them when required.

Invest in the disruptive threat. These investments may include investing in technology, capabilities, processes, and perhaps acquiring companies with the disruptive skills, knowledge, and technologies. This strategy includes investing in adjacent areas.

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disadvantages

timing

implementation tips

Only a short to medium term solution. Buying time before the inevitable.

Implement strategy as soon as the disruptor becomes visible

Take advantage of relationship with industry regulators and other stakeholders. Unload a legal firestorm – the disruptor is probably small and poor

Hard to maintain value over time. Cannot work forever. Need to build a strong brand. Must know when to ‘cut bait’. Can be demotivating for people involved in ‘dead man walking’ core

Implement strategy immediately and maintain for as long as possible.

Strong brand promotion. Strong brands can protect against superior products or ‘good enough’ products at lower prices. Prepare plans for retreat and be prepared to implement them when core starts inevitable decline.

Will not be popular with the legacy core. Sometimes hard to spot winners. Can be expensive with uncertain payback. Integration can be tricky.

Must start immediately, in conjunction with Milk and Block strategies.

Build sensing capability. Develop a rigorous process to evaluate new acquisitions. Do not be afraid to ramp up quickly or kill quickly.

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Disrupt the Current Business Strategy

Retreat Into A Niche Strategy

Redefine The Core Strategy

Exit Strategy

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defintion

examples

advantages

Launch a product or service that competes directly with the disruptor. Use natural advantages, such as size, knowledge, brand, relationships to build shares in the new business.

Intel (Celeron chip), Apple, Amazon (Kindle app), Netflix (Streaming)

Better to cannibalize yourself than for someone else to do it.

Accept that the core is lost to the mainstream market and serve a niche market that still desires legacy products or services. Focus on quality.

Kodak, travel agents (complex travel itineraries)

Smaller, niche markets can still be profitable. You have the capabilities to complete and win.

Build an entirely new business model, typically building on skills, knowledge, and competences from your core business.

Fujifilm (moving into cosmetics), IBM (moving into consulting)

No longer constrained by disruption to core business

Recognize failure, exit the business (ideally through acquisition), return capital to shareholders

MySpace, Blockbuster, Borders, Radioshack

No use flogging a dead horse. Use capital more effectively elsewhere.

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disadvantages

timing

implementation tips

Will cannibalize your core business and speed up decline. Will cause extensive internal pain.

Timing is crucial: too early and risk unnecessary cannibalization, too late and risk failure.

Use a different brand to make comparison less obvious for consumers. Take great care over timing.

Size of market is much smaller. You will need to massively downsize.

Wait until the core has deteriorated, then move quickly to establish niche position.

Identify clear niche positions where it is hard for the disruptor to compete. Build a strong brand associated with quality and luxury.

Very hard to do! Need to develop new capabilities, redesign the organization, and compete in a business you know little about

Can move any time you are ready, but normally after deterioration of the core.

Learn about new business, perhaps through partnership or acquisition. Show no mercy with those loyal to old core.

Exit before it is too late and there is no value left to capture.

Look for a friendly acquirer while you still have some value left. Maintain strength in the brand – it may be the most valuable remaining asset!

The company ceases to exist!

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Section 03

Business Performance Tracking Business performance measures can be divided

It goes without saying that positive surprises

into two broad categories: business results and

are better than negative ones (e.g., we

in-progress measures towards those results.

generated better results than we had forecasted, as supposed to lower). However,

The former is typically the business goals

to the extent the variation came unexpectedly,

we set out to achieve; the latter constitutes

there are reasons to be concerned about why

the indicators that allow us to monitor any

that happened and therefore intervene in our

deviations from our plans in order to intervene

business monitoring systems.

and course-correct in a timely fashion. There are several tools to track the Any “surprise” in business results signals that

performance of our business, both for business

our business tracking is not sufficient or not

goals and KPIs. The frequency of monitoring

accurate. In other words, we are not in full

is determined by the specific measures. It

control of what is happening in the business at

could be daily (e.g., sales, production units),

the required granularity, timing, or relevance

weekly (e.g., state of development of a project,

of key performance indicators (KPIs).

demand forecasting), or monthly or quarterly (e.g., financial results, new hires, attrition rate).

Objectives...

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Goals must flow from the objectives

Whichever tool we decide to adopt amongst

One tool I find complete and useful is the

the many available, we must use one

OGSM: Objectives, Goals, Strategies, and

consistently. Of course, the tool’s validity is

Measures. Many Fortune 500 companies use

only as good as the quality of the data we use

it. It brings together those four key elements

to populate it. Also, many businesses struggle

into one single document. This is very helpful

because of the disconnect between the goals

in two ways:

and the measures – that is, the measures do not “add up” to the goals or are not the right

Everything is in one place. It’s scalable and drives consistency across the entire business performance tracking;

It connects the measures to the strategies, thus ensuring sufficiency (or otherwise) that these will deliver on the goals.

ones to timely detect what is happening in the business. The scorecard is possibly the most common tool for measurement monitoring (i.e., KPIs). Color coding has become a popular feature of the scorecards to get a quick, visual view of how the business is performing. More

Another advantage of the OGSM is its cascading structure, which enables a systemic

broadly, data visualization (of which color coding is the most basic expression) has grown significantly in popularity, both in terms of new technologies and tools, as well as in adoption.

deployment down the organization of the corporate goals and strategies. This is how it works:

OKRs (Objectives, Key Results) is an effective and widely used tool, especially for personal objectives. The idea is to summarize goals and commitment to results.

Strategies must flow from the goals

Measures must identify how the strategies achieve the stated goals

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The table below illustrates the content definition of each one of the four elements:

Objectives

form

•

The specific results we need to achieve our objective

•

A specific and actionable definition of what ‘success’ actually looks like

Objectives should be fairly intuitive and simple.

•

Must be S.M.A.R.T. (specific, measurable, actionable, realistic, time-bound)

Words

•

Numbers/Dates

•

What we need/want to fulfill mandate or mission

•

Based on Mission & Visions, Yearly cycle, Key Priorities statements

•

defined

Goals

Objectives and Strategies are expressed in

KPIs and Measures are often referred to

words. Goals and Measures are numerical and

interchangeably. At a high level, that is

must be measurable. This implies full clarity

probably fair enough. However, we should

and precision on what we want to accomplish

think of the KPIs as metrics. That is, the

and by when.

business indicators we choose to track, which are monitored through the Measures.

For example, a Goal expressed as “revenue growth by 5%” is not a well-defined goal

As a result, the OGSM model typically has

because it does not specify by when – unless it

several measures per Goal. So, for example,

is implicit (e.g., in this fiscal year).

if the goal is to increase revenues by 5% in the current year, measures may include daily

The Measures must be granular and specific,

tracking of customer orders, weekly delivery

so to highlight if critical performance

of the products or services, and monthly

indicators are going off track. They are meant

monitoring of financial results (invoices issued,

to confirm that the business is performing

receivables, etc.).

as planned or alert us that an intervention is required. In this case, the sooner we know and take action to correct the course, the better. As we said earlier, every time we are surprised by unexpected results, it is a sign that our performance measures are weak or incomplete. 153

leadership essentials

Strategies

Measures •

How will we know if our strategies are working, and thus if we are achieving our goals

•

How we will achieve our goals

•

Must drive actions. Often take the form of programs

•

Must make a specific decision/choice or it is not a strategy

Simple and quantifiable. Need data collection

•

Serve as the basis for evaluating performance of the organization and individually

•

Words

•

Numbers

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154

The Goals should be limited in number to

Objectives are often associated with

ensure focus on what truly matters for the

vision statements. While there are

business. There is a high risk of dilution and

similarities between the two, an objective

distraction when we set too many goals. The

represents what we aspire to be, be

typical OGSM structure is illustrated in the

seen, or be recognized for. These should

visual below.

express our purpose and be motivational and aspirational for the people in our

The Strategies typically start with a verb

organization.

(although this is not a requirement per se). That is because verbs indicate actions, which is what the strategies are all about – “to increase…”, “to improve…”, “to expand…”, “to grow….”.

Company-level

one-level down

two-levels down

three-levels down

155

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Finally, the chart below depicts how the OGSM model enables deployment throughout the organization:

The Strategies and Measures at level X

the organization rolls up to the higher levels’

(expressed in words and numbers respectively)

objectives, goals, and strategies.

become the Objective and Goals at level X-1 (objectives and goals are also expressed in

Of course, this is not about a dogmatic or

words and numbers).

prescriptive word-by-word execution, but a strong alignment of priorities and work at all

Through this cascading model, we make sure

levels.

of consistency and that the work throughout 157

leadership essentials

M M

M M M

M M

M M M

M M

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159

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