Friday, September 8, 2017

The Ambidextrous Leader

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Conference Board (https://www.conference-board.org) reports an alarming churn at the top of the largest corporations. In the first fifteen years of this century, almost 25% of CEO departures from the Fortune 500 companies have been reported as being involuntary.

A PwC report on the 2,500 largest companies denotes the huge cost of forced turnover – a mind-boggling $112 billion loss in market value annually.

Leaders today are under enormous pressure to perform. Short-term orientation is all pervasive, and no one appears to have the time to think about the long-term. Activists and major investors want to see the performance on a daily basis. Even a little deviation from the projections can have catastrophic consequences. Whistleblowers appear to have found a new voice and also the media to spread the message like wildfire. Sometimes, the distinction between the messenger and the message is blurred to the point of irrelevance. Add to all this the constant search for breaking news, the ever expanding reach of social media, and the propensity for alternative facts to spread faster than the speed of thought, and you have the perfect recipe for disaster at every step.

Charles O’Reilly and Michael Tushman wrote in 2004 (HBR, April 2004) about the ambidextrous organization – an organization simultaneously capable of exploiting the present and inventing the future. In recent times, Vijay Govindarajan has added a third dimension in his Three Box Solution (HBR Press, 2016) - jettisoning the irrelevant past

Today, there appears to be a dire need for ambidextrous leaders.

On the one hand, leaders need to be decisive – about everything from disruption to diversity to sexual harassment. If you look at classical decision-making models, they have many steps involved. Information gathering, analyzing alternatives, and thinking through the consequences can all consume precious time. Snap decisions based mostly on intuition may be fashionable but can have serious repercussions.

On the other, leaders need to be good listeners. You can never predict where good news (or bad news, for that matter) is likely to emanate. Even harder to predict is the impact of time on how you respond to the news.

Here is the paradox. With honorable exceptions, decisive leaders are not good listeners. Those who have the patience and the attitude to listen, and to filter out the noise, tend to be ambivalent, waiting for any extra bit of information that might improve the outcome. In other words, listeners are not expected to be decisive in ways that many stakeholders seem to interpret the trait.

In their excellent HBR article (What Sets Successful CEOs Apart; HBR; May-June 2017), Elena Lytkina Botelho et al. suggest four guiding principles:

Deciding with speed and conviction – 12 times more likely to be high-performing CEOs.

Engaging for impact – deftly engaging with stakeholders results in success being higher by 75%.

Adapting proactively – 6.7 times more likely to succeed than those who focus only on the short-term.

Delivering consistently – those who scored high on reliability were 15 times more likely to succeed as CEOs than those who could not keep the promise.

Or look at it another way.

HBR publishes an annual ranking of the best performing CEOs in the world. The model uses a combination of sustained performance (total shareholder return and market capitalization) and sustainability measures (environmental, social, and governance performance). Long-term financial performance is weighted at 80% and ESG performance at 20%.

Guess who were the top three in 2016?

1.    LARS REBIEN SORENSEN, NOVO NORDISK.

2.    MARTIN SORRELL, WPP.

3.    PABLO ISSA, INDITEX.

If you are wondering why these star performers are not in the news, you are not alone.

Perhaps it is time for the leaders of unicorns to take a closer look at what they are trying to achieve, beyond short-term gains.
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1 comment:

  1. Not being in the news means doing the right thing. CEO get attention in the news if it is about them and not the company.

    ReplyDelete