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Knowledge Area Review: Executive Team Best Practices July 2012
Knowledge Area Review: Executive Team Best Practices July 2012
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2 Approach and Summary List of • Framework used to guide research and structure document
Insights
• Summary of Insights, organised by Topic
3 Detailed Insights and Case Examples • Collection of 1-2 page summaries based on available research, that
o Explain key insight
o Identify potential proof points / benchmarks
o Cite relevant case example
4 Supporting Material • Potentially useful charts & illustrations supporting some of the
insights from Section 3
5 Relevant Extracts from ICG Industry • Selected articles from the last 12 months of ICG Industry Insights
Insights Reviews Reviews
The importance of an emotional connection in creating a strong executive team identity cannot be understated; for example, BCG
cited the example of a large bank at which key executives needed to first “get it” before championing the change cause. In a
similar vein, former eBay CEO Meg Whitman talks about how building trust and camaraderie is essential to a well functioning
executive team
HBR gives GE, Johnson & Johnson and others as examples of companies with a reputation for turning out strong leaders that
embody the organisation’s value propositions to customers and stakeholders; the 5 steps required to do so are laid out
Royal Bank of Canada and Pulte Homes are given as examples of organisations where values such as teamwork, mutual respect,
morality and work ethic are modeled to the rest of the organization in order to create a culture of success
The concept of championing innovation and learning, citing Barclays Global Investors and General Electric as examples, is explained
as being critical to formulating strategies and creating value, particularly for technology-driven companies
Finally, this topic closes with an HBR tool that helps organisations assess their own leadership branding capability as a precursor to
further work in this area
An HBR article discussing the building of a Leadership Brand argues that the fundamentals of “Leadership Code” need to first be
mastered by Executive Team members. In particular, four elements of the “Leadership Code” should be key components of any
Induction or Leadership Development program
As part of a broader BCG paper on the subject of “Adaptive” Leadership Teams, the authors argue that the CEO can play a critical
role in setting the appropriate context with Executive Team members to drive winning adaptive behavior
We then turn to Bank of America, who have developed a best-in-class Executive Induction program, comprising five distinct
elements. Furthermore, three key assumptions are at play in the successful delivery of an onboarding process, namely (a) having
multiple interventions over the first 12-18 months, (b) supported by high-quality interactions with (c) multiple stakeholder
resources. (Refer Section 4 for additional detail) 5
This topic opens with an older but highly relevant Bain case study on St. George Bank, in which former CEO Gail Kelly’s efforts to
underpin a major change initiative with effective communications are laid out in detail
We then refer to a London Business School case study of the major transformation at Royal Bank of Canada, which made heavy
use of “Leadership Dialogues” between the Executive Team and middle management. These sessions served to open up two-way
awareness and engagement as a precursor to a major change initiative
3M is a company long known for its prowess in innovation – an article in Organisational Dynamics argues that this trait has been
ingrained in the company’s culture through both Executive and peer-to-peer communication from the beginning, enabling creativity
and effectively creating a strategic asset in the process
Finally, in a reversal of the typical flow of communication, HBR hears from Frank Hassan, the former CEO of Schering-Plough on
how he created a culture of “Leading from the Front” to leverage the valuable input of frontline managers. He also lays out 3 steps
for enabling effective dialogue between the CEO and the frontline.
We begin by looking at BCG’s work with the Royal Bank of Canada and how leadership imperatives were aligned at all levels of the
organisation. In particular, the authors advocate using high performance teams of leaders to drive urgency, stocking the talent
pipeline with future leaders and investing in middle management
Booz analyses Google as an example of mobilising the “informal organisation” in order to drive responsiveness, listing some of the
ways that Google does this
We then turn to an older but still relevant research note from Harvard on Building and Leading Senior teams, where two ideas are
explored, namely ‘Managing Paradox’ to get the most out of teams and the power of ‘Splitting Decision Making’ across two groups
to improve outcomes
Cisco Systems is cited by Booz as an example of a company with a strong talent culture, in particular lauding its use of “Action
Learning Forums” as a mechanism to focus top talent on issues that matter for the organisation, often facilitating organisational 6
breakthroughs in the process
Booz recently released a paper on “Unleashing the Power of Teams” which discusses the 5 practices critical to the success of senior
leadership team workshops, citing the experience of a consumer products company in some detail
Finally, BCG’s work on the power of Role Charters is referenced, in particular their usefulness in clarifying decision rights and
boosting collaboration. A role charter template is given
We open with some sage McKinsey advice on focusing the senior team only on the issues where they are uniquely positioned to
add value, citing the example of a European consumer goods company to illustrate this. In particular, Executive Teams should be
focused on projects requiring cross-functional or cross-regional collaboration; the rest can be delegated and managed using clear
performance indicators
We return to the Royal Bank of Canada transformation example, as analysed by the London Business School, to explore how CEO
Gord Nixon branded the change effort, defined a measurable goal and clarified accountabilities in support of the project
Nissan is next analysed by Booz as an example of setting “Purposeful Initiatives”, in other words, a sequence of high-priority
campaigns that reinforce each other and, importantly, are linked back to a central purpose that is core to the organisation’s values
and overall strategy
We then explore an in-depth review of how Countrywide Financial revamped its strategic planning process. Key findings included
the importance of making planning a corporate priority, linkages across organisational units and dividing responsibility between an
“executive committee” vs. a “managing directorate”
Harvard’s Robert Kaplan makes the case for having an “Office of Strategic Management” to orchestrate strategy management
processes for the executive team, with key responsibilities including “architect”, “process owner” and “integrator”
We close this section with some practical tips from Bain on keeping meetings focused on decisions and actions, generated from
client interviews
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We return to the Royal Bank of Canada example, this time to highlight the importance of measuring progress at each, small step of
a major program or major change effort. A central Project or Transformation Management Office (TMO) can be quite helpful in this
regard
An insightful Harvard Business Review piece then guides us through the five traps of performance management with some specific
ideas on how to avoid them. Furthermore, we see how companies such as Avon, Humana, a European Investment Bank, Clifford
Chance, Southwest Airlines and others benefit from tweaks to their performance management metrics and management systems
Booz then looks at Aetna, Bell Canada and Campbells as examples of companies where “soft” initiatives were employed to deliver
“hard” results. At Aetna, “employee councils” were used to create emotional commitment to a significant change initiative. At Bell,
a “community of practice” was created organically to motivate employees. At Campbells, performance targets were tied to simple,
precise practices that all could relate to.
McKinsey outlines a blueprint for a Performance Dashboard, useful in particular on large-scale capital projects. At one glance, the
Dashboard can demonstrate critical path, cost projections, risk mitigation strategies, mini-projects and progress to date
Financial Insights then looks at Performance Management at a number of European Banks, identifying four distinct evolutionary
models, namely “Enterprise Performance Kings”, “Technology Engineers”, “Scorecard Wizards” and “Spreadsheet Warriors”
We then look at the case study of Old National Bankcorp and how it used a new performance management capability to strengthen
its risk profile, enhance management discipline and achieve consistent, quality returns
“Net Promoter Score” can be a very useful metric for measuring customer advocacy; an American Express case study is highlighted
in a Strategy & Leadership article
Finally, we look again to a Bain case study on St. George Bank where a new set of performance metrics and tracking measures
were implemented
An extensive McKinsey Global Survey on competitive response lists the most common information types gathered on competitors,
with news reports, industry group/conference analysis and annual reports topping the list. The same study goes on to analyse
responses to competitor moves, noting that in the majority of cases, the response was the single most obvious counteraction.
Finally, in choosing which response to make, companies most often used the lens of long- and short-term market share, followed
by long- and short term earnings or cash flow, as the primary evaluation metric
Another McKinsey white paper outlines the “Competitor-Insight” Loop as best practice in designing a Competitive Intelligence
function, incorporating four key steps which are illustrated in a chart
As part of its work on “Adaptive” leadership, BCG observes that companies’ “Sense and Respond” function needs to be well
developed in order to ensure that key industry developments are anticipated rather than reacted to
Vanguard is an example of a company that used market scanning to observe emerging trends in its industry, allowing them to
identify a unique and sustainable product opportunity
We then look at the example of a major bank and leading debit payment scheme who built a Radar Capability to periodically
update the c-suite with analysis of changes in the competitor pipeline and key trends
Finally, we close with a look at “lite wargaming” to uncover rival strategies, as illustrated by an Australian Insurance company’s
implementation of this type of tool
10
(D)
Setting
Gover-
nance
(B) Structure (G)
Training
Scanning
&
Markets
Inducting (E)
(A) & Rivals (I)
Leaders Setting
Creating Driving
Priorities
Identity & Focus Collabor-
& Brand (C)
Areas (H) ation
Commun-
Choosing
icating &
Engaging Talent &
Effectively
(F) Diversity
Managing
Results &
Perfor- Key Areas of
mance Focus for BNZ
Related topic but
out of scope 11
A5 Model morality, work ethic and performance in order to weave • Pulte Homes Organisational
the fabric of success Dynamics
Honesty and trust go hand in hand, particularly with senior leaders
A6 Champion innovation and learning • Barclays Global Investors Organisational
Support organisational innovation and encourage self-learning • General Electric Dynamics
B1 Master the “Leadership Code” before building a leadership • Canadian Tire HBR
brand
Strategy, Execution, Managing Talent and Personal Proficiency
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C2 Use “Leadership Dialogues” to Communicate and Engage • Royal Bank of Canada Business
Well-structured discussions can lay important groundwork for change Strategy
Review
C4 “Lead from the Front” to Leverage Critical Information from • Schering-Plough HBR
the Frontline
Adopting this mentality can create openness throughout the company
C5 Follow a three step plan for Effective Dialogue between the • Schering-Plough HBR
CEO and the Frontline • Pharmacia-Upjohn
Select participants, organise meetings, share output and follow up • Bausch & Lomb
14
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I) Driving Collaboration
ID Key Insight Case Example Source
I1 Address Team Dynamics and Processes • Latin American McKinsey – Read article
A necessary ingredient of building a top team Insurance Company
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Tap into Executives’ Emotions to Drive Change After losing market share for some years, BigBank (company name
disguised by BCG) needed desperately to grow and to raise profits. The CEO
In situations where change is required, the best laid and board believed the answer lay in cross-selling and in managing costs
plans and performance measures may not be enough more effectively. This strategy demanded unity from the bank’s five highly
to engage senior leaders independent units—units that had operated as classic silos. Internal rivalry
and lack of trust were rampant. So was disrespect, following industry
Instead, an emotional connection, where the executive stereotypes: retail banking saw the investment-banking unit as a capital
“get’s it” and internalises the mandate for change, is hog, with compensation levels disproportionate to its risks; investment
what is required banking felt that retail banking didn’t appreciate the complexities of its
business; and both units believed that the wealth division was paying out
too much to the sales force and not enough to shareholders. Bringing teams
and units together seemed an impossible task. But the CEO was firm: he did
not want to replace senior management. So how did he trigger a change in
behaviour?
Source: ICG Analysis; BCG, “Is Your Team Stuck? Injecting Boldness by
Unlocking Leaders’ Emotions”, April 2012 – Read article
© Internal Consulting Group 2015
Creating Identity/Brand
A1 – Tap Into Emotion To Drive Change (cont’d)
Key Insight Case Example
[cont’d]… At dinner that night, Wilson replayed the video in his mind. He
thought of his son, a talented violinist who was studying at one of the
nation’s top music schools. He remembered the succession of teachers who
had pushed his son to ever-higher standards of excellence—in the process,
dampening his son’s joy and amplifying his fear of making mistakes. As a
father, he had regretted this development. Wilson now realized that his son
needed to aspire once again in order to overcome his fear of failure and be
willing to take risks. It also occurred to Wilson that he himself probably
needed the very same attitude in his own efforts to lead the bank to
success.
As BigBank’s story illustrates, a CEO can incite behaviour change at the top
by developing a strong plan, instituting a new performance-measurement
tool, and linking the resulting measurements to a tangible consequence
(compensation). But there must also be a moment of truth when the
individuals on the team “get it”: when the change they seek becomes a
change in their own understanding and, subsequently, their behaviour.
Without that internalization, would the linkage to compensation have
worked on its own? Or, as is so often the case, would the leaders have
eventually gamed the system, without any real change occurring? At
BigBank, an external intervention (the video) shifted the frame of reference
of just one team member. The change in Wilson’s mindset and performance
ignited a chain reaction. Team discussions—about everything from financial
goals to talent development—shifted from a unit-only focus to a broader
enterprise concern.
22
Source: ICG Analysis; BCG, “Is Your Team Stuck? Injecting Boldness by
Unlocking Leaders’ Emotions”, April 2012 – Read article
© Internal Consulting Group 2015
Creating Identity/Brand
A2 – Adopt a “Coaching” Mentality with Senior Teams
Key Insight Case Example
Adopt a “Coaching” Mentality with Senior Teams Former eBay CEO Meg Whitman on her approach to her Senior Team:
Too often, senior leaders assume that team members “I figured out early that if we were going to work together as a
know how to work together effectively; however, they team we needed to throw the ball around a lot before we could
may not know how to “work it out amongst walk out on the court. So we spent a lot of time together, which
themselves”. was at odds with the pressure to get back to work, check voice
mail, and check e-mail. But I’ve found that throwing the ball
In addition, they may have the technical experience around has been very helpful, because we’re now able to have
but not the human or interpersonal expertise. pretty short and focused discussions, figure out what the point of
views are, and make a decision quickly.”
Therefore, team members
• need guidance and coaching around how to be Despite the intensely time constrained internet mentality, Whitman insisted
effective team members that her team hold two- to four-hour long, weekly management meetings
• need to spend sufficient time with each other to supplemented with periodic all-day retreats. How many executives would
grow and trust each other as a team have agreed to set such a schedule when revenue was growing at a 49%
quarterly rate?
Potential Proof Points / Benchmarks: Similarly, a recent BCG paper, “Winning Practices of Adaptive Leadership
Teams” cited the experience of a hospitality client who benefited from
Hold 2- to 4-hour long weekly management
regular executive team meetings:
meetings
The CEO at a hospitality company cited the importance of weekly
Organise periodic all-day retreats to encourage meetings to agree on objectives. The team meets every Monday
cohesiveness and lay the groundwork for more morning for up to four hours to discuss and reach some level of
productive meetings agreement on operational issues, even if is not full consensus. The
team leaves the room feeling united about the company’s overall
priorities.
23
Source: ICG Analysis; Harvard Business School, “A Note on Building and Leading
your Senior Team”, June 2002, Harvard Business School Note 402-037; “Winning
Practices of Adaptive Leadership Teams”, BCG, 2012 – Read article © Internal Consulting Group 2015
Creating Identity/Brand
A3 – Follow 5 Steps to Create a Leadership Brand
Key Insight Case Example
Follow 5 Steps To Create A Leadership Brand General Electric whose motto is “imagination at work,” is a diversified
company with $163 billion in annual revenue. It is famous for developing
Relatively few companies are able to establish leaders who are dedicated to turning imaginative ideas into leading
leadership brands. You want your leaders to be the products and services. A GE manager can be trusted to be a strong
kind of people who embody the promises your conceptualist as well as a decisive thinker; an inclusive, competent team
company makes to its customers. Leadership brands leader; and a confident expert in his field.
are developed through the following steps:
Johnson & Johnson, whose credo begins, “We believe our first
1. Do the basics of leadership – like setting strategy responsibility is to the doctors, nurses and patients, to mothers and fathers
and grooming talent – well. and all others who use our products and services,” earned $53 billion in
2. Ensure that managers internalize external revenue last year. It is celebrated for developing leaders who provide
constituents’ high expectations of the firm. scientifically sound, high-quality products and services that help heal and
3. Evaluate leaders according to those external cure disease and improve the quality of life. A J&J manager is known for
perspectives. being socially responsible and a stickler for product development and
4. Invest in broad-based leadership development that differentiation. She takes a product to market in a disciplined way; she is
helps managers hone the skills needed to meet committed to building consumer trust, to product quality, and to safety.
customer and investor expectations.
5. Track success at building a leadership brand over “Good help to those in need” is the mission of Bon Secours Health
the long term. System, a non-profit health care firm based in Marriottsville, Maryland, that
operates a variety of hospitals and nursing care facilities. Consistent with its
purpose as a Catholic health care ministry, the 19,000-person organization
Potential Proof Points / Benchmarks develops leaders who put a premium on “reflective integration.” That means
Bon Secours expects its managers to do more than just run health care
Develop a reputation for developing exceptional
units. They must also balance the business of health care with compassion
managers with a distinct set of talents and caring.
Earn trust that employees and managers will
consistently make good on the firm’s promises to
customers and stakeholders
24
Source: ICG Analysis; “Managing for the Long Term – Building a Leadership
Brand”, Harvard Business Review, July-August 2007 – Read article
© Internal Consulting Group 2015
Creating Identity/Brand
A4 – Define The Culture Clearly At The Senior Levels Of The Organisation
Key Insight Case Example
Define the Culture Clearly at the Senior Levels of Gordon Nixon makes a point of escaping Canada's frigid winter each
the Organisation January for a Caribbean cruise. But the excursion is more work than
pleasure for Royal Bank of Canada's chief executive. His 700 fellow
Values such as teamwork and mutual respect need to passengers are RBC tellers, administrative staff, junior employees and
be modelled at the very top of the organisation in middle managers who are being rewarded for superior performance.
order to permeate through the ranks
Mr Nixon joins the cruises to put into practice the teamwork and mutual
In addition, senior executives should not be afraid to respect he has tried to foster among RBC's 73,000 employees in eight years
make changes to their leadership teams in order to at the helm of Canada's biggest bank.
take performance to the next level
As he sees it, that culture has played a crucial role in RBC's ability - rivalled
by only a handful of other large banks - to ride out the storms that have
battered the financial services industry during the past two years.
"We don't tolerate fiefdoms and so forth," Mr Nixon says. "Those are the
sort of things that brought down a lot of organisations."
Potential Proof Points / Benchmarks:
Teamwork and "doing the right thing for the organisation" are non
Hold an annual ‘all expenses paid’-type event
negotiable elements of RBC's culture, Mr Nixon says. "We can have the best
attended by CEO/members of Executive Team to
trader in the world, but if he doesn't comply with the culture and values of
recognise superior performance at junior and
the organisation, we don't want that person being part of the [bank].”
middle levels
Mr Nixon says he is "a great believer in ensuring that you've got the right
Clearly articulate the organisation’s values; ensure
person running your businesses and giving them the rope to make mistakes
this is repeated and demonstrated by
but also to do the right thing". But, he adds: "You can't be afraid to make
CEO/Executive Team
changes even when you've got good people.”
Shuffle the Executive Team regularly (every 2-3
Mr Nixon has shuffled the bank's 10-member executive committee three
years)
times during his eight-year tenure. Several top lieutenants have left. The
former chief operating officer is now head of strategy. She has been
replaced by a 13-strong operating committee. 25
Source: ICG Analysis; “The Capital Gained from Culture; The Chief Executive of
Royal Bank of Canada believes mutual respect and teamwork have helped it ride
out the financial crisis”, Bernard Simon, Financial Times, 17 August 2009 – © Internal Consulting Group 2015
Read article
Creating Identity/Brand
A5 – Model Morality, Work Ethic And Performance
…
Key Insight Case Example
Model morality, work ethic and performance in According to Pulte Homes Inc. executive Bill Rieser, trust enables his
order to weave the fabric of success company to provide excellent customer service and technology-driven
advanced construction processes:
To weave the fabric of success, executives must create
not only financial but also emotional/psychological “When you deal with selling a product such as a home, in our
ownership based on mutual trust and respect. They do industry, we have to build trust. The customer has to trust us to do
this by role modelling high levels of morality, work the job that they want us to do. And we have to trust each other
ethics and performance. that we are going to – as a team – be supportive of each other and
our business. So honesty and trust go together. Integrity and
They also do it by sincerely conveying the goals as well conducting our business with a high level of morality are the things
as the challenges their organizations are facing. In we want to do.”
effect, they translate and communicate their analysis
of the business environment and their consequent
strategic decisions to employees in the organization.
26
Source: ICG Analysis; “Making All the Right Connections: The Strategic
Leadership of Top Executives in High-Tech Organizations”, Sosik et al.,
Organisational Dynamics, 2005 – Read article © Internal Consulting Group 2015
Creating Identity/Brand
A6 – Champion Innovation and Learning
Key Insight Case Example
…
Champion Innovation And Learning Various technology-driven companies we studied … such as Barclays
Global Investors – are using Internet-based systems to connect with key
Innovation and Learning represent intellectual capital stakeholders to gain the advantage on their competitors.
resources that are vital for technology-driven
organizations that wish to be strategically focused … executives are championing innovation, building communities of practice,
and deploying advanced information technology in their organizations.
Executives who display outstanding strategic These initiatives forge their connections with customers, suppliers and
leadership manage creativity and innovation using the business partners.
transformational leadership component of intellectual
stimulation to continually challenge and stretch their For example, Lee Kranefuss of Barclays Global Investors told us:
followers’ ‘‘mental machinery’’ in line with their
strategic objectives. They also manage mistakes, in ‘‘I wanted to create an environment where people felt safe to speak
the sense that they accept appropriate levels of up and challenge me! I didn’t want to be the only driver of
miscues as long as learning is achieved along the way. discussion. I wanted people to think outside the norm and solve
problems creatively. I wanted to create an environment where
people could make decisions without being second-guessed.’’
Potential Proof Points / Benchmarks:
His perspective is in line with Peter Drucker, who has noted that innovation
Actively encourage new, challenging thinking that
will be the core competency of the 21st century.
lies “outside the norm”
… an executive we interviewed from General Electric described it this
Consider mistakes ‘ok’ as long as learning is
way:
achieved along the way; in other words, avoid
creating a “no mistakes culture” that can snuff out ‘‘Basically I look at all problems as opportunities. I try to look at the
innovation glass half full as opposed to half empty . . . if there were no
problems there would be no opportunities and therefore no
Employ creative people who can become a source
inventions.’’
of innovation for the company and help build
intellectual capital In other words, outstanding strategic leadership provides followers with the
infrastructure necessary for creativity and harnesses technology to foster
learning and innovation in their organizations. 27
Source: ICG Analysis; “Making All the Right Connections: The Strategic
Leadership of Top Executives in High-Tech Organizations”, Sosik et al.,
Organisational Dynamics, 2005 – Read article © Internal Consulting Group 2015
Creating Identity/Brand
A7 – Assess Your Organisation’s Leadership Branding Capability
28
Source: “Managing for the Long Term – Building a Leadership Brand”, Harvard
Business Review, July-August 2007 – Read article
© Internal Consulting Group 2015
Training & Inducting Leaders
B1 – Master the “Leadership Code” before building a Leadership Brand
Key Insight Case Example
Master the “Leadership Code” before building a Canadian Tire works to develop executives who demonstrate all the
Leadership Brand prerequisites of leadership. The Toronto-based conglomerate, which had
Can$8.3 billion in revenue last year, regularly assesses the abilities of up-
As a prerequisite to building a leadership brand, and-coming managers in each dimension. Those with the highest potential
leaders must first master what is termed the often have towering strengths but need to be challenged in a completely
Leadership Code: new way in order to grow in other dimensions – or to demonstrate their
1. Master strategy; they need to have a point of view readiness for the next level.
about the future and be able to position the firm for
continued success with customers The company encourages such growth by pushing executives out of their
2. Be able to execute; which means they must be able comfort zone and moving them into new territory. For example, Canadian
to build organizational systems that work, to deliver Tire recently took the CFO of its financial services division and put him in
results, and to make change happen charge of a retail banking pilot. The firm also moved its retail VP of home
3. Manage today’s talent; knowing how to motivate, products into a position as president of the petroleum division. Managing
engage, and communicate with employees. They unfamiliar territory forces executives to learn new skills and not always rely
must also find ways to develop tomorrow’s talent on their core strengths.
and groom employees for future leadership.
4. Show personal proficiency; demonstrating an ability The results-focused CFO, for instance, demonstrated an ability to inspire
to learn, act with integrity, exercise social and and direct a large team during the pilot project. The retail VP had an
emotional intelligence, make bold decisions, and opportunity to build the strategy for an entire stand-alone small business
engender trust. unit and learn how to engage frontline employees. Over time, the most
promising leaders at Canadian Tire will move into assignments that
An individual leader may have a predisposition in some develop all the core skills of leadership.
areas, and should be strong in at least one, but must
demonstrate a high level of competence in all of them. Without excellence in all the fundamentals, leaders can be good, but they
will not be outstanding. Once these basics are established, companies can
Potential Proof Points / Benchmarks: move on to shaping their organization’s leadership brand.
Include the 4 elements of the “Leadership Code” in
any Induction or Leadership Development program
Source: ICG Analysis; “Managing for the Long Term – Building a Leadership
Brand”, Harvard Business Review, July-August 2007 – Read article
© Internal Consulting Group 2015
Training & Inducting Leaders
B2 – Set the Team Context for Adaptation
30
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Communicate Well To Support Major Change Australia’s St.George Bank provides a clear example of how to build a
winning culture. When Gail Kelly became St.George’s CEO in 2002, she
Culture change can be a long journey—and one that recognized immediately that the Sydney-based bank had much more
requires tireless leadership. Consistent, sustained potential than was reflected in its stock price. The new strategy, Kelly
communication of the required behaviours is critical. quickly decided, was to create a strong focus on delivering excellent service
It’s important to celebrate victories—large and small— to customers. That would require preserving the bank’s friendly, outgoing
but never to declare victory outright. culture while introducing a new, more rigorous set of performance-
minded values. It would take firm, decisive leadership, new levels of
accountability and a vision dynamic enough to excite all 8,500 of the bank’s
employees. The key to achieving the change, Kelly knew, was building a
Potential Proof Points / Benchmarks: stronger culture by “working with the grain” of the existing one.
Set expectations about the necessity for change, Energy is Kelly’s personal signature and crucial to her effort at cultural
the type of new culture required and how it will transformation. She relentlessly communicates and celebrates the new ideal
result in success. with big gestures that model new behavior. When Kelly talks about how
St.George had to change, she does so with a clear and gentle analogy: a
Use simple language and/or analogies to help the vine and a trellis. St.George’s passion for the business and its care for its
concept ‘stick’ customers was “a fantastically growing vine” she told employees wherever
they gathered. The trouble was, she said, the bank lacked a firm trellis—the
Align the leadership team around a common vision framework of management, discipline and strategy to keep the vine growing
and required behaviours. Encourage staff to “walk in the right direction. Bigger banks had a rigid trellis but little vine—
the talk” by having CEO and Executive Team first ultimately a weaker position, she said. The key was to build a
do the same themselves trellis to help the vine grow in the right areas and with the right support.
[cont’d]
33
Source: ICG Analysis; “Building a Winning Culture”, Bain & Company, 2006 –
Read article
© Internal Consulting Group 2015
Communicating Effectively
C1 – Communicate Well to Support Major Change (cont’d)
Key Insight Case Example
[cont’d]
These gestures certainly make for good PR. But they also send a powerful
message that the CEO and her team are serious about change. “I’m trying
to show by my behaviour that I am tackling these issues,” Kelly said.
None of these wins translates to a new culture overnight, but the results
show that St. George is clearly pointed in a new direction. “We talk about it
as a journey,” Kelly said. “Not a 100-meter dash, not a marathon.” Kelly and
her team have consistently delivered double-digit earnings growth over the
last four years, and the stock recently hit a new high. The transformation
has improved staff and customer advocacy levels and delivered outstanding
returns for shareholders.
34
Source: ICG Analysis; “Building a Winning Culture”, Bain & Company, 2006 –
Read article
© Internal Consulting Group 2015
Communicating Effectively
C2 – Use “Leadership Dialogues” to Communicate and Engage
Key Insight Case Example
Use “Leadership Dialogues” to Communicate [Royal Bank of Canada CEO Gord Nixon] knew he had to persuade unit
and Engage leaders to relax their grip on their businesses if RBC were to achieve its full
potential. Moreover, he had to accomplish this without the compelling threat
Before RBC embarked on an ambitious transformation of a burning platform.
program, CEO Gord Nixon launched a series of
facilitated conversations with senior managers across As a result, he launched a series of leadership development initiatives from
the bank which proved crucial to the eventual success late 2001 through 2003. Organized in sessions of 30 to 40 senior managers
of the transformation and executives, these interventions were geared toward enhancing
executives’ awareness of the advantages of enterprise (versus unit-level)
leadership at RBC. In keeping with the approach to the interventions, these
sessions were named “The Leadership Dialogues” to underscore the
importance of two-way exchange that would characterize the nature of the
executives’ time together with the CEO. The dialogues were also intended
to cultivate an honest and open climate in which executives could pose and
explore difficult questions about what kinds of changes were necessary at
RBC.
Potential Proof Points / Benchmarks: These dialogues were developed in partnership with an external consultancy
and were led by the CEO and members of his top executive team. They
Organise “Leadership Dialogues” with top leaders
provided a unique vehicle for fostering both leadership development
across the entire organisation, in order to drive (understanding the role and characteristics of leaders) and culture change
two-way enterprise-level awareness & engagement (understanding the power of enterprise and business leadership
simultaneously).
Leverage “Leader’s Exchanges” for junior
executives / high potential managers A parallel version of the dialogues, “Leaders’ Exchanges”, was delivered by
alumni of the dialogues aimed at more junior executives and high potential
managers in order to provide a multi-level, integrated message about RBC’s
new direction and style of working.
35
36
Source: ICG Analysis; “Making All the Right Connections: The Strategic
Leadership of Top Executives in High-Tech Organizations”, Sosik et al.,
Organisational Dynamics, 2005 – Read article © Internal Consulting Group 2015
Communicating Effectively
C4 – “Lead from the Front” to Leverage Information from the Frontline
Key Insight Case Example
“Lead from the Front” to Leverage Critical Former Schering-Plough CEO Frank Hassan on how he did it:
Information from the Frontline
“Soon after I first became a CEO, I decided that I would meet with
Frontline managers are arguably the most responsible representatives from the frontline community, both formally and
for a company’s success or failure informally, on every site visit I made, to communicate my vision and
• typically make up 50-60% of management ranks solicit their perspectives and concerns. I continued to hold formal
• directly supervise up to 80% of the workforce business reviews with the local general manager and his or her
• must motivate and bolster the morale of those team. But I also met with frontline managers without any local top
doing the work, and oversee execution management present. We called these meetings CEO Dialogues,
• represent an all-important feedback loop to the and over the years, my staff and I developed some simple rules for
CEO/Executive Team making sure that they were effective. (See Insight C5, “Follow 3
Steps for Effective Dialogue Between the CEO & Frontline”).
CEOs and their executive teams wishing to “lead from
the front” must: “In my experience, frontline managers are the key to bringing such
1. Make time for regular interactions with selected an organization to life. After all, they are directly responsible for
frontline managers managing the vast majority of a company’s employees and,
2. Take the “trivial” seriously, as often it will uncover therefore, have exceptional leverage on company performance.
even larger issues at play How they feel about senior management and the company as a
3. Decide when to go deep on certain issues whole influences the way they lead their people. When they are
4. Use the dialogue to ensure senior managers take engaged and energized, they communicate that to employees. The
frontline perspectives into account result is a charged-up and aligned organization.”
5. Appeal to a higher purpose (e.g. helping individual
consumers) when motivating front line staff “In addition, frontline managers are central players in a company’s
6. Empower the Front without undermining the Middle business strategy. Many executives assume that talking strategy
or short circuiting the chain of command with these managers will only distract them from focusing on their
specific roles. I couldn’t disagree more. In my experience, the
hardest thing about strategy is the execution. How well frontline
Potential Proof Points / Benchmarks: managers understand the company’s strategy and their own specific
role in it will in large part determine whether that strategy is
Hold regular CEO or Executive Team “Dialogues”
successful. It’s the CEO’s job to communicate the strategy to them
with selected frontline managers, following the
guiding principles above
directly and get them to own it.” 37
Source: ICG Analysis; “The Frontline Advantage”, Fred Hassan, Harvard Business
Review, May 2011 – Read article
© Internal Consulting Group 2015
Communicating Effectively
C5 – Follow 3 Steps for Effective Dialogue Between the CEO & Frontline
38
Source: “The Frontline Advantage”, Fred Hassan, Harvard Business Review, May
2011 – Read article
© Internal Consulting Group 2015
Setting Governance Structure
D1 – Align Leadership at Every Level
Key Insight Case Example
Aligned Leadership is Effective Deep Within the The Royal Bank of Canada (RBC)—Canada’s largest bank—had
Organisation experienced a significant drop in financial performance. By 2004, after ten
years of top-quartile performance, shareholder returns had fallen to the
Effective leaders: fourth quartile. Through careful analysis and by talking with employees from
• Think strategically the frontline through senior management, CEO Gordon Nixon recognized
• Set the pace that fixing organizational and people issues would be critical for improving
• Allocate resources financial performance and competitive advantage. Collaboration was poor
• Build engagement across businesses. The executive team’s decision-making disciplines had
• Drive accountability slackened—decisions were made slowly and without consistent analysis and
• Drive results transparency. And the organization structure, which was costly, was also
leading to low levels of employee engagement.
High performance organisations create leaders at
every level through 3 primary levers: The senior leadership team created a comprehensive transformation
1. High Performance teams of leaders drive urgency program that addressed operations, culture, and structure. The bank’s
and direction; in the face of ambiguity they are able management ranks were restructured, and initiatives that focused on
to mobilise the organisation and collaborate revenue growth and cost reduction were put in place. To ensure the success
2. The pipeline is stacked with future leaders whose of these initiatives, each leadership layer created its own role charters, so
skills are matched to future needs; typically as performance expectations and accountabilities were clearly laid out.
many as 60% of top management roles are filled
internally The senior team clarified its expectations for leadership behaviours and
3. Middle managers embrace and translate strategy; revised the performance management system to reward achievement of
they are seen as important, are invested in and financial targets and agreed-upon behaviours (such as welcoming challenge,
actively monitored to strengthen their engagement being solution oriented, and taking an enterprise-wide instead of a siloed
and skills perspective). To keep the effort on track, the bank rigorously managed the
three-year transformation by establishing clear targets and accountabilities.
Potential Proof Points / Benchmarks:
The plan worked. Three years after the completion of the transformation in
Ensure that collaboration is a key part of the
2007, RBC’s stock price had doubled, far outstripping the gains of its peers.
corporate ethos
40
Manage Paradox to Get the Most Out of Teams Split Decision Making Across Two Groups To Improve
Outcomes
Team work is a process of managing paradox. There are four
conflicting forces at the heart of team life: Senior teams are required to make many important decisions
about complex and ambiguous matters
• Embracing individual differences and collective identity and
goals The amount of task-relevant information and vested interest
• Fostering support and confrontation among team members possessed by individuals can vary depending on the decision
• Focusing on performance and learning and development being tackled
• Relying on managerial authority and team member discretion • Can be problematic when information sharing is asymmetrical,
and autonomy as can be the case when cross-functional teams are being
deployed
The most effective team leaders are able to adapt their
behaviour to suit the situation. In order to mitigate this, the team leader can propose
subcommittees in order to maximise participation and information
sharing
Potential Proof Points / Benchmarks • Can split decision making across two groups, with the first
group researching and proposing a solution, and the second
Avoid taking a “win/loss” loss mindset, instead try to establish
group offering critiques and counterproposals
a collaborative problem-solving mentality
This will not only improve information sharing, it will force team
Allow constructive conflict (task, not interpersonal) and
members to consider how proposed solutions will impact other
creative abrasion to enable productivity aspects of the business other than their own
Tolerate mistakes as sources of learning in order to Potential Proof Points / Benchmarks:
encourage risk taking and innovation
Use adjacent subcommittees to facilitate better decision
Give autonomy to team members to balance the authority of making
the leader 41
Source: ICG Analysis; “A Note on Building and Leading Your Senior Team”,
Linda Hill, Harvard Business School, June 2002 – Read article
© Internal Consulting Group 2015
Setting Governance Structure
D5 – Use “Action Learning Forums” to Focus Talent
Key Insight Case Example
Use “Action Learning Forums” To Focus Top To reinforce Cisco Systems Inc.’s culture of innovation through
Talent On Next Generation Products And collaboration, Vice President for Development Annmarie Neal and Senior
Organisational Breakthroughs Vice President of Emerging Technologies Marthin De Beer created a series
of high-profile Action Learning Forums designed to concentrate the
A talent culture is made up of the values, beliefs, company’s top talent on next-generation technology and organizational
behaviours, and environment required to attract, breakthroughs. In the forums, 10-person teams cross every conceivable line
engage, and retain committed and competent —rank, function, generation, geography, and gender—and work together
employees. Companies that embrace a talent culture for three months with the assistance of a psychologically savvy coach to
and feature it as a key element of their corporate further one of the company’s top strategic priorities. Venture capital prize
brand consistently outperform companies that do not. money is awarded to winning teams, guaranteeing that the best business
plans are funded and will get off the ground.
A talent culture must be led from the top and can be
achieved and sustained only if it is hardwired into a Billions of dollars’ worth of new value creation have been generated by
company’s processes. One such process is the use of these Action Learning Forums. Just one idea—Smart Grid, which revamps
focused, cross-functional teams to work on specific energy grids to make them faster and more cost effective—is projected to
projects deliver US$10 billion of revenue over the next five years. Perhaps more
important from a talent perspective, 20 percent of those who participated in
these teams have been promoted, and only 2 percent of these high-
Potential Proof Points / Benchmarks potential employees have left the company. The forums have been a
powerful and defining element of Cisco’s talent culture.
Use “Action learning forums” to harness talent,
apply energy to issues that matter and seed
organisational breakthroughs
42
Unleash the Power of Teams A consumer products company had just undergone a substantial global
reorganization, a confusing ordeal that in the heavily matrixed organization
Booz has identified 5 practices critical to the success of led to uncertainty about roles and responsibilities along with costly delays in
senior leadership team workshops: crucial decision making. And this was happening as the company’s
underlying sales and market share were already declining.
1. Apply the fundamentals of team performance to
actual business needs, connecting performance To get the organization back on track, 30 workshops in 15 countries were
objectives and team discipline. set up with the top senior management teams—representing 70 percent of
the company’s business as well as high-priority areas—with the goal of
2. Focus on the “hard side” of teaming in order to helping them to maximize their potential and the business’s returns in the
establish a clear case for how teaming and company’s reorganized operating framework. During each of the workshops,
leadership attributes will generate results. teams framed the organizational needs under the new approach and
explored leadership tools, concepts, and methodologies—for example, the
3. Clarify the critical choices of when and how— different types of teams and when to use them, the development of
discussion group, single-leader, or real team effective sub-teams, and the best methods for designing and running
approach—that will enable teams to work in the meetings. They collectively identified opportunities, prioritized them, and
appropriate mode for the performance situation defined action plans.
they face.
The results of the workshop were significant, and the impact was
4. Focus the discussion on defining and facilitating immediate. Roles, responsibilities, and key interfaces were clarified.
trade-offs and tensions within and between teams. Strategic priorities were established, allowing senior teams to focus where it
Explicitly look for tension and ways to make the mattered most. Disciplined meeting structures were created, with clear
tension productive agendas and efficient information sharing; indeed, agenda items were
reduced by as much as 70 per cent and meeting times were greatly
5. Ensure that the workshop has built-in follow-up minimized, saving each group member as much as half a day per week.
procedures (e.g. to discuss team purpose, Follow-up working sessions about how the teams themselves could work
performance, restructuring or leadership approach) more effectively with one another only added to the value of this process.
[cont’d]
43
Identify distinct opportunities, ideally using real-life In a company with more than 100,000 employees, these senior leadership
projects, for teams to learn and practice teaming workshops were critical to implementing the new organizational framework
skills. Specifically, structure senior workshops as quickly and to building momentum for this change in the broader
20% teaming fundamentals theory vs 80% applying organization. After the broad successes enjoyed by the senior teams, the
theory to current business issues. groundwork could be laid for widespread teaming focusing on business
improvement and better results throughout the organization. Senior leaders
Clearly address critical elements such as skills often accomplished this by instilling teaming behaviours and concepts in
required, meeting structure, leadership roles and their direct reports. And though the process was not entirely viral and
decision-making (the ‘hard side” of teaming) training was necessary at lower levels, starting at the top made it easier to
demonstrate to the organization the value, importance, and rudiments of
Implement formal and informal “reminder teaming know-how. Since this strategic teaming effort began, the consumer
mechanisms“, after the fact, ensure consistent products company has enjoyed growth in sales and total shareholder return
repetition of these behaviours. that has significantly outperformed the industry.
44
45
Set Out a Mantra, Metrics and Accountabilities In the spring of 2004, [Royal Bank of Canada CEO Gord] Nixon, working
to Drive Results with an outside consultancy, stepped up his efforts to address RBC’s
acceptable-yet-unremarkable financial results. He made a strategic choice:
In kicking off a major transformation effort, RBC CEO initiate a complete reinvention of RBC. He created a mantra for deep
made sure to change and named the effort the “Client First Transformation”. Nixon also
• ‘Brand’ the change effort with a mantra defined a measurable goal, “market leadership by 2007”, that was
• Define a measureable goal ambitious enough to inspire commitment but not so lofty as to appear
• Identify transformation champions to execute and unattainable. RBC’s position in the market could easily be measured, so
be accountable for results leaders could clearly assess the company’s progress toward the goal. Nixon
then chose a metric to represent the goal: top quartile performance against
In doing so, he galvanised and focused the a group of North American peers. Translated into precise financial objectives
organisation around the most important issues for the early years, the goal stipulated that RBC would need to generate
specified net income targets for each of the next three years.
This objective, and its accompanying metric, resonated with RBC’s existing
Potential Proof Points / Benchmarks: culture. The company had been the recognized leader in the Canadian
financial services industry for most of its existence; therefore, RBC’s
Strategic direction is clear and can be easily
managers were more likely to see the stated goal of market leadership as
communicated at all levels of the organisation both feasible and challenging, even if the targets were ambitious.
The organisation’s goal is clear and measurable
However, merely declaring a transformation, then articulating a compelling
vision and measurable goals for the effort, would not be enough.
Accountability for results is clear, those who are on
Transformation champions must also identify and execute additional key
the hook are bought in ingredients for success: excelling at process execution, generating
widespread buy-in, creating organizational alignment, relentlessly
communicating the steps in the transformation journey and weaving in
accountability until momentum builds and takes hold.
47
48
Source: ICG Analysis; “A Blueprint for Strategic Leadership”, Booz & Company,
strategy+business, Winter 2007 – Read article
© Internal Consulting Group 2015
Setting Priorities & Focus Areas
E4 – Enhance the Strategic Planning Process
Key Insight Case Example
Enhance the strategic planning process Countrywide Financial Corporation is a consumer Financial services
business. Since 1969, the Company has grown from a small entrepreneurial
A detailed case study on Countrywide Financial lays venture to a very large (Fortune200) international company. Today, CFC
out their revamped strategic planning process (Refer consists of 17 major business units, operating in five business segments —
also appendix). Some of the key changes made mortgage banking, and insurance, capital markets. In 2004, the company
include: had more than $8 billion in revenues, more than $58 billion in assets, and
• Make planning a corporate priority more than 35,000 employees.
• Dedicate resources to support planning
• Adopt a common planning template Countrywide, at one time the largest mortgage banker, was now (in 2000)
• Develop priority objectives — key objectives that fourth in the mortgage industry. The company's larger competitors, with
receive the most management focus greater financial resources, had grown through acquisitions (a strategy that
• Craft an approach to issues of linkages across was not available to Countrywide because of capital constraints).
organisational units, and ensure that business units Countrywide's core strategy — being the “branded” price leader — was
follow-through on plans becoming increasingly difficult to sustain. Thinking was beginning to
• Monitor progress throughout the organisation change, but it was going to be an evolutionary process.
Potential Proof Points / Benchmarks: Planning has always been a part of Countrywide's culture. The company has
always had a well-established strategic planning function, and the leaders of
Establish an “executive committee” to support the
the operating groups have always prided themselves on their strategic
CEO and COO in providing corporate-level oversight capabilities. However, the growth and diversification experienced during the
and leadership for the planning process. 1990s made the business more complex. Management needed to address
Committee's membership includes the CEO, the not only new industry segments and larger operating units, but increased
COO and their direct reports (senior managing organizational complexity as well. The entrepreneurial spirit combined with
directors) as well as a select group of managing a measure of autonomy that had long been part of Countrywide's culture
directors now presented a management challenge. While it helped to create a
vibrant, nimble operating environment, management recognized the need
Establish a “managing directorate” (all managing
to avoid counterproductive organizational “silos” and foster a spirit of cross-
directors) accountable for providing division-level organizational cooperation.
oversight and leadership for the planning process
[cont’d]
49
The company took several steps to modify the planning process and
supporting infrastructure. First, Stan Kurland, decided to make the process
a corporate priority. Next, management dedicated the proper level of
resources to strategic planning, restructured the planning process
throughout the company, defined or redefined the participation of various
organizational players in the process, and developed a methodology for
staying focused on priority objectives.
Countrywide was able to accomplish this in a period of about two years. The
implementation of a strategic planning system is an evolutionary process,
dependent on varying internal and external factors. By its nature, the
strategic planning process can never be seen as entirely complete or
perfected. As a result, Countrywide continues to refine its strategic planning
process, and to-date it has delivered some very significant results. 50
An Office of Strategy Management (OSM) is a small cadre of professionals that orchestrate strategy management processes for the
executive team. Responsibilities include:
1. Architect which designs and embeds any missing strategy and operations management processes into strategy execution. Ensures
that all the planning, execution, and feedback processes are in place, and that they are linked together in a closed loop system.
2. Process owner for several strategy and operations management processes, such as those to develop the strategy, translate the
strategy, and orchestrate the senior management strategy review meetings.
3. Integrator of many existing activities. This is challenging because organisational and functional units already have primary
responsibility for processes such as budgeting, communications, human resources planning and performance management, IT
planning, initiative management, and best practice sharing. The OSM must work with the existing owners of these processes to
ensure they become aligned to the strategy.
Drive the operations plan and budget from the revenue targets in the strategic plan
Have regular, perhaps monthly, meetings of the senior management team which focus only on strategy
51
Source: ICG Analysis; “Strategy Execution and the Balanced Scorecard, Q&A
with: Robert S. Kaplan”, Harvard Business School, August 2008 – Read article
© Internal Consulting Group 2015
Setting Priorities & Focus Areas
E6 – Follow 9 Practical Tips to Keep Meetings Focused on Decisions & Action
Key Insight Description
1. BlackBerry Two companies ask participants to put their BlackBerrys and other mobile devices in a ziplock bag. The meeting organizer collects them
bags at the beginning of the meeting and distributes them at the end. The all-too-simple point: We’re here to focus on decisions, not on
what’s happening in the outside world.
2. Decision At the end of the meeting, one client suggests, ask the group to say, Here is what we decided today. Make sure everyone is on the same
Declaration page, every time. If people postpone a decision, acknowledge that the group decided not to decide. Track how often this happens, and
see whether the rate declines over time.
3. Personal Here’s how a healthcare company does it: Before moving from discussion to decision, the meeting leader asks each participant what he
Participation or she would decide and why. The decision maker gets additional input; everyone else gets practice in listening and then articulating their
thinking.
4. Sacred One company puts a foot-high statue of an elephant in the middle of the conference table. The moral: When you’re discussing a
Symbols decision, don’t ignore the elephant in the room. Another places a carved wooden hippo on the table for the first part of the meeting,
when the purpose is to wallow in ideas. When it comes time for a decision, the leader removes the hippo: No more wallowing
5. Stand-up Plenty of companies have short stand-up meetings at the start of a day, usually to review the status of projects. But as for the longer
Sessions meetings—aaah, those comfy conference room chairs, just the place to relax for a while. A suggestion: Try having fewer chairs than
participants (or no chairs at all) when you get together to make a decision. You’ll be amazed how quickly people come to closure.
6. RAPID We’re fans of the decision tool RAPID®, which helps companies assign decision roles to particular individuals. (RAPID is a loose acronym
Reminders for the key roles: Recommend, Input, Agree, Decide and Perform.) A couple of companies put RAPID posters on the walls of meeting
rooms for easy reference. Others put the word on everyone’s ID badges. It’s all just a way of reminding people to pay attention to their
roles in this decision.
7. Regular Another RAPID-related technique from a client: Go around the room at the beginning of a meeting, and ask each person what role he or
“role calls” she is playing in the decisions at hand. No role? Sorry, you’re in the wrong meeting. Also, if senior people habitually send delegates when
the leaders themselves should be there, ask the delegates to leave. It might hurt, but it will get attention—and it may get the senior
people there next time
8. Do-over Are too many meetings devoted to revisiting previous decisions? Just say no. One client recommends refusing to reconsider a decision
denials unless there’s a very good reason for doing so. A side benefit is that people will make sure to attend the meeting that’s making the
decision, knowing they can’t reopen the discussion next week.
9. Principles Ultimately, the value of a meeting comes down to what everyone does and says in the course of it. Try this: At the end of each meeting,
in Practice run through a checklist to see if the meeting lived up to the values you’re trying to inculcate. Honest debate? Coming to closure in a
reasonable period of time? Accountability for each decision role? You can phase out this technique over time as more people understand
what’s expected.
52
Source: “Decision Insights - Refresh, refocus and remind: Nine practical tips to
keep meetings centered on decisions and action”, Bain & Company, 2012 –
Read article © Internal Consulting Group 2015
Managing Results & Performance
F1 – Measure Progress at Each, Small Step of a Major Program
Key Insight Case Example
Measure Progress at Each, Small Step of a Major Royal Bank of Canada held to two maxims for tracking organizational
Program performance on the transformation, starting with what gets measured gets
done, followed by there’s no point measuring only the final outcome of an
RBC used a highly structured Transformation initiative. Executives realized early that, if the effort failed, it would be
Management Office to track and monitor the progress virtually impossible to take corrective action at the 11th hour. Instead,
of a major change effort progress would have to be measured at each small, relevant step during
implementation. Monitoring progress at key intervals would serve as a vital
This analogy can be extended to any major strategic opportunity to make corrections in the implementation process – and
program or initiative that the company’s success increase the odds of ultimate success.
depends on
[CEO Gord] Nixon used the Transformation Management Office as the
vehicle to track and monitor the progress and performance of RBC’s change
journey. Headed by a key RBC executive who reported to the CEO, the TMO
comprised a small team of six programme managers, each experienced in
RBC’s key divisions and support functions. The TMO acted as RBC’s engine
Potential Proof Points / Benchmarks: for embedding accountability throughout the enterprise. Staff members
prepared status reports every two weeks and discussed questions, concerns
For major projects/initiatives, measure progress at and successes with top management. Not surprisingly, elements of the
key implementation milestones business landscape changed over time and original initiative profiles often
required modification. Nevertheless, thanks to the TMO tracking process,
Use a central Project or Transformation unit leaders continually knew how close the company was to its goal of
Management Office as the conduit between the market leadership and what they needed to do next to move it even closer.
project itself and the Executive Team, with status
reports fortnightly Though RBC’s Client First Transformation journey will continue to evolve,
the effort has already begun paying big dividends. Between the launch of
the transformation in the fall of 2004 and the first quarter of 2007, RBC has
posted nine consecutive quarters of top quartile results – clear achievement
of its market-leadership goal. Compound annual earnings growth hit 30 per
cent in 2005 and 2006; and, also in 2006, RBC recorded net income of
C$4.7 billion.
53
Avoid the 5 traps of performance management When Marc Effron, the vice president of talent management for Avon
Products, was trying to determine whether his company was doing a good
How to avoid the five traps: job of finding and developing managers, he came up with the idea of
1. Measure how well you’re doing, using benchmarks creating a network of talent management professionals. Started in 2007,
from outside the organization. the New Talent Management Network has more than 1,200 members, for
2. Look for measures that lead rather than lag the whom it conducts original research and provides a library of resources and
profits in your business. Use the quality of best practices.
managerial decision-making as indicator of success.
Look at what you’re doing and aren’t doing. The U.S. health insurer Humana, recognizing that its most expensive
3. Determine the right measure to use. patients are the really sick ones (a few years back the company found that
4. Diversify your metrics, as it’s a lot harder to game the sickest 10% accounted for 80% of its costs), offers customers incentives
several of them at once. Vary the boundaries of for early screening. If it can get more customers into early or
your measurement, by defining responsibility more even preemptive treatment than other companies can, it will outperform
narrowly or by broadening it. Loosen the link rivals in the future.
between meeting budgets and performance.
5. Be very precise about what you want to assess, be The managers of one European investment bank … measure
explicit about what metrics are assessing it, and performance by the outcomes of deals they’ve turned down as well as by
make sure that everyone is clear about both. the outcomes of deals they’ve won. If the ones they’ve rejected turn out to
be lemons, those rejections count as successes.
Potential Proof Points / Benchmarks: Clifford Chance replaced its single metric of billable hours with seven
criteria on which to base bonuses: respect and mentoring, quality of work,
Identify and measure leading (as opposed to
excellence in client service, integrity, contribution to the community,
lagging) indicators of success commitment to diversity, and contribution to the firm as an institution.
Diversify metrics to avoid gaming; choose the right
To reduce delays in gate-closing time, Southwest Airlines, which had
metric based on what needs to be measured and traditionally applied a metric only to gate agents, extended it to include the
assessed (understanding cause and effect whole ground team – ticketing staff, gate staff , and loaders – so that
relationships in the process) everyone had an incentive to cooperate.
[cont’d] 54
[cont’d]
Office supplier Staples … lets [managers] exceed their budgets if they can
demonstrate that doing so will lead to improved service for customers.
55
Source: ICG Analysis; “Fast Track to Recovery — Leading outside the Lines Can
Turn Survivors into Winners”, Booz & Company, 2010 – Read article
© Internal Consulting Group 2015
Managing Results & Performance
F3 – “Soft” Initiatives Can Deliver “Hard” Results (cont’d)
Key Insight Case Example
[cont’d]
57
Source: ICG Analysis; “Fast Track to Recovery — Leading outside the Lines Can
Turn Survivors into Winners”, Booz & Company, 2010 – Read article
© Internal Consulting Group 2015
Managing Results & Performance
F4 – Use Performance Dashboards to Report on Project Progress
58
Develop reliable measurement tools that cover The large Pan European bank is currently rolling out a major set of
financial targets, customers, business processes, performance management system enhancements including a data
technology, human capital and their relationship to warehouse and a new analytical dashboard aimed at improving performance
return on capital management across a large number of jurisdictions and currencies. Their
current systems provide online access, but updating is done weekly, with
Provide an online environment with appropriate mostly financial metrics, and analytical tools are available only to the central
access for all levels of management enables better planning team. However, there is poor integration across
and faster decision-making as well as timely and the group. Since the strategy is to focus on growth and use global hubs and
consistent measurement of results shared services to reduce cost/income ratios it is critical that their
performance management system is able to give them the necessary insight
Use planning tools and processes to enable into costs and profitability. Instead of building out the range of balanced
effective linkage between departments, lines of scorecards, they are focusing on standardizing their existing indicators
business, and the enterprise level. In doing so, across all the companies in the group.
eliminate dysfunctional manual steps and provide
integration between strategy formulation, business
planning, and execution’
60
Implement performance management initiatives Old National Bancorp’s implementation of a new performance
to build on balanced scorecard fundamentals management capability – a transformation driven by executive leadership’s
desire for greater accountability throughout the organization – has delivered
Ensure the scorecard has meaningful links between the a number of strategic benefits, including improvements in its three strategic
business units and performance of the organisation. imperatives:
The tool needs to be used to hold people accountable.
• Strengthen the Risk Profile: Old National analyzed the potential financial
impact of the Federal Reserve Board Regulation E rules changes before
the changes were finalized; then, the company adjusted fees on other
product lines to offset the revenue loss the rules changes would
eventually cause. Additionally, Old National was one of the first banks to
return all of its Troubled Asset Relief Program (TARP) money to the U.S.
Treasury Department.
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Use “Net Promoter Score” To Gauge The Benefit The systematic nurturing of new-customer relationships is a discipline that
Of Fostering Customer Advocacy now comes naturally at American Express. Senior managers, troubled by
the periodic peaks in attrition among new customers, saw a big opportunity
The ‘‘Net Promoter Score’’ (NPS) is a measurement to get more value out of their customer-acquisition investments by helping
developed by Satmetrix Systems, a Silicon Valley- new card members discover service features that best suited their needs.
based software and services firm that specialises in Digging into new-customer data, they discovered that defections increased
customer experience management. sharply in the initial months after customers signed up for a card and,
again, following the one-year anniversary. The problem: Customers most
The NPS is derived from customer surveys that ask likely to close their accounts did not understand the benefits the card
respondents to rate, on a zero-to-10 scale, how likely offered or had chosen a level of membership that did not deliver the best
they would be to recommend a company’s products or value.
services to a friend. The NPS is calculated as the
percentage of respondents whose likelihood of Setting out to become better attuned to the needs of the customer, the
recommending is very high (measured as a score of 9 product team developed initiatives to teach new card members how to take
or 10) minus those who say they are unlikely to advantage of the card’s features and benefits. First, American Express
recommend (a score of 0-6) or are, at best, passive representatives personally call high-potential customers to explain
buyers (indicating a score of 7 or 8). membership privileges and ensure that they have selected the card that
delivers the best value. Then, tracking the member’s initial card-use
Potential Proof Points / Benchmarks: patterns, the company reaches out again by mail or follow-up call to fine-
tune the service and increase its value to the cardholder.
Incorporate Net Promoter Score into core
performance metrics in a balanced scorecard, The card-member education and retention program has yielded a significant
particularly for businesses where referrals are a key improvement in American Express’s returns on its new-customer acquisition
source of new customers investments. Persuaded by the success of this effort, customer advocacy in
the card division is now one piece of a larger effort to increase the Net
Promoter Score and strengthen customer partnerships throughout American
Express.
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Source: ICG Analysis; Cornel Wisskirchen, Dirk Vater, Tim Wright, Philippe De
Backer, Christine Detrick, (2006),"The customer-led bank: converting customers
from defectors into fans", Strategy & Leadership, Vol. 34 Iss: 2 pp. 10 – 20 – © Internal Consulting Group 2015
Read article
Managing Results & Performance
F8 – Use Scorecards to Deliver the Business Agenda
Key Insight Case Example
Use Scorecards To Deliver The Business Agenda [After building a cohesive management team at St.George, Gail] Kelly’s
next step in building a high-performance culture was to demand
The frontline is where sustained cultural change can accountability and create the organizational framework to support it.
have the greatest impact on a company’s performance.
The process began at the top. She assigned one of the newly hired
A culture of accountability is best achieved by holding executives, Peter Clare, to come up with a new set of metrics and tracking
people accountable for actual delivery, rather than measures—many of them focused on customer service and customer loyalty
spending energy on a formal “culture change” —to assure a new level of rigor at St.George.
program. Culture is a means to an end, not an end in
itself. At St.George’s business-banking division, Greg Bartlett, the division leader,
asked his staff to make double-digit improvements in year-over-year profits
Winning cultures are best measured through the day- and operating income. In return, he extended a new degree of trust to
to-day activities of the frontline. managers who were held accountable for running a profit center and
making decisions as if it were an independent business, not merely an
appendage of a larger organization.
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Source: ICG Analysis; “Building a winning culture”, Bain & Company, 2006 –
Read article
© Internal Consulting Group 2015
Scanning Markets & Rivals
G1 – Know the Most Common Information Gathered on Competitors
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Source: “Getting Into Your Competitor’s Head”, McKinsey, 2009 – Read article
© Internal Consulting Group 2015
Scanning Markets & Rivals
G5 – Ensure the Organisation’s “Sense and Respond” Capability is
Developed
Key Insight Case Example
Ensure the Organisation’s “Sense and Respond” A pharmaceutical company holds weekly market- briefing team meetings
Capability is Well-Developed to specifically discuss the competitive environment and its impact on the
core strategy. The team distributes a summary to the broader leadership
Adaptive teams systematically use multiple real-time team. Said an executive from the company, “It’s important for the executive
filters and amplifiers of information to monitor the team to be highly attuned to and driven by external market and competitive
external forces that drive change in their business data, especially in a global environment.”
environment. They use the information to proactively
question how external forces could affect the “Adaptation is about knowing how you are trying to adapt,” said an
company’s business. executive at a financial services company. “For example, how is the
market changing relative to our behaviour and experience? We are not
Filters often take the form of customized data mining, reading about news after it’s occurred; instead, we are in the know before it
market research, dashboards, and war rooms. Such is reported.”
tools enable teams to excel at reading external signals,
connecting disparate trends into meaningful patterns, “It’s not about consensus decision making, but consensus information
and putting in place mechanisms that allow them to gathering so that people are informed and can assess as many factors and
collectively separate the signal from the noise. When pieces of information as are necessary,” said an executive in a financial
early-warning signs flash red, the teams are in a services company. “Poor-performing teams react to internal versus
position either to consciously act differently or to ‘proact’ to external.”
choose not to act—ahead of the curve.
“Things evolve so quickly, senior teams need to anticipate challenges and
scenario-plan what may happen,” said an executive in the hospitality
Potential Proof Points / Benchmarks: industry.
Ensure that key industry developments are
anticipated rather than reacted to
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Trends are a key input into strategic leadership The Vanguard Group, the world’s largest pure no-load mutual fund
systems company, is an example of a company who proactively responded to an
observed trend in the marketplace.
Collecting existing and emerging trends within
particular industries is a vital input to a strategic Jack Bogle started Vanguard in 1975 because he felt that shareholders were
leadership system. Executive leaders are often not well served by the standard practice in the mutual fund industry, where
described as being responsible for interpreting events funds are burdened by fund management companies seeking profits
and defining reality for followers. As a result, they through their servicing of the funds. His dream, dubbed the ‘‘Vanguard
frame the way followers experience events so that Experiment,’’ was that its shareholder would create their own management
followers can make sense out of their personal and company to provide – at cost – the administrative services they needed.
strategic situation.
Today, Vanguard is considered by industry experts as a trend-setter and
These events emerge out of the business market or technology leader in employing e-business strategies and building solid
environment which serves as the context for strategic relationships to meet the growing needs of investors.
leadership and is ripe with various organizational
opportunities and threats. Executive leaders must be
particularly astute in recognizing these opportunities
and threats so that strategies can be created and
adapted in a manner that is responsive to the market.
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Source: ICG Analysis; “Making All the Right Connections: The Strategic
Leadership of Top Executives in High-Tech Organizations”, Sosik et al.,
Organisational Dynamics, 2005 – Read article © Internal Consulting Group 2015
Scanning Markets & Rivals
G7 – Build a Radar Capability
Key Insight Case Example
Create structured monitoring devices After worrying incessantly about yet another bright and shiny object
appearing in the payments landscape, a major bank and then the leading
Most corporate and business strategy functions rely on debit payment scheme built a radar capability.
ad-hoc strategy reviews and annual plan updates as
well as inform access to media search lists and This capability comprises numerous tools, of which two stand out:
anecdotal evidence of new or emerging trends and
rivals 1. A competitive rival pipeline which accurately and periodically tracks the
“realistic” time for the development and realisation of a rivals business (or
Radar like systems which periodically update the c- innovation) in the market place.
suite with empirical analysis of changes to the • This analysis (see example Appendix Y) is now periodically refreshed and
competitor pipeline and key trends can ensure major changes in position are reported as part of a quarterly update to
confidence that scanning and rival strategies are better executive.
understood • Major announcements and other informal channels still occur, but much
of the noise (and hubris) around rival evolution is now avoided
• These pipelines are often built for both domestic markets and as an
aggregation of leading global innovations
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Use “Lite” Wargames To Uncover Rival A major Insurance company was wondering how to best respond to a
Strategies major new state regulation. This change will create the potential for rapid
changes to competitive intensity and customer shopping and switching.
Wargames are the most sophisticated way to identify
rival strategies. However, they are also the most The client wanted to understand how to they could use more sophisticated
expensive, typically costing AUD$500K and up. scenario analysis and or lite Wargaming techniques to best reveal rival
strategies.
Many of the advantages of Wargames can be
uncovered without the expenses by running a lite They subsequently developed a capability which they called “Lite”
Wargame that relies more on rival strategy Wargaming. This capability allows them to apply Wargaming tools and
identification than sophisticated modeling of the real techniques (briefing books, scenario analyses, rival team enactment,
time impact of these strategies on industry revenue strategy and response analysis).
and profit pools
This capability, previously unaffordable, is now accessible to other
departments to be applied to other critical market changes.
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Development Stages
0 1 2 3 4 5 6
No Building
Build Committed Achieving Established
identification Signalling presence/c
awareness resources critical mass competition
of entry apabilities
Marketing Initial market Public declaration Entry planning Entry planning Ramp up of Expansion
survey of interest Establishing Establishing adoption in Direct threat to
Exploring network network targeted market incumbents
alliances/partners segments
Selected
Examples
Typical
Timeline 2-3 years
1-2.5 years
1-2 years
Group imperative to maintain Mandate to sacrifice some Normal expectations to deliver profit
Group profit level (your team) short term profit target
Financial
/Industry Industry financial No material Above normal cost Major 1HFY13 event/
Pressures pressures/impact on price events/’normal’ increases/material substantial re-pricing
increases cost increases industry profit required 83
pressures
Formulate contingent
Iterations during Reaction of client, other
strategy given scenario
wargame players/stakeholders
outcomes
Definition
• Dynamic simulation tool for exploring complex strategic situations and partially role playing likely stakeholder actions and
countermeasures
Advantages Disadvantages
• Allows for many stakeholders to be involved in the strategy formulation • Can be time and labour intensive (we
process will be running a “lite wargame” with
• High involvement in the process (learn by doing) and transparent findings limited modelling capabilities)
build strong buy-in • The number of scenarios and
• Dramatically increases awareness and accuracy of stakeholder positions and discontinuities explored is very limited
their likely actions (which can feed other strategy processes) (other high probability game changers
should be desk checked)
• Increases understanding of the industry and different points of view, develops
teamwork
• Game begins with a short kick-off briefing and last minute Q&A • Teams must use the information at hand to act in the interests
• After receiving the game context and objectives, teams will move of the stakeholder they represent and ‘in character’ with that
to a work area to agree and document their strategies stakeholder
• Teams must abide by the law and game protocols
• A control room runs the game, orchestrates the teams, interprets
individual stakeholder and team decisions and feeds back results • Teams must follow instructions given by the control group in
the initial briefing
• Public announcements may be made throughout the game (e.g.
new regulation, media releases or updated rules) to solicit team • Teams may submit requests to the control group for industry
actions collaboration and lobbying or public announcements – the
control group has discretion to decide if such requests will be
granted
• Lessons learned and implications for insurance strategy will be integrated into the response strategy
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