0861 247 328

Tag Archive for: CEO

Six Keys to Leading Successfully During Transition

/in , , , , , , ,

By Professor Dave Ulrich, Ross School of Business

The last few months have seen noteworthy CEO appointments in South Africa and the rest of the world.  At home, MTN announced in June that Rob Shuter will replace Sifiso Dabengwa as chief executive in 2017, and in September it was announced that Sisa Ntshona will take over the reins at South African Tourism.  Internationally, Vicki Hollub became the first woman to lead US independent oil giant Occidental Petroleum, a Fortune 500 company, and Edward Bastian stepped into the corner office at Delta Airlines.

Changing a company’s top leadership can raise a lot of questions about its immediate and long-term future, and may even have a material effect on the company’s value and stock pricing. Many, both inside and outside the company, look to the CEO to set the tone in the immediate aftermath of any major change. Here are a few things that any CEO leading a company through a transition should keep in mind:

  1. Be aware of how the departures look to outsiders: Any leader is made stronger by the leaders he or she creates. Leaders should multiply others and make them better, and talk about “we” more than “I.” When an entire team leaves, it may send a signal to investors and others watching that a leader is not empowering his or her leadership team.
  2. Remind people watching, of your track record of leading people to success: An effective leader delivers results and takes personal responsibility for doing so. In high tech firms, there is often “patient” capital that will provide market value far beyond earnings—as seen in companies like Uber and Amazon—but executives need a track record of building market presence and share in clear and measurable ways. At a time when doubt runs high, a CEO should reassure those watching that he or she has a strong action plan and vision.
  3. Position the departures as an opportunity for growth: An effective leader has insight into industry trends and how to position his or her company to win. In fast-moving social media industries, it is critical to continually reinvest and create a future. For example, Google may not succeed in balloons or driverless cars, but its leaders are constantly positioning themselves to be the innovators and leaders of the future. There’s opportunity for the CEO and other company spokespeople to message the departures as a chance to propel the company forward.
  4. Hire the right talent to replace the people who have left: Good leaders surround themselves with better people. The most confident leaders are able to hire and develop very competent teams; the least confident leaders often try to make themselves look better by bringing in people who are not as effective. Whether someone has left or was asked to leave doesn’t matter, as long as the CEO takes this opportunity to replace them with someone even more closely aligned with the company’s goals. This will help propel the company forward.
  5. Stay true to the company’s mission: Effective leaders should turn customer brand promises into leadership actions in order to build trust. Walmart’s leadership team is dedicated to delivering low cost; Disney leaders are dedicated to guest experience. Twitter’s challenge is to create a clear external brand promise to customers and then use that as criteria for its leadership team.
  6. Above all, put the company and its success first: Effective leaders build cultures and HR systems that institutionalize the leadership. When the company becomes more important than the leader, it is more likely to navigate, and even thrive, through a transition.

Leadership transitions happen, especially when a company is entering a new strategic phase, and the current executive team isn’t the right one to get the company to where it needs to be. But all too often, the transition itself focuses too much on the individual people involved and not enough on the requirements and unique needs of the company. By keeping the focus where it always belongs—on how these developments can serve the greater business goals—a CEO can lead his or her company to an even stronger position.

Dave Ulrich is the Rensis Likert Professor of Business at the University of Michigan’s Ross School of Business and author of Leadership Capital Index. Ulrich is ranked as the #1 management guru by Business Week, has been profiled by Fast Company as one of the world’s top 10 creative people in business, and listed as a Top 5 Coach in Forbes.  Ulrich was in South Africa last week leading an ongoing series of events on Human Capital, hosted by Business Results Group and the Gordon Institute of Business Science.

CUSTOMER CENTRIC METRICS RESCUE RETAILER FROM STRATEGIC ECCENTRICS:

/in

CUSTOMERS TAKE CARE OF THE PROFITS – HOW INTIMATE ARE YOU WITH YOUR CUSTOMERS?

Tom Peters has long argued the case for Customer Centricity. At the 2011 Progress Conference he said; “The magic formula that business has revealed is to treat their customers like guests and their employees like people.” So what is his 2013 take on strategy and leadership? Think of this as “Tom Peter’s Balanced Scorecard”.

Leaders “Do” People

You take care of the people.

The people take care of the service.

The service takes care of the customer.

The customer takes care of the profit.

The profit takes care of the reinvestment.

The reinvestment takes care of the future.

Now, hold that thought.

In The Execution Premium, Dr Dave Norton and Professor Robert Kaplan evidence the magic of Tom’s winning formula. The book cites a case study of how a large retailer, Store 24, turned around their failed strategy by applying what their CEO Bob Gordon, called their Customer Intimacy programme as a key scorecard metric.

The Store 24 strategy, which was called “Ban Boredom”, seemed like a great idea and a sure fire way to differentiate them from their competitors. The original “Ban Boredom” plan was an exciting strategy providing an entertaining atmosphere with fun promotions and frequent themes. This gave store managers permission and discretion to find ways to execute on the strategy. They dressed up in costumes consistent with themes and holidays and activated imaginative promotions with great displays.

NOT EVERYONE WANTS “DISNEY” MAGICAL MOMENTS – CUSTOMER CENTRIC METRICS SAVED THE DAY

Unfortunately this “Disney” approach had an adverse effect. It seemed that while executed with good intentions, the result was failing on the customer intimacy metric.

It was most fortunate that this strategy was predicated on their “customer intimacy” programme. And by getting “up close and personal” with their customers, they were able to quickly abandon the “Ban Boredom” Programme after two years and replace it with a new strategy.

What their “customer intimacy” programme showed was that the customers valued their traditional strengths of good product selection, quick service and a clean environment. They did not value, AT ALL, the experience they were trying to create. Customers were unhappy with the inattentive store employees dressed in costumes and distracted by the ever-changing displays in store.

METRICS ARE KING

You get what you measure! It’s an old adage and one that could not have been truer for Store 24. Using the Balanced Scorecard approach, the retailer was able to assess customer satisfaction quickly. Not only were they able to change direction quickly, they were also able to identify interesting elements for a comeback strategy.

COMEBACK STRATEGY – “CAUSE YOU JUST CAN’T WAIT”

Their comeback strategy, called “Cause, you just can’t wait”, was wholly based on customer feedback. They realised that flawless execution was essential and further research showed the negative relationship between low skilled employees and operating profit. They were able to show consistently that strategy implementation was only effective when done at stores with high skill crews. They realised, too, that the ability for them to implement their come-back strategy relied heavily on employee satisfaction.

BACK TO TOM!

Which brings us right back to Tom Peters, “Treat your customers like guests and your employees like people. You take care of the people. The people take care of the service. The service takes care of the customer. The customer takes care of the profit.” Most readers will acknowledge that this is very much the Disney leadership model – the difference, however, is that it doesn’t mean that every customer wants a “Disney moment”. What does ring true is that if you get the people right, the service will follow. Get that right, and the profits are a natural result.

Having acknowledged the metrics, Store 24 brought back their traditional strengths as a key driver of their customer value proposition and replaced the “fun, entertaining experience” strategy with speed and efficiency as their new value proposition.

BALANCED SCORECARD WINS THE DAY

Had Store 24 not had a Balanced Scorecard in place, they may well have pursued their quirky “Ban Boredom” idea for many more years, with inexperienced and dissatisfied store crews having “fun” at the expense of their customer and profits. Scorecard metrics not only determine how organisations measure up on people, products, processes and resultant profits; they also provide a direct link to customer satisfaction.

Dave Norton urges companies to use an “employee-customer-profit value chain model” as their main management system.

Are you measuring the right things? Do you scrutinise the “employee-customer-profit value” cause and effect relationships? If you did, what might that value chain reveal and offer you in terms of a new strategic opportunity with a high execution premium?

_______________________________________________________________________________________

Dr David Norton is the co-creator of the Balanced Scorecard and leading global practitioner in applying the Balanced Scorecard in both the Private and Public Sector. Together with Professor Robert Kaplan, he has been acclaimed by Harvard Business Review for his significant contribution to the management profession in the past 75 years. More recently Thinkers 50 have ranked them in their Hall of Fame alongside Tom Peters, Kenichi Ohmae, Warren Bennis, Howard Gardner, Henry Mintzberg, Charles Handy, Philip Kotler and Ikujiro Nonaka for their mammoth contribution to business management and leadership.

On the 11th September 2014 Dr Norton will present a full day seminar in Johannesburg on EXECUTING STRATEGY IN A NEW ECONOMY – Balanced Scorecard Essentials.