How to Bring Strategic Change to Your Business - Thinking in New Boxes

The ability to survive in a world of accelerating change and challenge calls for ever greater creativity in our thinking. But to become more creative, we need to understand how our minds work. Once we do, we will recognize that we must do more than simply “think outside the box,” as the traditional business manuals suggest. We need to “think in new boxes.” In this way, business leaders can marshal their companies’ creativity and give them a real competitive advantage.

We Cannot Think Without Models

We constantly simplify things in order to make sense of the world around us. Take three examples:

• How many colors are there in a rainbow? You will probably say seven. But why seven, when there are actually thousands? The fact is that thousands is not a manageable figure—so we are forced to simplify, and seven is what we have been taught. 

• How many columns are at the front of the Parthenon? You are probably hesitating and might say anywhere from five to ten. Actually, there are eight. But to have an image of the Parthenon in your mind’s eye requires only that you have a general grasp of the details. 

• How many grains of sand does it take to make a pile? More than a few, obviously. But there is no exact answer because a pile is, by definition, an approximation: we do not need to know the precise number.

Learn how operational dexterity can help you maximize effectiveness. Read More >>

In the business world, we also simplify. Take three more examples: market segments are conceptual categories and do not add up to the same thing as the market itself; balance sheets are models based on rules relating to currency and accounting, and they do not represent financial reality; and Maslow’s hierarchy of needs, devised by the behavioral scientist Abraham Maslow, is an abstract rendering of human nature rather than a precise profile of your customer.

These six examples demonstrate that the human mind needs to invent models and concepts and frameworks as stepping stones on the road to interpreting reality. They are not precise representations of reality—they are working hypotheses. They allow us to think and then work. They help us to “freeze” part of reality in order to make things manageable.

The Art of Thinking in New Boxes (Because Thinking Outside the Box Is Not Enough)

Models and concepts and frameworks are—to use another phrase—mental boxes within which we com-prehend the real world. And ever since the 1960s, we have been taught to be creative by “thinking outside the box."

The trouble is this: once you have mentally stepped outside the box, what happens next? The space outside the box is very expansive—infinitely so—and there can be no guarantee that you will find a solution to your problem. So the answer is that you need to find a new box. And you must consciously build or choose that box yourself; if you do not, an unconscious process will do it for you.

The way we think means that we cannot be creative in a constructive way without inventing models or boxes. Ideally, you need to develop a number of new boxes—new models, new scenarios, new ways of approaching a problem—to structure your thinking. The challenge—and the real art of creativity—is to know how to build those new boxes and, in the process, provide the framework for fresh imaginative effort.

Half a century ago, Bic, a French stationery company, brought to market the idea of making low-cost pens. Some creative brainstorming produced a series of variations on the theme: two colors, three colors, gold trim, advertising logos, erasers, and so forth. But who would have thought of making a razor? Or a lighter? Bic could come up with those ideas only by adopting a radical change of perspective. Instead of viewing itself simply as a pen company, Bic started to think of itself as a disposable-objects company—that is, as a mass producer of inexpensive plastic implements. In making this transition, Bic had, in effect, created a new box.

Business offers a number of other examples.

• Apple, originally a manufacturer of popular personal computers, leveraged its expertise to expand into the multimedia business. Initially, there was no logical reason for it to contemplate taking on Sony and its ubiquitous Walkman. But once Apple had created a new box and viewed itself through a different lens—specifically, as a multimedia company that knows circuits and bytes—the notion of developing a digital “walkman” became obvious. 

• Google’s original aspiration was to build the best search engine ever. Arguably, the company eventually achieved that. But for Google to enter a new era of growth, it needed to perceive itself differently. The creation of a new “we want to know everything” box sparked projects such as Google Earth, Google Book Search, and Google Labs, as well as further improvements to the company’s search engine. 

• Philips, a high-tech company, had concentrated its efforts on product-oriented ventures ranging from semiconductors to domestic appliances. Then it started to shift its strategic emphasis and endeavored to identify and exploit global trends in health care and consumer markets. In doing so, it has become a world leader in several new categories, including home health-care systems. By thinking in a new box, Philips has used its core skills in different ways—and has fundamentally changed its business as a result. 

• Michelin and IBM illustrate how some companies have successfully moved from a product or technology orientation to a solutions or results orientation—without necessarily abandoning their core products or technologies. Michelin, the tire manufacturer, is now a road safety specialist, while IBM, the computer giant, has entered the consulting business.

How to Create New Boxes

If the theory makes sense, how does it work in practice? Here is one example. Like many companies, Champagne De Castellane, a French champagne manufacturer, was committed to growing its sales. To develop ways of achieving this goal, it held workshops on three days over a two-week period. Senior executives were asked to build a new box that would foster some innovative business ideas.

To start with, the executives were asked to think about their business without mentioning the words they most often used to describe it—for instance, liquor, drink, champagne, alcohol, bottle, and so on. As a result of this exercise, the team came to the conclusion that the company’s business was fundamentally about contributing to the success of parties and celebrations.

Once that insight had emerged—and a new box had been formed—the executives had a framework within which they could think about the company and its future. Many ideas flowed—a number of which enabled Champagne De Castellane to become more appealing to consumers and to grow sales. For instance:

• In the summer, champagne is often not cold enough, especially if it is brought to a party as a gift. The company found that it could solve the problem by making a plastic bag that was sturdy enough to carry not only the bottle but also a few pounds of ice. 

• At many parties and celebrations, someone is called on to give a speech. The company determined that it could put together a self-help booklet titled “How to Write a Speech” and attach it to the bottle. 

• Parties thrive on games and entertainment. The company resolved to modify the wooden crates that contain its champagne bottles so that they could be recycled as game boards for chess, checkers, and backgammon.

It is worth noting that during the three-day brainstorming process, about 80 percent of the executives’ energy was devoted to the identification of a new box (the party). Once that was done, the ideas came relatively easily. Indeed, coming up with the right new box is always the tough part, regardless of whether the underlying challenge is scenario planning, business development, or the design of a new strategic vision. So it is critical that companies understand this—and adopt a process that allows them to create the new box.

---

The brain is like a two-stroke engine. We are well aware of the value of the second stroke, when the brain selects, compares, sorts, plans, and decides. But the first stroke—when the brain imagines, dreams, suggests, and opens horizons—is the one that really matters. This process, however, needs organization—hence the need for a new box. And in times of crisis, when companies everywhere are concerned about their future, the importance of being able to think in new boxes is greater than ever. via bcg perspectives

_________________________________________________________________________

Jim Woods is about helping companies and people engage innovate and grow in all the areas important to them. Jim is a professional speaker, author, coach, and strategy consultant based in Colorado Springs, Co. Follow Jim on Twitter @innothinkgroup, Facebook https://www.facebook.com/InnoThink Group or check out his company website http://innothinkgroup.com for more tips and strategies effective leadership, engaged employees, increase growth, and customer effectiveness through innovation. To arrange for Jim to consult or speak at your event email Jim.

 Click here to arrange for Jim to speak to or consult with your organization.

10 Principles of Change Management and Innovation for Dummies

Image courtesy allthingslearning

Way back when (pick your date), senior executives in large companies had a simple goal for themselves and their organizations: stability. Shareholders wanted little more than predictable earnings growth. Because so many markets were either closed or undeveloped, leaders could deliver on those expectations through annual exercises that offered only modest modifications to the strategic plan. Prices stayed in check; people stayed in their jobs; life was good.

Market transparency, labor mobility, global capital flows, and instantaneous communications have blown that comfortable scenario to smithereens. In most industries — and in almost all companies, from giants on down — heightened global competition has concentrated management’s collective mind on something that, in the past, it happily avoided: change. Successful companies, as Harvard Business School professor Rosabeth Moss Kanter told s+b in 1999, develop “a culture that just keeps moving all the time.”

This presents most senior executives with an unfamiliar challenge. In major transformations of large enterprises, they and their advisors conventionally focus their attention on devising the best strategic and tactical plans. But to succeed, they also must have an intimate understanding of the human side of change management — the alignment of the company’s culture, values, people, and behaviors — to encourage the desired results. Plans themselves do not capture value; value is realized only through the sustained, collective actions of the thousands — perhaps the tens of thousands — of employees who are responsible for designing, executing, and living with the changed environment.

Long-term structural transformation has four characteristics: scale (the change affects all or most of the organization), magnitude (it involves significant alterations of the status quo), duration (it lasts for months, if not years), and strategic importance. Yet companies will reap the rewards only when change occurs at the level of the individual employee.

Many senior executives know this and worry about it. When asked what keeps them up at night, CEOs involved in transformation often say they are concerned about how the work force will react, how they can get their team to work together, and how they will be able to lead their people. They also worry about retaining their company’s unique values and sense of identity and about creating a culture of commitment and performance. Leadership teams that fail to plan for the human side of change often find themselves wondering why their best-laid plans have gone awry.

No single methodology fits every company, but there is a set of practices, tools, and techniques that can be adapted to a variety of situations. What follows is a “Top 10” list of guiding principles for change management. Using these as a systematic, comprehensive framework, executives can understand what to expect, how to manage their own personal change, and how to engage the entire organization in the process.

1. Address the “human side” systematically. Any significant transformation creates “people issues.” New leaders will be asked to step up, jobs will be changed, new skills and capabilities must be developed, and employees will be uncertain and resistant. Dealing with these issues on a reactive, case-by-case basis puts speed, morale, and results at risk. A formal approach for managing change — beginning with the leadership team and then engaging key stakeholders and leaders — should be developed early, and adapted often as change moves through the organization. This demands as much data collection and analysis, planning, and implementation discipline as does a redesign of strategy, systems, or processes. The change-management approach should be fully integrated into program design and decision making, both informing and enabling strategic direction. It should be based on a realistic assessment of the organization’s history, readiness, and capacity to change.

2. Start at the top. Because change is inherently unsettling for people at all levels of an organization, when it is on the horizon, all eyes will turn to the CEO and the leadership team for strength, support, and direction. The leaders themselves must embrace the new approaches first, both to challenge and to motivate the rest of the institution. They must speak with one voice and model the desired behaviors. The executive team also needs to understand that, although its public face may be one of unity, it, too, is composed of individuals who are going through stressful times and need to be supported.

Executive teams that work well together are best positioned for success. They are aligned and committed to the direction of change, understand the culture and behaviors the changes intend to introduce, and can model those changes themselves. At one large transportation company, the senior team rolled out an initiative to improve the efficiency and performance of its corporate and field staff before addressing change issues at the officer level. The initiative realized initial cost savings but stalled as employees began to question the leadership team’s vision and commitment. Only after the leadership team went through the process of aligning and committing to the change initiative was the work force able to deliver downstream results.

3. Involve every layer. As transformation programs progress from defining strategy and setting targets to design and implementation, they affect different levels of the organization. Change efforts must include plans for identifying leaders throughout the company and pushing responsibility for design and implementation down, so that change “cascades” through the organization. At each layer of the organization, the leaders who are identified and trained must be aligned to the company’s vision, equipped to execute their specific mission, and motivated to make change happen.

A major multiline insurer with consistently flat earnings decided to change performance and behavior in preparation for going public. The company followed this “cascading leadership” methodology, training and supporting teams at each stage. First, 10 officers set the strategy, vision, and targets. Next, more than 60 senior executives and managers designed the core of the change initiative. Then 500 leaders from the field drove implementation. The structure remained in place throughout the change program, which doubled the company’s earnings far ahead of schedule. This approach is also a superb way for a company to identify its next generation of leadership.

4. Make the formal case. Individuals are inherently rational and will question to what extent change is needed, whether the company is headed in the right direction, and whether they want to commit personally to making change happen. They will look to the leadership for answers. The articulation of a formal case for change and the creation of a written vision statement are invaluable opportunities to create or compel leadership-team alignment.

Three steps should be followed in developing the case: First, confront reality and articulate a convincing need for change. Second, demonstrate faith that the company has a viable future and the leadership to get there. Finally, provide a road map to guide behavior and decision making. Leaders must then customize this message for various internal audiences, describing the pending change in terms that matter to the individuals.

A consumer packaged-goods company experiencing years of steadily declining earnings determined that it needed to significantly restructure its operations — instituting, among other things, a 30 percent work force reduction — to remain competitive. In a series of offsite meetings, the executive team built a brutally honest business case that downsizing was the only way to keep the business viable, and drew on the company’s proud heritage to craft a compelling vision to lead the company forward. By confronting reality and helping employees understand the necessity for change, leaders were able to motivate the organization to follow the new direction in the midst of the largest downsizing in the company’s history. Instead of being shell-shocked and demoralized, those who stayed felt a renewed resolve to help the enterprise advance.

5. Create ownership. Leaders of large change programs must overperform during the transformation and be the zealots who create a critical mass among the work force in favor of change. This requires more than mere buy-in or passive agreement that the direction of change is acceptable. It demands ownership by leaders willing to accept responsibility for making change happen in all of the areas they influence or control. Ownership is often best created by involving people in identifying problems and crafting solutions. It is reinforced by incentives and rewards. These can be tangible (for example, financial compensation) or psychological (for example, camaraderie and a sense of shared destiny).

At a large health-care organization that was moving to a shared-services model for administrative support, the first department to create detailed designs for the new organization was human resources. Its personnel worked with advisors in cross-functional teams for more than six months. But as the designs were being finalized, top departmental executives began to resist the move to implementation. While agreeing that the work was top-notch, the executives realized they hadn’t invested enough individual time in the design process to feel the ownership required to begin implementation. On the basis of their feedback, the process was modified to include a “deep dive.” The departmental executives worked with the design teams to learn more, and get further exposure to changes that would occur. This was the turning point; the transition then happened quickly. It also created a forum for top executives to work as a team, creating a sense of alignment and unity that the group hadn’t felt before.

6. Communicate the message. Too often, change leaders make the mistake of believing that others understand the issues, feel the need to change, and see the new direction as clearly as they do. The best change programs reinforce core messages through regular, timely advice that is both inspirational and practicable. Communications flow in from the bottom and out from the top, and are targeted to provide employees the right information at the right time and to solicit their input and feedback. Often this will require overcommunication through multiple, redundant channels.

In the late 1990s, the commissioner of the Internal Revenue Service, Charles O. Rossotti, had a vision: The IRS could treat taxpayers as customers and turn a feared bureaucracy into a world-class service organization. Getting more than 100,000 employees to think and act differently required more than just systems redesign and process change. IRS leadership designed and executed an ambitious communications program including daily voice mails from the commissioner and his top staff, training sessions, videotapes, newsletters, and town hall meetings that continued through the transformation. Timely, constant, practical communication was at the heart of the program, which brought the IRS’s customer ratings from the lowest in various surveys to its current ranking above the likes of McDonald’s and most airlines.

7. Assess the cultural landscape. Successful change programs pick up speed and intensity as they cascade down, making it critically important that leaders understand and account for culture and behaviors at each level of the organization. Companies often make the mistake of assessing culture either too late or not at all. Thorough cultural diagnostics can assess organizational readiness to change, bring major problems to the surface, identify conflicts, and define factors that can recognize and influence sources of leadership and resistance. These diagnostics identify the core values, beliefs, behaviors, and perceptions that must be taken into account for successful change to occur. They serve as the common baseline for designing essential change elements, such as the new corporate vision, and building the infrastructure and programs needed to drive change.

8. Address culture explicitly. Once the culture is understood, it should be addressed as thoroughly as any other area in a change program. Leaders should be explicit about the culture and underlying behaviors that will best support the new way of doing business, and find opportunities to model and reward those behaviors. This requires developing a baseline, defining an explicit end-state or desired culture, and devising detailed plans to make the transition.

Company culture is an amalgam of shared history, explicit values and beliefs, and common attitudes and behaviors. Change programs can involve creating a culture (in new companies or those built through multiple acquisitions), combining cultures (in mergers or acquisitions of large companies), or reinforcing cultures (in, say, long-established consumer goods or manufacturing companies). Understanding that all companies have a cultural center — the locus of thought, activity, influence, or personal identification — is often an effective way to jump-start culture change.

A consumer goods company with a suite of premium brands determined that business realities demanded a greater focus on profitability and bottom-line accountability. In addition to redesigning metrics and incentives, it developed a plan to systematically change the company’s culture, beginning with marketing, the company’s historical center. It brought the marketing staff into the process early to create enthusiasts for the new philosophy who adapted marketing campaigns, spending plans, and incentive programs to be more accountable. Seeing these culture leaders grab onto the new program, the rest of the company quickly fell in line.

9. Prepare for the unexpected. No change program goes completely according to plan. People react in unexpected ways; areas of anticipated resistance fall away; and the external environment shifts. Effectively managing change requires continual reassessment of its impact and the organization’s willingness and ability to adopt the next wave of transformation. Fed by real data from the field and supported by information and solid decision-making processes, change leaders can then make the adjustments necessary to maintain momentum and drive results.

A leading U.S. health-care company was facing competitive and financial pressures from its inability to react to changes in the marketplace. A diagnosis revealed shortcomings in its organizational structure and governance, and the company decided to implement a new operating model. In the midst of detailed design, a new CEO and leadership team took over. The new team was initially skeptical, but was ultimately convinced that a solid case for change, grounded in facts and supported by the organization at large, existed. Some adjustments were made to the speed and sequence of implementation, but the fundamentals of the new operating model remained unchanged.

10. Speak to the individual. Change is both an institutional journey and a very personal one. People spend many hours each week at work; many think of their colleagues as a second family. Individuals (or teams of individuals) need to know how their work will change, what is expected of them during and after the change program, how they will be measured, and what success or failure will mean for them and those around them. Team leaders should be as honest and explicit as possible. People will react to what they see and hear around them, and need to be involved in the change process. Highly visible rewards, such as promotion, recognition, and bonuses, should be provided as dramatic reinforcement for embracing change. Sanction or removal of people standing in the way of change will reinforce the institution’s commitment.

Most leaders contemplating change know that people matter. It is all too tempting, however, to dwell on the plans and processes, which don’t talk back and don’t respond emotionally, rather than face up to the more difficult and more critical human issues. But mastering the “soft” side of change management needn’t be a mystery. via strategy-business.com

 

HIRE JIM WOODS TO CONSULT OR SPEAK WITH YOUR ORAGANIZATION.  

Jim Woods is principal and founder of InnoThink Group. Jim is a business turnaround expert and personal coach. His story is riveting. He has worked with government, U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. Jim W experiences, extensive research on competitive strategy and innovation have given him a fresh perspective on improving individual and organizational performance. Jim is a prolific speaker on strategic innovation, creative leadership, uncertainty and competitive strategy. Speak with us for consulting or speaking engagements call 719-266-6703 or click here for more information. Follow Jim on Twitter. Follow Jim on Facebook.  

 

The Case Against Incremental Improvements In A Business World Turn Upside Down

I hear this from executives and workers all the time: "I understand that we need to innovate, but why now? I'm just trying to make it to the next quarter. This is the time to get back to basics." In theory, I don't object to getting back to basics. Every company has to grow revenue, raise prices (if it can), and cut costs. That simple arithmetic never changes.

But here is the shared dilemma: Most companies today can't grow revenue by force feeding the same old stuff to the same old customers through the same old channels in the same old way. People may already be eating as many hamburgers as they are ever going to eat, drinking as much beer as they are ever going to drink, even buying as many plain vanilla personal computers as they are ever going to buy.

You just can't grow revenue significantly -- unless you bring jaw-dropping new products and services to customers. And surprise surprise….your customers are internal (employee partners) and external. Unless employee partners are working in a state of discovery and awe, rather than archaic feardoms, remarkable competitive products leaving competitors whimpering, “What the heck” on Monday mornings won’t occur.

The choice for business is really quite simple. Get busy doing the things you know to do.

 

Hire Jim

Jim Woods is principal and founder of InnoThink Group. Jim is a business turnaround expert and personal coach. His story is riveting. He has worked with government, U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. Jim W experiences, extensive research on competitive strategy and innovation have given him a fresh perspective on improving individual and organizational performance. Jim is a prolific speaker on strategic innovation, creative leadership, uncertainty and competitive strategy. Speak with us for consulting or speaking engagements call 719-266-6703 or click here for more information. Follow Jim on Twitter. Follow Jim on Facebook.  

 

The Case Against Incremental Improvements In A Business World Turn Upside Down

I hear this from executives and workers all the time: "I understand that we need to innovate, but why now? I'm just trying to make it to the next quarter. This is the time to get back to basics." In theory, I don't object to getting back to basics. Every company has to grow revenue, raise prices (if it can), and cut costs. That simple arithmetic never changes.

But here is the shared dilemma: Most companies today can't grow revenue by force feeding the same old stuff to the same old customers through the same old channels in the same old way. People may already be eating as many hamburgers as they are ever going to eat, drinking as much beer as they are ever going to drink, even buying as many plain vanilla personal computers as they are ever going to buy.

You just can't grow revenue significantly -- unless you bring jaw-dropping new products and services to customers. And surprise surprise….your customers are internal (employee partners) and external. Unless employee partners are working in a state of discovery and awe, rather than archaic feardoms, remarkable competitive products leaving competitors whimpering, “What the heck” on Monday mornings won’t occur.

The choice for business is really quite simple. Get busy doing the things you know to do.

Hire Jim

Jim Woods is principal and founder of InnoThink Group. Jim is a business turnaround expert and personal coach. His story is riveting. He has worked with government, U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. Jim W experiences, extensive research on competitive strategy and innovation have given him a fresh perspective on improving individual and organizational performance. Jim is a prolific speaker on strategic innovation, creative leadership, uncertainty and competitive strategy. Speak with us for consulting or speaking engagements call 719-266-6703 or click here for more information. Follow Jim on Twitter. Follow Jim on Facebook.  

Dilbert Simplifies The Mystique of Innovation and Management Hyperbole - Jim Woods

Courtesy Scott Adams

Why not try someone different? Hire Jim Woods to consult with your organization or speak at your event.

 

Jim Woods is principal and founder of InnoThink Group. Jim is a business turnaround expert and personal coach. His story is riveting. He has worked with government, U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. Jim W experiences, extensive research on competitive strategy and innovation have given him a fresh perspective on improving individual and organizational performance. Jim is a prolific speaker on strategic innovation, creative leadership, uncertainty and competitive strategy. Speak with us for consulting or speaking engagements call 719-266-6703 or click here for more information. Follow Jim on Twitter. Follow Jim on Facebook.  

Collaboration and The Rise of Compassionate Leadership: Should You Be Cruel to Be Kind?

There's a powerful link between productivity and what has been identified as "compassionate leadership" in organisations, observes Christina Boedker, a lecturer in accounting at the Australian School of Business and leader of a major business research study that looks at the links between leadership and organisational performance.

The single greatest influence on profitability and productivity within an organisation, according to the research project – which to date has taken in data from more than 5600 people in 77 organisations – is the ability of leaders to spend more time and effort developing and recognising their people, welcoming feedback, including criticism, and fostering co-operation among staff.

Out of all of the various elements in a business, the ability of a leader to be compassionate – that is, "to understand people's motivators, hopes and difficulties and to create the right support mechanism to allow people to be as good as they can be" – has the greatest correlation with profitability and productivity, Boedker observes. "It's about valuing people and being receptive and responsive to criticism."

The findings correlate with the theory recently advanced by Geoff Aigner, director of Social Leadership Australia and adjunct faculty member in AGSM Executive Programs at the Australian School of Business. Aigner's thought-provoking book, Leadership Beyond Good Intentions: What It Takes To Really Make A Difference asserts that good management is ultimately an act of "compassion". While not a word typically associated with organisational leadership, Aigner suggests, compassion in this context means taking responsibility for the growth and development of others, "something that should be every leader's goal".

"Without this motivation we are on our own with the power we have rather than using it to benefit our world and work. Without this motivation we're not really leading," Aigner points out.

Compassion vs. Kindness

In everyday life, people typically confuse compassion with kindness, argues Aigner, who consults to organisations including the Australian Human Rights Commission, National Australia Bank, NSW Health and the NSW Department of Family & Community Services.

"There is a point that all managers face, wanting to be nice to people, but also having an organisational purpose," Aigner says. "I have often seen leaders getting stuck trying to balance the two, either being too hard or too soft in their approaches." He acknowledges that "taking responsibility for organisational systems and the people in them can be overwhelming, tiring or frightening" for managers.

Click here to read Peter Drucker's insights on Effective Leaders

One example is the common dilemma when a manager is reluctant to tell a subordinate that they are not performing because that person is perceived to be fragile – "they may come from a minority group or be difficult to deal with", suggests Aigner. But for a manager faced with this situation, to stick his or her head in the sand is counter-productive, he says. "Whether the reluctance to address the performance issue is due to kindness (or fear), failure to address the real issue actually blocks the under-performing person's growth and the system is damaged."

Boedker agrees. "Sometimes you have to be cruel to be kind," she says. "Getting people where they want to go will sometimes involve hard conversations. Many managers don't like having these conversations but to be compassionate – effective as a manager and leader – they must have them."

A surprising outcome of Boedker's research is the finding that, out of four levels of leadership from the executive level through middle management to frontline managers, it's the lowest level of leaders that drives a company's profitability. Perhaps, Boedker surmises, this is because frontline managers are more customer-facing than others and therefore have a lot more impact.

"Sometimes the assumption is that leadership is only at the elite level and that leadership development should concentrate on the executive team," Boedker says. "But leadership exists at all levels and in reality frontline managers tend to supervise more people and therefore can have a far greater impact. And compassion is a two-way thing. It flows from the top down but also, importantly, from the bottom up. In other words, hard conversations must be initiated by all staff, including subordinates who can give their bosses valuable feedback because all leaders need compassion to achieve personal growth and be the best they can be."

Facts About Leadership

The research results produced by Boedker and her team make clear the value of managers who show compassion. In high-performing workplaces, as opposed to the organisations in which productivity and profitability are below average, the following statistics were revealed:

• leaders spend more time and effort managing their people (29.3% higher)
• managers have clear values and practice what they preach (25.7% higher)
• senior people give employees opportunities to lead work assignments and activities (22.9% higher)
• management encourages employee development and learning (21.1% higher)
• leaders welcome criticism and feedback as learning opportunities (20.4% higher)
• managers give increased recognition and acknowledgement to employees (19% higher)
• leaders foster involvement and co-operation amongst employees (18% higher)
• management communicates a clear vision and goals for the future (17.9% higher)
• managers are innovative and encourage staff to think about problems in new ways (16.5% higher)

Applying Power Positively

For an organisation to perform well, all managers or leaders must show great compassion. But how do they activate compassion, asks Aigner, when many management issues stem from the underuse – or misuse – of the power that the position offers them?

Rather than focusing on a certain style of leadership, Aigner believes the real issue for managers is in how they use their power and how power manifests; both are useful to think about in terms of becoming a compassionate leader. "Maybe we need to reclaim the word ‘leadership', which is unashamedly about making progress for the systems we are operating. We need to ask how to use our power as individuals responsibly. Using power responsibly makes us compassionate," he says.

"In organisations where leaders do not own their power, there is little compassion. Paradoxically, managers who are bullying and heavy-handed tend to think they don't have any power or rank. Early in my career as a younger manager, I think I was pretty heavy-handed. I was not the subordinate anymore and I needed to take responsibility for that," recalls Aigner, who began his career in the transport industry before undertaking an MBA and becoming a consultant. "The successful CEOs I meet understand the power they have. They're not shirking it. They understand power is a tool that can be useful for other people and for organisational development."

Aigner also identifies a problem that seems endemic to the local culture. Australia generally has an adolescent relationship to power – "we are either attacking it or seducing it" – and this presents challenges for leaders, he observes.

Aigner believes greater leadership development is required at all levels of organisations. To bring on compassionate leadership, managers need to take the first often awkward step of understanding themselves and the power they exercise. Only then can change occur, because compassionate leaders invariably are aware of their own human failings, he says.

Beyond the hierarchical power that's handed to managers through the organisational structure, Aigner suggests that power manifests in the workplace in a multitude of ways. "There's informal power via reputation, connections and unearned rank that may be attributed to gender, race, education, class, culture, birthplace, sexuality … There's also psychological rank from life experiences, confidence, overcoming hardships and experience of loving environments," he notes.

In recent years, working across all sectors, Aigner insists he's noticed that Australian managers and executives often are scared of engaging in a deeper conversation about how they exercise power and their own capacity for leadership. "But you only have to scratch the surface to see a real desire to do the job well and make organisations more responsible, more useful and more effective, and for people to reach their full potential," he says. "I have seen a real desire to leave a legacy of more than just this year's financial statement. And this is a great and admirable dream."

•   protection of followers from all threats. Such protection should cover, the book suggested, threats both external and internal to the organisation, and threats from the followers' own behaviours and ignorance. I have found this advice one of the most valuable ideas I have ever encountered.

Unfortunately, I do not recall the name of the book.

Anyway, one of the implications of this particular idea is that lower-level managers can indeed have a huge impact of an organisation's performance. I would argue, however, that is not because the managers there are distinctively 'customer focused' (as Boedker suggests) but rather because they are more likely than senior managers to encounter 'external threats' (e.g. irrate or unreasonable customers), and hence have greater opportunity to be visibly protective of their subordinates. via knowledge.asb.unsw.edu.au

How are you responding to a competitive and economic environment unlike anything that has come before? 

Jim Woods is about helping companies and people engage innovate and grow in all the areas important to them. Jim is a professional speaker, author, coach, and strategy consultant based in Colorado Springs, Co. Follow Jim on Twitter @innothinkgroup, Facebook https://www.facebook.com/InnoThink Group or check out his company website http://innothinkgroup.com for more tips and strategies effective leadership, engaged employees, increase growth, and customer effectiveness through innovation. To arrange for Jim to consult or speak at your event email Jim.

Leaders Make Values Visible by Marshall Goldsmith

Ultimately, our actions will say much more to employees about our values and our leadership skills than our words ever can. If our actions are wise, no one will care if the words on the wall are not perfect. ...

The corporate credo. Companies have wasted millions of dollars and countless hours of employees' time agonizing over the wording of statements that are inscribed on plaques and hung on walls. There is a clear assumption that people's behavior will change because the pronouncements on plaques are "inspirational" or certain words "integrate our strategy and values." There is an implicit hope that when people - especially managers - hear great words, they will start to exhibit great behavior. 

Sometimes these words morph as people try to keep up with the latest trends in corporate-speak. A company may begin by striving for "customer satisfaction," then advance to "total customer satisfaction," and then finally reach the pinnacle of "customer delight." 

But this obsession with words belies one very large problem: There is almost no correlation between the words on the wall and the behavior of leaders. Every company wants "integrity," "respect for people," "quality," "customer satisfaction," "innovation," and "return for shareholders." Sometimes companies get creative and toss in something about "community" or "suppliers." But since the big messages are all basically the same, the words quickly lose their real meaning to employees - if they had any in the first place. 

Enron is a great example. Before the energy conglomerate's collapse in 2001, I had the opportunity to review Enron's values. I was shown a wonderful video on Enron's ethics and integrity. I was greatly impressed by the company's espoused high-minded beliefs and the care that was put into the video. Examples of Enron's good deeds in the community and the professed character of Enron's executives were particularly noteworthy. 

It was one of the most smoothly professional presentations on ethics and values that I have ever seen. Clearly, Enron spent a fortune "packaging" these wonderful messages. It didn't really matter. Despite the lofty words, many of Enron's top executives either have been indicted or are in jail. 

The situation couldn't be more different at Johnson & Johnson. The pharmaceutical company is famous for its Credo, which was written many years ago and reflected the sincere values of the leaders of the company at that time. The J&J Credo could be considered rather quaint by today's standards. It contains several old-fashioned phrases, such as "must be good citizens - support good works and charities - and bear our fair share of taxes" and "maintain in good order the property that we are privileged to use." It lacks the slick PR packaging that I observed at Enron. 

Yet, even with its less-powerful language and seemingly dated presentation, the J&J Credo works - primarily because over many years, the company's management has taken the values that it offers seriously. J&J executives have consistently challenged themselves and employees not just to understand the values, but to live them in day-to-day behavior. When I conducted leadership training for J&J, one of its very top executives spent many hours with every class. The executive's task was not to talk about compensation or other perks of J&J management; it was to discuss living the company's values. 

My partner, Howard Morgan, and I recently completed a study of more than 11,000 managers in eight major corporations. (See "Leadership Is a Contact Sport," by Marshall Goldsmith and Howard Morgan, s+b, Fall 2004.) We looked at the impact of leadership development programs in changing executive behavior. As it turns out, each of the eight companies had different values and different words to describe ideal leadership behavior. But these differences in words made absolutely no difference in determining the way leaders behaved. One company spent thousands of hours composing just the right words to express its view of how leaders should act - in vain. I am sure that the first draft would have been just as useful. 

At many companies, performance appraisal forms seem to undergo the same careful scrutiny as credos. In fact, more effort seems to be given to producing the perfect words on an appraisal form than to managing employee performance itself. I worked with one company that had used at least 15 different performance appraisal forms and was contemplating yet another change because the present sheet "wasn't working"! If changing the words on the page could improve the performance management process, every company's appraisal system would be perfect by now. 

Companies that do the best job of living up to their values and developing ethical employees, including managers, recognize that the real cause of success - or failure - is always the people, not the words. 

Rather than wasting time on reinventing words about desired leadership behavior, companies should ensure that leaders get (and act upon) feedback from employees - the people who actually observe this behavior. Rather than wasting time on changing performance appraisal forms, leaders need to learn from employees to ensure that they are providing the right coaching. 

Ultimately, our actions will say much more to employees about our values and our leadership skills than our words ever can. If our actions are wise, no one will care if the words on the wall are not perfect. If our actions are foolish, the wonderful words posted on the wall will only make us look more ridiculous. via Marshall Goldsmith 

Jim Woods is president and founder of InnoThink Group. We are one of the very few consulting firms specialized solely in helping organizations of all sizes in all industries catalyzing top line growth through strategic innovation and hypercompetition. Email or call us at 719-649-4118 to speak at your event or devise an effective competitive advantage and innovation strategy for your organization.  Subscribe to our innovation and hypercompetition newsletter?  

Follow us on Twitter

Follow us on Linkedin

Follow us on Facebook