“Leadership is not about the next election, it’s about the next generation.” Simon Sinek, author, speaker, and organisational consultant.
We’ve seen a number of long standing and previously successful businesses fail in recent years – Woolworths, Maplin. Ferranti, Baring’s Bank, Blockbuster, Toys-R-Us, Polaroid, Kodak – to name just a few. It’s a pretty long list if you think about it, and there are many others reported to be on the brink – House of Frazer for one example. There are others which have gone from strength to strength. John Lewis, Dyson, as just a couple of examples.
There have been many others which have survived the turmoil of the last generation – financial and economic shocks, disruptive technology, trade barriers, changes in consumer demand, changes in people’s lifestyles driven by multiple effects – technology, the digital world, working patterns, globalisation, etc.
Why have some failed and some prospered? Is this down to the behaviours of the leadership team, or simply an inevitable effect of a changing world?
This blog does not set out to analyse the reasons for failure, survival or success in individual or systemic cases. What it observes is how the priorities and behaviours of a CEO might be influenced through operating an enterprise in today’s world – and how the dynamics of senior leadership teams could be a crucial factor.
The theory of economic cycles has been around for a long time. 80 years ago N.D. Kondratieff wrote in The Review of Economic Statistics[1] about an eleven year economic cycle, but also of a 50+year “long wave effect”. What drives the daily decision making of the average CEO?
The CEO has turnover, free cash and profit targets to achieve, reported quarterly if not more frequently, and a bunch of shareholders to satisfy who mostly are only interested in maximising the next dividend. On one hand this is right and proper – “jam tomorrow” is always a tough strategy to gain support for. But on the other hand – and I am speculating that in many cases this hand doesn’t carry much influence – there is a question about longer term prosperity and survival. Investing for the future. Anticipating market changes and getting there first. Embracing disruptive technology rather than denying or ignoring it. Succession planning for key roles in the organisation – Board level but also throughout the leadership structure.
Who does the overstretched and over-busy CEO with little or no time for strategic longer term thinking surround himself with?
Some will effectively delegate day to day operations to allow themselves capacity for what are arguably far more important decisions then how to bump up the figures in the next shareholder report. Some will surround themselves with like-minded people who offer little challenge thus ensuring that the leadership group will simply fall into a self-propagating “group think” which adjusts the use of evidence to produce the required or expected outcome. (As an aside this is exactly what sometimes goes wrong in aircraft disasters, when the cockpit crew are unable to think beyond their direct experience, are not trained for more innovative or lateral thinking to maximise the potential to correctly diagnose a previously unseen failure).
My postulation is that the wiser CEO will take care to surround himself with people who all think in a different way – who will generate challenge and discussion during which problems and ideas are deeply dissected from differing perspectives – the trick being, of course, to generate a little constructive tension in key decision making for not only the short term decisions but to make sure that the medium, longer term and very much longer term scenarios are understood and effective strategies put in place.
None of this is new. There are many tools for analysing the behaviour preferences of individuals and groups, under varying conditions of stress.
So to misquote from the Latin: “Quis custodiet ipsos custodes?” – “who guards the guards”, or in this case, “who leads the leaders”, and holds the CEO and his team to account for getting all the things discussed above right?
It might be a Chairman. It might be one of more non-executive Directors. It might be shareholders. Or any combination of the above. Or – more to the point – how to these people, whose vested interest is most likely in longer term success of the Enterprise, satisfy themselves that this is all being done to the best that it can?
Why not inject a little challenge? Create a little constructive tension in the machine? You may not be popular, as It may not appear a priority when the short term outlook looks rosy, but in this world more and more focus is on event horizons of an hour, a day, a month, or maybe a quarter or a year. Who is remembering to look at the Long Wave Effects? In the longer term you might be lauded for having the vision to protect the Enterprise.
[1] Kondratieff, N D. (1935) ‘The Long Waves in Economic Life’, The Review of Economic Statistics, Vol XVII, Number 6, November 1935, pp 105-115, MIT Press