How does the way we manage need to change to meet today’s challenges? The traditional “command and control” management model was never perfect. In an industrial age when suppliers could sell all their output to eager customers, business leaders could “plan and control” their way to the future. This model was already in trouble in the 1990s as customer loyalty collapsed in the wake of globalization, privatization and the Internet revolution. These increasing levels of uncertainty are here to stay.
Key components of leadership: A Common Purpose: Leadership is about creating purpose and meaning that is shared by a group of people, Creating a vision is the first great step, but unless the vision is shared by the people it will not align actionCharacter that Inspires Confidence and Trust: Who you are as a leader is just as important as what you can do … your competence. Vision and purpose is necessary, but not sufficient, without a proven character people will not follow. Character is supported by core values and a leadership philosophy which inspires trust. People trust leaders who are honest, transparent, are accountable and have integrity. Character is the foundation of leadership, if you don’t believe in the messenger, you won’t believe the message!
Most of you will remember Aesop’s fable about the tortoise and the hare who decide to have a race on a sunny day. The brash, confident hare thinks he has won the race before it even starts and decides to have a nap under a tree half way through. But when he awakes the tortoise is at the finishing line. Too many business leaders think and act like hares. They think they can grow shareholder value at unrealistic rates each year by setting aggressive targets and incentives and then (like the hare) ‘predict and control’ their future results through detailed budgets and short-term decisions. Tortoises don’t make such promises, predictions or assumptions. Instead they keep their eye on the path ahead and continuously improve their performance. The tortoise always wins in the end. Their aim is to adapt to changing conditions, beat their peers and endure over long periods of time. The best organizations are, like tortoises, adaptive systems that continuously learn, adapt and improve. Unfortunately in the business world when tortoise-type organizations appoint new leaders they can turn into hares. Royal Bank of Scotland (1727), Citigroup (1812), Lehman Brothers (1850), Washington Mutual (1889), Merrill Lynch (1914) and AIG (1919) had all adapted and endured for, in most cases, a century or more but collapsed when a new leadership generation changed the way they were managed. The result was the credit crunch of 2007-9 when trillions of dollars were wiped off corporate balance sheets leaving governments around the world with no option but to step in with taxpayers’ funds to avoid a catastrophic collapse of the financial system.
Different models lead to different styles of managementCEO’s Vision
The emerging organizational form makes the deployment of many management tools and information systems more clear and compelling. As one user noted, tools such as the balanced scorecard are ‘turbo-charged’. Also the new model is a clearer representation of the organization as a ‘system’ and enables leaders to embrace ‘systems’ or ‘lean’ thinking. There is more clarity around how work flows should be organized and which processes and activities add value for the customer and which should be eliminated. All the core ideas behind lean thinking, the strategy-focused organization, customer relationship management and economic value-added start to coalesce around horizontal accountability flows.At the same time technology vendors have developed enterprise wide (web-based) performance management systems variously known as CPM (short for ‘corporate’ performance management) BI (short for ‘business intelligence’). CPM involves the integration of planning, forecasting, scorecarding and business intelligence (or decision support) including financial reporting and consolidation. It uses a common database and the ability to display the data via a scorecard or dashboard interface. In a sense, CPM is to performance data what enterprise resource planning (ERP) is to transactional data: that is a broad embrace of all relevant information, fully integrated and thus providing a single view. The whole point of a web-based CPM system is to empower people by enabling them to access whatever information they think will be useful to them. Everyone is on the same page at the same time. The result is more coherent, effective and responsive decision-making.