Chapter 3

The connected leadership challenge

Chapter 1 introduced you to the five factors which when combined can help develop the connected organisation. In this chapter we consider them in a bit more detail through the following framework:

• What does the connected organisation look like?
• How should leaders behave to achieve that?

At the end is the connected company questionnaire, which will give you a better idea of the gap between where your organisation currently stands and where it should be, so that you can plan how to bridge that gap.

Reinventing leadership

As discussed in the previous chapter, the challenges facing today’s organisations are daunting. They transcend markets, geographies and sectors. Many of these challenges are caused by the exponential rate of technological innovation and capacity, but some are rooted in the upheavals caused by the global financial crisis, the associated loss of trust in corporate and governmental institutions, and consumer empowerment.

How can organisations respond? Many are seeking to develop a culture that operates with an almost organic ability to adapt and work in a joined-up way. They are looking to a more connected model with an ethos of devolved decision making and collaboration, which allows for quick adjustments to changing conditions. Unlike the decades-old hierarchical structures built on giving orders from on high, this is more fluid, with a more sophisticated mix of highly coordinated activity and localised service delivery.

The emerging style of leadership to support this model is more in tune with high levels of customer expectation, in terms of both the quality and the value of the products and services you provide and customers’ perception of your trustworthiness as an organisation. Sometimes this is focused on rebuilding trust when corporate reputations have been rocked by scandal. Other times it is about encouraging people to adapt and learn in local markets to stay close to accelerating customer expectations while remaining true to the core mission of the organisation. Fundamentally, however, it is about reinventing what we mean by leadership, moving from the cult of the leader as hero to a new post-heroic culture, which is more in line with society’s emphasis on values, democracy and transparency of information.

Transformation on the scale required to achieve this model might seem overwhelming at first. But by adopting a planned and sustained approach which involves people across the organisation, companies can achieve this level of change, as some of the case studies in this book demonstrate. This transition comes from working through the five factors first discussed in Chapter 1 and illustrated in Figure 3.1.

Taking each in turn, here is a description of what these factors mean with an example of how each works in practice.

• Purpose and direction enables you to create clarity and belief, so that your colleagues can buy into what they are doing together and why it is worthwhile. Purpose is about the higher emotional or ethical mission of the organisation, why it exists and what its unique contribution is to the world. Direction is about the longer-term vision of the organisation, what it is seeking to achieve and the strategy to help achieve it. At Standard Chartered Bank the purpose is ‘Here for good’, which is a bold statement of accountability and long-term thinking. The bank’s direction is to be the leading international bank, which requires it to invest in customer connectivity and make its network highly effective and efficient.
• Authenticity enables you to create trust by insisting on values-based leadership, which is rooted in open and transparent relationships between leaders and followers across the organisational structure. At UK retailer Marks and Spencer, for example, its values include being ‘in touch’. Its leaders work hard to be in touch with colleagues, customers, suppliers and other stakeholders, partly through its ‘Plan A’ sustainability programme and partly through everyday interactions, in order to achieve a sustainable long-term business that people can trust.
• Devolved decision making enables you to create involvement by ensuring that decisions are made at the appropriate level in the hierarchy as close to the customer as possible. At Spanish-based Inditex, owner of the Zara retailing brand, store managers and their teams decide what stock to order, based on what customers are buying, and, perhaps more importantly, what they are not. Each evening they review sales and what customers have tried on and rejected, and order accordingly to reflect local demand.
• Collaborative achievement enables you to create results through working together as teams to achieve shared outcomes such as end-to-end process efficiency and flexibility. In the case of the UK’s Olympic athletes, Team GB, the emphasis on individual athletes and teams working together to learn from each other and swap great ideas across disciplines was one of the drivers of the team’s great success in winning 29 gold medals at the London Olympics in 2012.
• Agility enables you to respond to changing conditions by developing a culture of continuous improvement and adaptation to changing customer trends and competitor activity, in line with the organisation’s purpose and direction. A good example is Three, the UK mobile operator. The company has a strong culture of challenging the market norms by thinking differently, which it put into practice in 2014 by allowing customers to use their smartphones internationally on the same tariff as in the UK, a popular move that led to the company’s customer rating improving dramatically.

The connections in this chain of factors all need to be strong for it to work in a sustainable, reliable way. These connections rely on a high degree of trust among people in the organisation: trust that each person and team will play their part in the process and trust that each person and team will do what’s best for the whole business based on an explicit and shared sense of purpose and clear priorities understood consistently across the whole business.

In the following sections we explore more about the five factors from both the organisational and the leadership perspectives.

What does the connected organisation look like?

As we look at the connected leadership factors from the point of view of how to create a connected organisation, I hope you can start to understand where to find both your company’s strengths (which you can build on) and the gaps (which need filling).

1 Purpose and direction

The characteristics of a connected organisation in terms of purpose and direction include:

• We have a shared understanding of why we exist as an organisation.
• We have a clear sense of what we are trying to achieve as an organisation.
• Our overall strategy provides consistent parameters for action across all levels of the organisation.
• A line of sight exists between each person’s goals and the organisation’s strategic goals.

The direction is about where the organisation is going: the vision for the future and the strategy of how to get there in terms of planning, budgets, setting priorities, resource allocation and so on. The purpose is the answer to the question ‘why?’ as opposed to the ‘what’ and ‘where’ of the direction. It considers:

• Why is the nature of our work important and meaningful?
• Why is it more than simply generating financial returns for our shareholders?
• What purpose does the enterprise have in society for all our stakeholders?
• Is what we are trying to achieve and where we are going closely aligned with our purpose?
• Are we giving everyone the sense of a higher order of value than simply seeing what they do as a job with a salary?

There is another way to define the difference between purpose and direction. An organisation might have a very well-defined strategy in place as part of the determination to be, say, number one in the market by 2020. But the people in the enterprise might have no sense of why that’s important. This should be articulated through what we call the organisational narrative: the story the organisation tells about itself. It has to resonate strongly enough to engage colleagues in or with a vision, whether it’s called a mission statement or another form of words that explains ‘why we exist’.

For example, the purpose of Richard Branson’s Virgin Group from its very early days has been to identify markets where there are incumbent suppliers such as in the music and airline industries, and set out to shake up those markets by changing the rules on behalf of customers. This gives colleagues a strong sense of purpose. They buy into it because they see it has real meaning. The strategic direction is often focused on changing the customer experience, so that they perceive increased value and want to return. The direction is completely in line with the higher purpose represented by the Virgin brand.

2 Authenticity

The characteristics of a connected organisation in terms of authenticity include:

• managers at all levels build open and trusting relationships with all colleagues
• managers and colleagues have strong self-awareness and emotional intelligence
• managers act, and encourage others to act, on a balanced processing of information (awareness of what is happening now)
• managers and colleagues always act in the best interests of the whole organisation.

Purpose and direction go together because they are about what the organisation does and why it is significant. They define and give emphasis to its meaning in the world, which in turn gives the people who work there a shared sense of doing something worthwhile, of making a difference. The second connected leadership factor, authenticity, is more about how the business operates. This includes what the values, the culture and norms are based on, which is often reflected in the character of the senior leaders and the principles on which they make decisions, as well as the degree to which they foster open and transparent relationships.

Making this explicit is both important and helpful. Unless you communicate effectively with people across the business to develop and sustain a good level of understanding about what values you share and what behaviours are therefore valued or not wanted, colleagues have no reference point. In one client I work with, the CEO replaced two successful board members over a two-year period because they were not living the values of the organisation. Despite repeated challenges from the CEO, the two executives chose to continue to behave in ways that demonstrated a moral pragmatism that the CEO found unacceptable. The signal to everyone else in the business was clear: we take our values seriously and they are not negotiable, even if you are performing well in other ways.

If senior leaders and the organisation communicate values that are not seen in practice, in the everyday way leaders make decisions, manage performance, promote people and so on, these ‘espoused values’³ in fact highlight a disconnect between what the leaders say and what they do, which discourages trust among colleagues. A common feature among many of the businesses I meet in my work is this lack of trust among colleagues in the senior leaders of their organisation. If people hear one thing and see another played out in practice, they are unlikely to believe the words or the underlying intentions of the leaders involved. Organisations where front-line employees trusted senior leadership posted a 42 per cent higher return on shareholder investment over those firms where distrust was the norm.⁴ Trust matters, and is a foundation stone for effective distributed leadership.

Therefore, open, transparent and trusting relationships are the fundamental enabler for the successful and connected organisation. When these relationships are in place, leaders can give authority to others to take decisions and make things happen, and others feel comfortable and confident to take that authority and its associated risks.

3 Devolved decision making

The characteristics of a connected organisation in terms of devolved decision making include:

• service-oriented decisions are taken as close to the customer as possible
• only key strategic decisions are made centrally
• local decisions are based on the best response to local circumstances within the organisation’s overall parameters
• unified management information is available to support joined-up decision making.

Devolved decision making involves sharing power across the organisation based on the principle of each level making the decisions only they can make. The board, for example, is in many companies the only group that can make long-term strategic decisions about resource allocation, culture, market priorities and so on. If they focus on these, and enable their teams to make other decisions, they will provide a clear strategic lead for the business, which gives a clear framework within which others can then make decisions and operate effectively. It gives people the flexibility and freedom to operate and make decisions closer to the customer, confident that what they are doing is in line with the corporate purpose, direction and values.

But people need to be clear about what decisions it is best for them to make. They also need access to good information on which to base those decisions and to understand the implications of their decisions for the rest of the organisation and its wider stakeholders, from customers to regulators.

In the research conducted by Ipsos MORI and Cirrus in early 2015, this is the factor that is the least popular among CEOs.⁵ This could be the result of the natural human tendency in senior leaders to seek and exercise high levels of control in order to ensure the ‘right’ outcome. But it breeds a more compliant, less intelligent organisation, and one where decisions are delegated upwards and the commitment to executing decisions is reduced because people have not made the decision themselves. They have been, in effect, disempowered.

Success in the transition to a more empowered environment is not simply a case of delegating more decisions and hoping it works. It needs to be based on persistent support and coaching from senior leaders, to develop in their teams the skills and judgement to make and execute sound decisions. It also requires high-quality and simple management information to provide more junior managers with the insight needed to make sound judgements about the best course of action in any given scenario. And it needs regular feedback for managers from senior leaders to help fine-tune their insight, judgement and ability to understand and manage risk.

If empowerment is a shared activity between more senior and more junior people, where the latter are receiving more power to decide and developing the ability to use it wisely, it can transform the more junior person’s confidence, capability to decide and execute effectively, and readiness for more senior roles.

All of this is best happening when the ‘spine’ of the organisation is strong: the vision, the purpose, the values and the strategy are all clear, coherent and well understood across the business. With this in place, leadership can be distributed more widely, safe in the knowledge that people have clear parameters and support in place to do what’s best for the business. Underpinning all of this is the culture of the organisation, which needs to be focused on learning, not blame, on the customer, not on internal priorities, and on simplicity, not bureaucracy.

4 Collaborative achievement

The characteristics of a connected organisation in terms of collaborative achievement include:

• high-performing team working is the norm
• there is strong cross-functional working and mutual influence across the organisation
• reward structures are based on collective merit more than individualistic performance
• open and purposeful conversations predominate.

Building teams that collaborate effectively across the business is increasingly recognised as a source of innovation and agility in successful businesses. This team-working mindset operates on a number of levels.

• At the top, if the members of the board or senior leadership team work well together, in a trusting and mutually supportive way where egos are unimportant, they will set a tone for the rest of the business that collaboration is key.
• More widely across the business, if teams work across functions and business units to produce the best outcome for customers, the end-to-end processes will tend to function effectively.
• In the context of external relationships, if suppliers, unions and other stakeholders are treated with respect, as well as sharing challenging standards of quality and efficiency, the organisation will tend to benefit from improved functioning and flexible supply.

Collaborative teams operate through a code of conduct that encompasses clear and shared priorities, agreed principles of behaviour that are acceptable and not acceptable, and a clear line of sight between where the organisation wants to go and each individual’s and team’s role in getting there. Reward structures that reinforce positive behaviour that are in the best interests of customers rather than individual objectives only are also important, as is a low tolerance of uncooperative behaviour.

An important foundation stone for effective collaboration within and between teams is that everyone who works in the organisation has a deep understanding of its purpose and direction. This allows them to ask themselves regularly, ‘How can my role contribute to our overall endgame?’ Once again, this framework should provide clarity on where to focus collaborative efforts in the wider interests of the whole enterprise.

5 Agility

Agility is not just about one’s short-term response to a threat but about embedding the long-term capability to identify and respond quickly to emerging threats and challenges in a world with high levels of complexity and uncertainty.

The characteristics of an agile organisation include:

• all teams work hard at continuous improvement and are focused on what’s best for the customer
• the culture supports experimentation without blame
• knowledge is shared freely to facilitate innovation and improvement
• people are developed to do their best at all levels without discrimination.

What makes the difference is that colleagues don’t have to refer all decisions up the chain and wait for a response. If everyone knows what the customer experience is meant to be like, and why it is important, they can adapt it to local circumstances and achieve the right outcome on behalf of the business. This is why it is so important to have a deep and clear understanding about the company’s shared direction, purpose and values across the whole business, as it offers people higher degrees of freedom within a firm framework (the ‘freedom framework’). This in turn encourages people to take greater responsibility for outcomes such as sales, each customer’s experience and longer-term loyalty, while driving initiative and discretionary effort.

These characteristics also provide the business with the ability to change rapidly and to adopt new ways of working with an open mind rather than a resistant mindset. This adaptability is increasingly important in the VUCA environment in which we are operating.

Leadership brand

In order to create a connected company it is important to develop leadership capability across the business. In the age of the post-heroic leader it is not sufficient to develop individual leaders and hope that they link up. Instead I recommend adopting the concept of a leadership brand, which was originally proposed by Ulrich and Smallwood in 2007⁶ in their Harvard Business Review article, whereby you define the leadership attributes that will differentiate you in the eyes of your customers based on the reputation you wish to have with them. Your leadership brand needs to be grounded in how your ‘leaders deliver value to customers by connecting employee actions to what customers want’.⁷ Clearly there are some fundamental leadership attributes that all managers and leaders need and you need to recruit for and develop these in your organisation. Ulrich and Smallwood propose strategy formulation and execution, talent management and development, and personal proficiency as the key elements of these ‘leadership foundations’.

In addition to these, however, if you focus on those particular attributes that will drive success for your business based on what you want to be known for (in line with your overall purpose, direction and values), you will create a more single-minded momentum in that direction and you will be more likely to achieve that reputation in practice. Three, the UK mobile operator, for example, wants to be known for making mobile better and so the company develops leaders to be explorers, seeking opportunities to reinvent ways to achieve customer delight and ‘make it right’.

Connected leadership provides you with a set of capabilities to draw on as you define your leadership brand. It gives a blueprint for leadership in the complex networked society in which we operate and so is in itself sufficient and comprehensive. But you can also tailor it to fit in with the particular reputation and customer value you seek to deliver, which might involve emphasising particular factors or it might mean creating a revised version that resonates with your particular strategic intent. Either way, connected leadership is a synthesis of major research into leadership in the 21st century and what it takes to create leadership as an organisational capability,⁸ so if you omit any of the factors it will be incomplete. The opportunity therefore is for you to define your particular leadership brand and to use all of the connected leadership framework in a way that best fits with that brand, so that you are placing the emphasis where it best suits your differentiated strategic intent.

In my experience the best way to define your leadership brand is through a process of research, facilitated dialogue and expert branding. The research should include your strategic documentation such as business plans, values and brand promise, senior executive interviews, interviews or focus groups from across the business with various stakeholder groups such as colleagues, unions and investors, and listening to customers about what they value particularly and what they would value more about doing business with you. It is great if you can open up the research through the use of social media to create a company-wide debate about what great leadership would look like for your business and for your customers.

The dialogue should be focused on making sense of all of the research data, drawing out what it is saying fundamentally about what is your point of difference in the eyes of your most valued customers, and identifying the core themes on which it makes sense for you to focus in building leadership as a core capability as an organisation. You are not taking the research data as a given, you are using it as input to the process of drawing out the key insights you need to define the sweet spot for your leadership brand. These stages may take several iterations in order to get commitment from all key stakeholders, but it is worth the effort in order to get commitment to the outcome.

Once this is all clear you can craft the themes into a brand identity that is memorable, compelling and resonates with your company’s culture and style. Above all, it needs to be simple, immediately relevant to all leaders across the business, and to include in an appropriate blend the factors of connected leadership. As with any branding activity, the definition and design are important, but you will gain benefit from it only when it is embedded in the hearts and minds of its intended audience, so its communications and bringing it to life through all stages of the leadership experience in your company are key to making it deliver real value. This means that your leadership brand needs to become a key reference for your leadership selection criteria, development programmes, performance management and succession planning. In this way you will orientate all decision making about who is a leader in your business towards the customer reputation you want to achieve. The results are a more concerted movement in the same direction towards the leadership approach you desire, more coherent selection and development of leaders, and a shared mindset among leaders of what’s important around here. This can be a powerfully unifying experience among your leadership community if done well.

What does the connected leader look like?

1 Purpose and direction

The characteristics of the leader who has strong capability in the area of purpose and direction include:

• Storytelling expertise: the leader knows how to deliver the organisational story effectively and with genuine commitment. Leaders understand the power of communication and influence to connect colleagues to the strategy by enabling people around them to make it practical and relevant, so they can appreciate how each individual contributes to the overall purpose and direction of the business.
• Engagement: the leader communicates the purpose and direction in a way that engages each employee through their head so that they know what it means, through their heart so that they feel connected, and through their spirit so they develop a real sense of being part of something more than just being in a job.
• Dialogue: the leader is able to talk with people as individuals and encourage them to tell the stories that both spread understanding of the purpose and direction and share experience and learning more widely within and outside the organisation.
• Sensemaking: the leader helps people make sense of what they are doing and why it is important, and thus enables people to identify more strongly with the organisation and its role in the world.

To sum up, this leader has a sense of mission that is contagious and a clarity of purpose that inspires others to act with a similar intent.

2 Authenticity

The characteristics of the authentic leader include:

• Genuine role model: the leader’s behaviour demonstrates the values every day. These leaders are intolerant of behaviour that shows the opposite of the values. They have a strong moral compass and understand that actions speak more loudly than words.
• Self-awareness: the leader is in tune with their own emotions and able to manage them effectively so that their emotional reactions to events don’t interrupt positive behaviours involuntarily.
• Open and transparent relationships: the leader encourages a high degree of honesty based on mutual respect.
• Balanced processing of information: the leader seeks an objective perspective and to make sense of each situation in an unbiased way so that they can encourage balanced decision making and action.

In other words, this leader can be trusted to behave consistently and in line with what they say is important. They also recruit and recognise people who demonstrate the values in order to build a values-based culture.

3 Devolved decision making

The characteristics of the empowering leader include:

• Belief in others: the leader has a strong belief in the ability of others to do a great job and they trust others to be experts in their field, to make sense of situations and to choose a path that they would choose or support themselves.
• Clear parameters: the leader communicates well to other people the goal, what are the givens and what is each team’s role in achieving the goal. This clarity provides others with a simple framework in which to take effective decisions, depending on the situations they encounter along the way.
• Coaching: the leader actively develops their team members to be as competent at decision making as they can, which includes getting sufficient involvement, adopting an appropriate perspective, looking for and using relevant facts, focusing on the desired outcomes and ensuring balance as well as pace. The more the leader coaches their team members to become great decision makers, the more confident they become in empowering their own teams, creating a positive cycle of reinforcement.

The empowering leader will typically generate huge loyalty from their team members, which in turn leads to increased effort and achievement of goals. They are also developing the leaders of the future, which is the talent that will fuel growth and succession.

4 Collaborative achievement

The characteristics of the collaborative leader include:

• Team building: the leader believes that teams are an effective way to get things done⁹ and that they create an environment where people are more likely to give of their best. The leader sees their role as nurturing the team through developing mutual respect, a depth of shared understanding and an intolerance of behaviours that weaken the team.
• Stakeholder management: the leader recognises and builds trusting relationships with those who have a vested interest in the performance of the leader’s area of responsibility, gaining their confidence and support.
• Multi-team collaboration: the leader develops proactive cooperation between teams, especially those that interact along the end-to-end processes of the business, rewarding behaviour that is in the best interests of the business and its customers, rather than necessarily in the local interests of a particular team or business unit. They develop a quality of dialogue that is purposeful, focused on achieving concrete outcomes and respectful of the interests of all parties.
• Influence and open to influence: the leader recognises that to lead is to influence, and that the most sustainable form of influence is mutual, where each person involved listens to and is open to influence from the other. Mutual influence promotes collaboration, trust and a sense of shared goals that builds stronger bonds between teams across the organisation.

This leader gets the best from their team and enables cross-functional collaboration to drive results for the customer.

5 Agility

The characteristics of the leader who can help to create an agile organisation include:

• Curiosity and insight: the leader is keen to learn, determined to stay in tune with the changing needs of their customers and actively encourages this mindset among their entire team.
• Improvement and innovation: the leader is dissatisfied with current wisdom, seeking to improve processes, products and ways of working. In some roles where there is scope for it, the leader is also focused on achieving innovations that change the rules, creating space for others to dream and invent ways to attract and retain customers.
• Leading change: the leader engages their people in the benefits of changing in order to be more effective or efficient. They help people to embrace changes, recognising that this can sometimes be a difficult transition for people to make. They trust their people and earn that trust in return, based on always having the best interests of all parties at heart, whatever the decisions that need to be made.
• Manage ambiguity: the leader helps people to make sense of the ambiguity in work, the need, for example, to act consistently with others in the business to deliver a great customer experience while also encouraging individual moments of brilliance to make that experience special.

The agile leader enables their people to learn, be flexible and change within the framework set by the company’s purpose, direction and values.

Next steps

In this chapter we have explored what connected leadership means at both the organisational and the personal leader levels. In the next chapter we will dig into these topics in more detail so that it becomes increasingly practical, giving you insights and activities that you can use at work to move further along the journey towards being truly connected. Below you can take a simple questionnaire that will enable you to define where your organisation is on that journey right now and where you could be focusing your effort to make most progress in the future.

Connected company questionnaire

In order to analyse where your organisation is currently relative to the connected company model, and therefore where you might want to focus your attention in developing new ways of working, here is a simple survey that covers each of the five factors. You can use it to diagnose your current position and to develop plans for the connected leadership journey. You can also use it as a checklist for your own ways of working as a leader, either by completing it yourself or by doing it with your team as a basis for discussion.

This questionnaire is designed to help you assess where your organisation, or perhaps the part of the organisation in which you work, is on the journey towards being fully connected. If you are answering it based on a sub-set of the organisation, please be consistent throughout.

Please rate each statement based on your honest assessment of how true this is as a description of the organisation in which you work. Where you are assessing a part of the organisation, please answer in relation to that part only. The rating scale is as follows:

• 1 – strongly disagree
• 2 – disagree
• 3 – neither agree nor disagree
• 4 – agree
• 5 – strongly agree

If in doubt, please choose the score that best reflects your overall assessment of the situation currently in your organisation.

Score summary

Interpretation

Scores of 20–40 indicate a low level of connectedness. This is typically either a more command-and-control environment or a bureaucracy.

Scores between 41 and 60 show limited levels of connectedness.

Scores between 61 and 80 indicate a high level of connectedness, with significant levels of empowerment and learning across the organisation, coupled with a strong sense of collective strategic focus.

Scores over 80 suggest a highly connected organisation committed to distributing leadership in a coherent way and encouraging high levels of innovation based on shared values and a customer-centric mindset.

A fuller personal Connected Leadership Profile will be available from early 2016 via [email protected].

Notes

1 Ignatius, A. (2014) ‘The best-performing CEOs in the world’, Harvard Business Review, November, 47–56.

2 Ipsos MORI (2015) Ipsos MORI’s Captains of Industry Survey 2014, www.ipsos-mori.com/researchpublications/researcharchive/3523/Captains-of-Industry-support-Britain-being-in-the-EU.aspx (accessed 15 June 2015).

3 Schein, E. (2010) Organizational Culture and Leadership, San Francisco, CA: Jossey-Bass.

4 Towers Watson (2008) ‘Global Workforce Study 2007–2008: Closing the engagement gap: a road map for driving superior business performance’, London: Towers Watson.

5 Ibid.

6 Ulrich, D. and Smallwood, N. (2007) ‘Building a leadership brand’, Harvard Business Review, July–August, 79–92.

7 Ibid.

8 Ipsos MORI, op. cit.

9 Gully, S. M., Incalcaterra, K. A., Joshi, A. and Beaubien, J. M. (2002) ‘A meta-analysis of group-efficacy, potency, and performance: interdependence and level of analysis as moderators of observed relationships’, Journal of Applied Psychology, 87: 819–832.