Accenture Leadership Ensembles Orchestrating Global Company

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<ul><li><p>Leadership Ensembles: Orchestrating the Global CompanyRobert J. Thomas, Joshua Bellin, Claudy Jules and Nandani Lynton Research ReportOctober 2012</p></li><li><p>Leadership Ensembles: Orchestrating the Global Company</p><p>2 | Accenture Institute for High Performance | Copyright 2012 Accenture. All rights reserved.</p><p>Contents</p><p>Foreword 3Introduction 4Disciplined Agility: The Secret Is in the Ensemble 6Foresight: One Foot in Today and One in Tomorrow 11Synthetic Intelligence: Exercising the Ensemble Mind 15Conclusion 17Appendix 18</p></li><li><p>Leadership Ensembles: Orchestrating the Global Company</p><p>3 | Accenture Institute for High Performance | Copyright 2012 Accenture. All rights reserved.</p><p>Foreword</p><p>Steering the global enterprise is hard work. Gone are the days when corporate headquarters ruled, and local operations were relatively isolated pockets of activity around the world. Today, markets for talent, products and capital are both global and local. The same is true of customer relationships. As CEOs from long-established multinationals and rapidly expanding newcomers in high-growth markets repeatedly told the team at Accentures Institute for High Performance (AIHP), todays global enterprise needs to be in the worldcompeting, collaborating and learningand also needs to bring the world into the enterprise. Highly challenging tasks.</p><p>Fortunately, this study offers both practical and provocative insights about what it takes to lead the contemporary global enterprise. The teams interviews with senior leaders revealed an emerging model of top management organization what AIHP researchers call the ensemble approach. Unlike more rigid, fixed approaches dictated by the organizational chart, an ensemble approach deploys executives and managers in a network that can flexibly surge to address problems and opportunities as they arise.</p><p>Fashioning an ensemble approach to global management takes energy and dedication not least because it forces incumbent leaders (and chief leadership officers, like myself) to worry even more about how such a network can be established and sustained, and how a pipeline of future-ready leaders should be managed. My fellow steering committee members for this project David Smith, Accentures managing director for Talent and Organization, and Don Packham, former head of HR for BP and, more recently, for the FBI were struck by the importance attributed to discipline, agility and foresight by the 50-plus C-suite executives the research team interviewed. We certainly benefited from their words and the examples. I think readers will, too.</p><p>Adrian Lajtha</p><p>Chief Leadership Officer Accenture</p></li><li><p>Leadership Ensembles: Orchestrating the Global Company</p><p>4 | Accenture Institute for High Performance | Copyright 2012 Accenture. All rights reserved.</p><p>Introduction</p><p>For companies deeply immersed in the global economythose that earn, say, a third or more of their revenue from commerce beyond their national boundariesbeing global means much more than being multinational. Akin to the contrast between digital and analog technology, being global offers far greater opportunities. It also raises more intricate challenges.</p><p>As global business leaders seek to oversee and manage their large complex organizations, the paradigm for effective leadership is changing. Companies can no longer rely on single individuals at the top to handle the complexity and uncertainty of the global environment. At the same time, even a team at the top is not always best suited to address each and every situation. Whats needed instead is an agile, future-focused and intelligent leadership ensemble at the top. This report explains what leadership ensembles are, what makes them necessary, and the attributes that make them most successful.</p><p>Chief among those is the variety and complexity of the choices that top-level decision-makers face. A decade ago, management was advised to think global and act local. Today, however, the challenge is how to be global or local at any point along the value chain where an opportunity arises to gain competitive advantage. The country head of India for a multinational consumer technology corporation puts it colorfully: You have to be able to move effortlessly along the scale between mindlessly local and hopelessly global. Indeed, global organizations need to perform effectively all along that scale (staying well clear of those extremes!). </p><p>Being global is not simply a matter of shifting the center of gravity (or decision-making) between the corporate center and the geographies; its about sustaining multiple centers of gravity and preventing them from crashing into one another.</p><p>Being global also puts an enormous strain on a leaders ability to keep the pieces of an increasingly fragmented whole connected. The growing physical </p></li><li><p>Leadership Ensembles: Orchestrating the Global Company</p><p>5 | Accenture Institute for High Performance | Copyright 2012 Accenture. All rights reserved.</p><p>dispersion of company leaders and the increase in their cultural and linguistic diversity puts a premium on the ability of core managementthe top one to two percent of executivesto stitch the organization together across geographic, cultural, temporal and political boundaries. Decisions that might have been made in the hallways of corporate centers must now be carried out at a distance, asynchronously, or through media not suited to replicating the spontaneity of a live meetingwith many opportunities for error or misinterpretation.</p><p>In an effort to better understand these challenges, as well as the opportunities experienced by companies that have become truly global, researchers in Accentures Institute for High Performance interviewed 50 of the most senior and influential executives at 39 global companies from five continents (see the appendix entitled About the Research for more detail). Those interviews were revealing: While all of the individuals we spoke with confirmed that leading and governing a global organization is dramatically more complex than managing a multinational, and contributed to our understanding of why and how that is the case, few felt that their own companies were doing enough to cope with the complexity or to prepare a pipeline of global leaders with the skills they believed necessary for future competitive success.</p><p>Concretely, our research, which also included an extensive review of the management literature and our prior experiences with top leaders at global firms, surfaced three essential exam questions that CEOs must ask and answer if they and their top management are to be effective in a global environment:</p><p>Question 1: How do we create a top management tier that both reflects and capitalizes on the diversity in business, culture, geography and thought style? Answer: Through Disciplined agility in organization and decision-making. </p><p>Question 2: How will we keep one foot in today and another in tomorrow, i.e., how do we stay current with developments in different parts of the world while anticipating the implications of future trends? Answer: With Foresight, gained through disciplined efforts to bring both the future and the world into the room.</p><p>Question 3: How can we make smart decisionstaking into account the breadth of experiences and perspectives that come with being globalwithout sacrificing speed? Answer: With Synthetic intelligence, captured through a new combination of experience and analytics.</p><p>When a leadership group is agile, and able to use foresight and synthetic intelligence to look ahead effectively and leverage the wealth of experience and perspective that is present in a global enterprise, the rewards are tangible.1 Past studies have confirmed a link between top management effectiveness and company performance and, by extension, a top management groups readiness to face the </p><p>future may often be the best indicator of an organizations readiness to continually grow and redefine itself in the context of ever-changing surroundings.</p><p>In the sections that follow, we explain why these questions emerged as being critically important, and how the work being done by some of the CEOs and senior leaders we interviewed translate the answers from page to practice. Hopefully, their experiences will serve as a useful guide for their peers in other companiesthose with extensive global experience and those who are just starting to go global.</p></li><li><p>Leadership Ensembles: Orchestrating the Global Company</p><p>6 | Accenture Institute for High Performance | Copyright 2012 Accenture. All rights reserved.</p><p>Disciplined Agility: The Secret Is in the Ensemble</p><p>Differences in language, custom, time zone, politics and taste divide marketsbut they also divide top management. Bridging those management differences, we were told, requires from senior leaders a level of agility more closely resembling that of a musical ensemble than the usual executive board composed of a CEO and his or her direct reports and the handful of standing committees that most companies maintain.2</p><p>Consider: The secret of a successful musical ensemble resides in the ability of musicians to perform equally well in the intimacy of a quartet, the relative formality of a chamber group or the tight structure of a symphony orchestra.3 An ensemble leader may be called upon to be strong and visible, as in the case of a symphony, but at other times, for example in a chamber orchestra, the conductor will lead while playing in the midst of the group. On occasion, there will be no conductor. Shared understandingcommonly forged through the experience of tackling difficult music piecesand a conviction to improve through practice give a musical ensemble the agility to operate under such widely varying conditions.</p><p>A top management ensemble, which may be thought of as the top one to two percent of executives and experts, similarly consists of the right people (irrespective of differences in their cultural, functional, or business backgrounds), in the right configurations (small group or task force, executive team or kitchen cabinet), who are best able to respond effectively to the variety of situations that a complex global world can churn up. As Herve Borensztejn, former executive vice president at Converteam (a French subsidiary of General Electric), put it: Sometimes we have to make decisions immediately in order to keep up with the speed and pace of our competitors even though not all of us are available at the same time. Other times, we need to gather a much larger group to thoroughly debate our options.</p><p>Ian Cheshire, CEO of Kingfisher (one of the worlds largest home-improvement retailers with stores in the European Union, Turkey, China and Russia), also illustrated the point, explaining that in order to get the scale benefits of being international and the diversity benefits of different eyes and different perspectives he ensures that key decision makers on specific issues are both representative and also relevant an approach that requires periodic calibration. The ensemble approach, according to Cheshire, helps the company operate as a collective and intelligent network rather than as a hierarchy, and creates a community that [brings] practices from one place to another.</p><p>By ensemble we mean: Executives, each with a distinctive expertise or perspective, who can be drawn together in combinations suited to specific decision situations or business contingencies and who, because they share common understandings and a common discipline, can be reconfigured without significant loss in effectiveness.</p></li><li><p>Leadership Ensembles: Orchestrating the Global Company</p><p>7 | Accenture Institute for High Performance | Copyright 2012 Accenture. All rights reserved.</p><p>Figure 1: Configurations of the Top Management Ensemble</p><p>The four ensemble configurations we observed represent four different patterns of behavior and roles that can be taken on as needed for a specific purpose and a specific period of time.</p><p>Comfort with ambiguity; able to think and act</p><p>Decision- making</p><p>Unraveling complexity</p><p>Problem- solving</p><p>Speed of implementation</p><p>Avoiding groupthink</p><p>Implementing decisions once made</p><p> Improvising and innovating</p><p>Configuration </p><p>Creative, divergent thinkers</p><p>Small circle of trusted advisors</p><p>Team of rivals</p><p>Process and business experts</p><p>Tiger Team</p><p>Kitchen Cabinet</p><p>Advocates</p><p>Operators</p><p>Composition Strength Weakness</p><p>Beware a Static Understanding of the Word Team </p><p> Jos Lopez, COO of global giant Nestle, calls Nestles ensemble-oriented approach to management leading as a team. But he acknowledges that the meaning of the word team, at Nestle, has evolved. Many of our interviewees said the same of their own organizations, and when asked to name their companys top leadership team responded with a question: Do you mean the CEOs direct reports or the various committees we use to get things done? In most companies there are multiple top teams and many of those groups are not teams by any dictionary definition.4</p><p>Across the companies we studied, we found top leaders coming together in four distinctly different ways, each of which represents a pattern of behavior and roles that can be taken on as needed for a specific purpose and a specific period of time. The four ensemble configurations we observed (shown in Figure 1) are:</p><p>Tiger Team. Composed of experts and divergent thinkers, but tasked with an explicit goal, Tiger Teams are usually quite comfortable with unstructured tasks and ambiguity. They are seen to be most effective when given a challenging assignment, such as revisiting business strategy in the wake of disruptions in the market, or contemplating an acquisition with enterprise-wide implications. They are not, however, well suited to repetitive, </p><p>routine assignments. And although they are likely to commit themselves fully to the course of action they choose, they tend not to arrive at those big decisions quickly. </p><p>Kitchen Cabinet. Interviewees frequently described the Kitchen Cabinet, or the inner circle of trusted advisors, as the place where important decisions get made. With members nested in adjacent offices or dispersed globally but connected by video and voice, Kitchen Cabinets are usually chaired by the CEO. These ensembles </p></li><li><p>Leadership Ensembles: Orchestrating the Global Company</p><p>8 | Accenture Institute for High Performance | Copyright 2012 Accenture. All rights reserved.</p><p>Figure 2: Configuring the Right Group for the Situation</p><p>Depending on the issue, two factors determine the best type of configuration for the ensemble: the type of output required of the group, and how committed that group must be to implementation.</p><p>2. Desired commitment: </p><p>What level of ownership is required for effective implementation?</p><p>Tiger Team</p><p>Kitchen Cabinet</p><p>Advocates</p><p>Operators</p><p>Divergence</p><p>Convergence</p><p>Owner Participant</p><p>1. Desired output: </p><p>Whats needed: multiple points of view or consensus?</p><p>which can then be presented to the ultimate decision-maker(s). Under these circumstances, divergent thinking works best; the configurations most...</p></li></ul>