managing high performing global organisations

The Inside Track

News & reviews from the latest Celerant Leadership Challenge Dinner

To score AAA you need 5 Cs and a D

MANAGING HIGH PERFORMING GLOBAL ORGANISATIONS

SERIES: LEADERSHIP CHALLENGE DINNERS HOSTED BY CELERANT CONSULTING UK.

SPEAKER: RUSSELL KING, ADVISOR TO CELERANT CONSULTING AND CHAIRMAN OF

GEOPRO MINING. VENUE: GORDON RAMSAY AT CLARIDGES, LONDON.

Celerant HPGO's Brochure AW1 singles.indd 1 26/10/2011 17:20

The Inside Track


“ The most important element is clarity. When times are tough people need to know where they are going.They need the Captain strapped to the wheel steering the ship, not down in the cabin looking for the map.” Russell King

2 Celerant leadership Challenge dinner


he global economy is still in intensive care and it’s having a profound effect on every global organisation. Markets are uncertain, margins are under pressure and employees are concerned for the future. So how can business leaders mobilise their organisations to provide superior returns and growth? How can they provide the best leadership across continents, cultures and attitudes?

To help answer those questions Celerant Consulting UK hosted an Executive Dinner at the iconic Gordon Ramsay at Claridges, London with Celerant Consulting Advisor Russell King as guest speaker. Russell spent nearly 10 years at Anglo American creating a global HR organisation with a world class approach to talent management. His knowledge, insight and experience proved to be the perfect catalyst for the lively and wide ranging debate that followed amongst our guests, all senior leaders from the global Energy, Manufacturing, Private Equity, FMCG and Service sectors. We warmly thank our valued guests for their contribution to the debate and to Russell King for his inspiring insights.

‘ The best management dinner I have been to. The subject, speaker and discussion that followed were excellent.’ James Deeley, Commercial Director, Charter International Plc.

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Celerant leadership Challenge dinner 3

Tim Durston, Client Partner at Celerant Consulting UK.


The Inside Track


he first thing to acknowledge when we’re talking about managing High Performing Global Organisations (HPGOs) is that the world is changing rapidly. It’s a fact, but we shouldn’t become too mesmerised by it though, because it’s nothing new. When I first started working at ICI in 1979, we talked about the world changing rapidly and I’m sure that the chaps who walked in front of cars with red flags thought their world was changing rapidly, too.

What we can sometimes miss is that the environment can also change in small, imperceptible ways and if you’re not careful and alert to this it can end up killing you. It’s a bit like the story of the frog - if you drop a live frog into boiling water it jumps out, but if you put it in cold water and slowly heat the water up, it just accepts its changing environment until it dies. I think this can often apply to us, particularly when you’re running what should be HPGOs.

Everyone accepts that things are changing rapidly in technology, but globalisation means that it’s happening in every industry and the competitors of yesterday are probably not the competitors of today - and almost certainly not the competitors of tomorrow. To give just one example from the industry where I most recently worked: in 2004 about 85% of the top 40 global mining companies by market cap were from the developed world. By 2010 that had dropped to just over 50%, with the rest coming out of the

developing world. So the competitors you’re going to face tomorrow are probably the guys you’ve never even heard of today.

The Incumbent’s DilemmaFor incumbents this is a real problem because change and innovation often cause higher costs and inefficiency in the short term. So that often makes it dif-ficult for incumbents to react to changes in their environment because the board says: ‘Why do you really want to do this? You’re going to increase cost, you’re going to reduce efficiency and it’s difficult to see what the short term benefit will be.’ But failing to innovate or adapt means risking medium to long-term survival.

To academics this is often called the Innovator’s Dilemma, but I actually think it should be called the Incumbent’s Dilemma. Innovators can do what they like, but the Incumbent often has a lot of problems. This is most evident in technology - who remembers the Sony Walkman? Sony didn’t respond to changes in the way people listened to music because they also owned record labels and that hampered their flexibility. But Apple and companies like them didn’t own any record labels, so they were able to change the rules of the game.

You need velocity not speedIt’s important not to have a knee-jerk reaction to changes in your external environment. Don’t mistake speed for velocity. Velocity has direction and speed doesn’t. If your only


Profile: Russell King spent nearly 10

years at Anglo American creating a

global HR organisation with a world

class approach to talent management.

Until the end of 2009 Russell was

Chief Strategy Officer and an

Executive Committee member.

He is now an advisor for Celerant

Consulting, Chairman of GeoPro

Mining and Sorrett Advisors, a

Director at Aggreko plc, Spectris plc,

and a Senior Advisor with Royal

Bank of Canada Capital Markets.

Russell King, Advisor to Celerant Consulting and Chairman of GeoPro Mining

Managing High Performing Global Organisations.

T



concern is to react, you can soon find yourself speeding in totally the wrong direction. So one has to change and compete, but it has to be thoughtful and considered, rather than change for its own sake - or even speed for its own sake. You don’t need speed, but you do need velocity. Sometimes going slower actually means that in the long term you go faster. Too many management teams simply don’t understand this, so they don’t spend enough time puzzling through the issues, discussing them enough so that they can pull out all the insider wisdom.

5 simple, practical and effective ways forwardSo what does it take to manage HPGOs in a rapidly changing and competitive world? Over the years, I have found that what I call the 5 Cs are simple, practical and effective tenets for any manager, any leader, who wants to bring about change.

The first is Clarity. Making sure that everyone in your organisation is absolutely clear what it is you’re trying to do. It’s the single greatest thing that is correlated with business performance. When times are tough people want the captain to be strapped to the wheel steering the ship, not down in the cabin looking for the map. Leaders need to create clarity and suck up uncertainty, but these days I often think that because managers want to be more open and sharing, they often share their uncertainties with people. But that’s

not the role a true leader. Their role is to reduce uncertainty and create absolute clarity of purpose. You need to have a clear view of the future that is carefully considered and evaluated - and granular enough to inform choice as to how to allocate scarce resources to secure sustainable competitive advantage. In short, you need to be a meerkat, not an ostrich.

The second is related to the first and I call it Commitment. I recently worked with a very senior team in a big multinational and when I challenged them about their strategy as printed in their annual report, I was amazed that 2 people said they didn’t agree with it because they thought it was unachievable. So Commitment means ensuring that the entire leadership team is aligned and everyone down the line is too.

The third element is Consistency. Are all your systems and processes aligned to your long term vision? Here I can tell a story about my time at Anglo American and it’s not a tale out of school, because the new CEO has talked about it quite a lot. When I first joined Anglo 70 people a year died in mining accidents. We said that safety was our single most important thing, but when I went into a platinum mine one day and asked the manager to show me his incentive scheme, he was incentivised on production, not safety. So the lesson is that you can’t give people mixed messages. All systems and processes must be aligned and then linked from top to bottom to provide accurate and timely data so that performance can be properly managed.

CLAR

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MIT

MEN

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CON

SIS

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CAPA

BIL

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CONSTANCY


The Inside Track

‘ Clarity of purpose is the single greatest thing that is correlated with business performance.’



The fourth C is for Capability and it’s pretty obvious what I mean by this. Have you got the organisation, the systems, the money and the talent to do what you want to do? I’m currently in talks with a mining services company that wants to be international, yet all the management team are from the home country and none of them has ever worked abroad, so you do wonder how this business is ever going to become international. If you take a company like Schlumberger on the other hand, it’s a great French company, but when you look at its executive board it’s difficult to spot many Frenchmen. They are in a minority now and that’s why they’ve been so successful. So you have to ensure that your organisation is agile and diverse, with the right systems and processes to back that up.

The final element is Constancy. Most managers are really bad at just keeping on doing the same thing. So this whole

notion of keeping on doing the same thing day after day is very important. When I ran a paint company for ICI we had 6 things that we thought would make the company great and the main one was ‘delighting the customer.’ So for 2 years we gave out the same message in every company magazine and every company meeting. Then one day back in 1997 I was walking round a highly unionised plant in North Queensland and one of the operators had a graph on his machine and I asked what it represented. He said that as the company kept on about delighting the customer, they thought they’d actually find out whether we were doing that. So they went to a local store and asked what the complaints were. They were told that it was dents and drips on cans, so they decided to measure it. This was the early days of computers and one of the guys was actually taking the data home and producing some little graphs. That was fantastic for us, but it had taken 2 years in a business of only 5,000 people, to get people to own the message of delighting the customer. Too often senior manager say ‘we’ve told everyone to do that, now on to the next initiative’. So you need a relentless focus - keep on keeping on.

You need Diversity of ideas and opinionsThe final thing which is missing is Diversity. I could have included it in Capability, but because it’s so important I like to treat it separately. Diversity is a topical subject, but because it tends to focus on gender, it can obscure other issues. Diversity is much more than gender. I had a seminal experience when I joined Anglo American. I was the first non South African ever to sit on the executive committee. However,


‘ Failing to embrace diversity is sowing the seeds for medium term underperformance and potentially, longer term failure.’


I was male and I was white. So when Anglo recruited a very high calibre female as its CEO it was a real shock to the old guard. She was the first non-mining, non-south African and non-male CEO and she brought a totally different, refreshing and challenging view of the future to the Anglo boardroom. For example, whereas most miners had come to accept that min-ing was a dangerous business and thus accidents would happen, often with fatal consequences, the new CEO didn’t and she refused to accept that people dying was an inevitable consequence of mining - even to the extent of shutting down mines that couldn’t operate safely.

So diversity it isn’t just gender or ethnic-ity, it’s also diversity of experience and opinion. You need people with different experiences, different backgrounds and different opinions. I believe that the more diverse the leadership team, the better and more effective it is likely to be. When ICI recruited somebody from Philip Morris to head its Paints business he transformed the company from a producer to a consumer marketeer and moved the business from barely profitable to the most profitable part of ICI.

It’s more rewarding than managing uniformityNow, this has one pretty big caveat, which is that the leader of a diverse team has to be more skilled than one where everyone looks and thinks alike. So I suspect that this isn’t happening enough because its much tougher managing diversity than it is managing homogenous management teams. If you want a quiet life as a leader, just manage people who are like you. They

will look like you, they will think like you, they will do the same things as you. That’s easy and you’ll all get on well together, but you won’t be in good shape for the future.Another good example of this is BHPB. They have an internal CSR committee and they allow people from NGOs to sit on that committee to ensure that they hear views that aren’t necessarily what they want to hear, but what they need to hear. It isn’t easy, but the benefits are enormous. You actually know what they think and they know what you think, so you’re starting to have a much better dialogue.

Embracing Diversity in its broadest sense may not be easy or comfortable, but I suggest that unless we do this we stand little chance of becoming a HPGO. In a way it is analogous to the Innovators Dilemma I referred to earlier - it’s tough to embrace diversity, it may not be hugely efficient first off, it may even be unpopular and painful, but my view is that failing to embrace diversity is sowing the seeds for medium term underperformance and, potentially, longer term failure.

So my insights into successfully managing a HPGO are: Don’t confuse speed with velocity; Think and manage with Clarity, Commitment, Consistency, Capability and Constancy - and embrace Diversity in its widest form. It makes really good business sense, but to quote J Edwards Deming, the guru of Total Quality Management:

‘You don’t have to do this, survival isn’t compulsory.’


The Inside Track



Discussion HighlightsFollowing the speech, Tim

Durston, Client Partner at

Celerant Consulting UK,

chaired a lively debate that

covered numerous topics,

including global versus local

and the impact of China

on the West’s way of doing

business. Here are some

of the highlights:

Tim Durston: We’re currently involved in numerous transformation programmes across the globe and one of the questions we keep being asked is what is the optimum dynamic between Head Office and the local management?

James Barlow, Senior Director, Global Strategic Planning, Huntsman Polyurethanes: I’d be interested in Russell’s thoughts on how you make the marriage between the global and the local platform correct and balanced. What’s the best way to let independent regions do what they want to do, yet corporately stitch it together?

Russell King: I think one of the problems here is that large corporations have a passion for tidiness. If you sit in head office, you want everything across the globe to be neat and tidy, but if you insist on that you risk losing a whole lot of creativity and entrepreneurship. For me, global means there are minimum standards that managers have to comply with around corporate governance, financials, ethics and managing the talent. Other than that it’s very difficult to see what global adds to anything that’s got to do with reacting to customers, being close to the customers and delivering outstanding service. In one company that I’m involved with, a listed company with many separate businesses that are totally global, there’s no HR function at head office. It concentrates on managing the portfolio, finance, culture and corporate governance. Everything else is managed locally. Sometimes it’s not very neat and tidy, but the trade off is that we get greater speed of response, creativity and entrepreneurship.

James Deeley Commercial Director, Charter International Plc: We’re a global company with operations in over 120 locations around the world. All our business leaders know that there are certain things which are sacrosanct and if they don’t do them there’ll be consequences, but other than that our view is: you’ve got good leaders, good people, we expect you to make money, go run your business. You can’t centralise everything or you’ll end up killing all the spirit in the company.

Rudi Kindts, formally at British American Tobacco plc: I don’t think the debate is whether you go global or local. You start from the kind of business you are. If I can talk from an FMCG perspective, we were driving global brands so it would have been suicidal for us to go local. We wanted consistency from our brands and so did the consumer. The model we had was complicated to manage because some of the brands were local, some were regional and some totally global. So we did go regional and we did go local, but you organise yourself around the customer and the business you are in. You make a choice and you make that choice in the light of the company you are, the brands you have and the customers you have. There’s not one model that’s ideal for everyone.

Dominique Fournier, Chief Executive, Infineum International Ltd: At the end of the day, whether you are global or local, what makes the difference is how your people perform on the ground. You need to give people the right message, so for me Clarity is the most important of the 5 Cs, and it needs to be backed up with Consistency. The most important thing is people engagement. It’s not a top down rule, it’s pretty much a bottom up rule. You need to tell people what’s expected of them and let them know what’s in it for them. If you do that you will resolve all your problems.

Russell King: I think the worst thing you can do is tell people you’re going to empower them, without telling them exactly what that means. In ICI Paints where we managed global brands and local brands, we had this very simple matrix: There are areas which are no-go, where you have no freedom. Areas where you have to ask before you can do anything. Areas where you have to tell us out of courtesy before you do anything. And areas where you can just get on with it. In other words, no go, ask go, tell go and go. That came directly out of a dialogue with our employees. People need to know what is negotiable and what is non-negotiable.

Global versus local



Rudi Kindts: The point you were making about Clarity struck me because you didn’t use the word ambiguity. I think there’s a current tension in senior management because clarity only goes as far as the point where ambiguity kicks in. And today the ambiguity is much bigger. A lot of senior managers cannot work with ambiguity and the stress that comes with ambiguity is being cascaded down through the organisation and that makes it very difficult to manage. I also agree with you about velocity not speed. Velocity means direction and clarity means direction - in an ambiguous world.

Russell King: That’s a really interesting point. We all know that the best managers have a tolerance of ambiguity. They can suck in ambiguity and not communicate it to their people. The other point I want to make is to do with the growth of a more open society, social media and the notion of giving people more autonomy. It might sound old fashioned, but I think one of the results of all this is that a lot of leaders have actually forgotten some of the basic rules of leadership, which are you’re not paid to be popular, you’re not paid to tell people every single thing that goes on in the organisation. Sometimes not telling them is better for them. I was talking to a union guy I used to work with at ICI and he bemoaned the fact that these days managers communicate far too much with employees about every nuance and every uncertainty in the business. He felt this was complicating the relationship between the union and the company, because the union is a business and the company is a business and sometimes you just need to cut a deal. If everyone is telling everyone everything, then you’ve actually given autonomy to the wrong people.

Dominique Fournier: Ambiguity is dilemma and in our company we have one dilemma that we have not yet resolved. I want all my plans executed flawlessly, but at the same time I want innovative people. Those 2 things don’t work together, but I would like them to. So you have to transform ambiguity into a dilemma and say I want this and I want

this. It’s not a question of either - or. It’s both. We need to find a way to have both. So if your people make a mistake that they shouldn’t have, that’s bad. But if they make a mistake because they tried to innovate, that’s OK. I think ambiguity is fine as long as you try to spell out what the ambiguity is about.

Mark Higson, Managing Director, Royal Mail Letters Business, Royal Mail Group Ltd: Just picking up on the point Russell made about Diversity, different abilities and different backgrounds. The critical thing here is that you have to be prepared to accept failure. If you bring in someone from a different background, particularly into a well established business, there is often a tissue rejection. But the 30% or 40% you succeed in is so valuable that you’ve got to keep doing it. You’ve got to have the courage to keep doing it and recognise that failure is a part of that.

Russell King: Have other people tried to inject new cultures or experience into their business?

Dominique Fournier: 10 years ago we were a pretty Anglo-American company, but now more Asian people are joining us. We have a rating system, a typical management way of looking at people and they don’t do so well in that rating system. The reason is simple. Our rating system is Anglo Saxon and people from Singapore, China, Japan etc have a different set of rules, a different way of doing things. So we have to adapt to this. It’s a long process, but you need to elevate diverse people to your management team to increase your level of understanding. If you only have Westerners rating Japanese you will fail. If on the other hand, you have a Japanese person in your management it opens your mind to what you need to do to succeed in Japan. Russell King: You do have to adapt to different cultures. One company where I was an observer introduced a Chinese employee onto the board and he never said anything. It wasn’t because he didn’t have

anything to say, it was because no one ever asked him if he had anything to say, so he didn’t speak.

Dominique Fournier: We had something similar. Our manufacturing network ranges across Europe, the US and Japan. So conference calls were always scheduled for midday in Europe, early morning in the US and late evening in Japan. Then one day, one of the Europeans argued that it was unfair that we were always calling the Japanese late at night. So they got the Europeans to wake up in the middle of the night when it was morning in Japan. And all of a sudden the Japanese contributed so much more. We thought they were just being polite when they didn’t say much.

Clarity versus ambiguity

‘ You need a very simple matrix. No go, ask go, tell go and go.’


The Inside Track



Tim Durston: Most of us around this table have worked with companies in China and discovered that some things are done a bit differently there. What lessons do you think we can learn going forward?

James Barlow: I spend a lot of time in China and one of the messages I get back is that they believe many western companies don’t really understand them because they look at China from a Western perspective and try to educate them to be like us. They believe the recent recession was predominately our fault, so we need to be more humble and more Chinese in our thinking. The other thing they talk about is that decision making in China is so much faster than in the West and we need to bridge that gap.

Mart Tiismann, President & CEO Sidel Group, Sidel International AG: We’ve made significant investments in China and yes, the Chinese are incredibly fast at making decisions. It’s very refreshing to speak to one of our Chinese customers who might order 40 lines in one meeting, whereas it can take a major western company 2 years of scheduled meetings to finally reach agreement on 2 lines. But at the same time the whole description of how the Chinese act now reminds me of the way people advocated doing business during the internet bubble. People were saying ‘You don’t get it, you’ve got to move fast.’ When things are moving fast you have to move fast, but as Russell pointed out there’s real value in thinking things through. I think there are certain ways of doing things in Europe that we actually underestimate. China’s economy is growing so fast that it is often enough for a decision to be just directionally right to pay off. But as their economy matures they will have to learn how to make better calibrated decisions to efficiently allocate limited resources.

Russell King: I can also give you a view that Chinese business can be very slow. If you need any regulatory approval in China, you might as well watch paint dry. We’ve been waiting over a year for regulatory approval on a deal I’m involved in. The Chinese

company said yes on day one, but we’re still waiting for official approval. It may be because of the development stage they are at, but I think a lot of Chinese companies don’t actually think very long term, they just make a decision. I’ve talked to Chinese friends about this and they say this is pretty much China. They do something and then work out the next stage of the plan.

Robin Pinchbeck, Group Director of Strategy and Corporate Development, Petrofac UK Holdings Ltd: I have worked in very large corporations and their decision making processes are complex and slow, but that isn’t a function of being in the West, it’s a function of those companies operating the way they do. And that’s usually because of scale, corporate governance and a lot of accumulated history.

Rudi Kindts: We can’t operate the way the Chinese do. It’s not going to happen. The decision making process does take more time, but that’s because management can’t just do what it likes. The shareholder is king.

Robin Pinchbeck: The point that really struck me about Russell’s speech was what he said about Constancy, which is repetition, repetition, repetition. We underestimate how long it takes for a message to sink into a work force. It’s no good saying it 3 times, you’ve got to say it 300 times. I also think there should be an ‘S’ somewhere in amongst the 5 Cs, which is Simplify.

Dominique Fournier: The point I want to make is that we all need to have more Chinese, Indians, Brazilians etc on our boards to take advantage of these markets. This is where the world is going, so we need to have them in our management team. The secret of success will not be in them becoming more Western, but in them helping us to become a little bit more like them, so we can be successful in their countries.

China and The West

‘ We all need to have more Chinese, Indians, Brazilians etc on our boards to take advantage of these markets. This is where the world is going.’


Dominique Fournier Chief Executive, Infineum International Ltd

If you had to pick out one aspect of the Managing HPGOs speech, what would it be? What was good about the speech was that it crystallised what you’ve been thinking yourself. I’m not saying Russell brought me something completely new, but he certainly expressed it in a way that impressed me. I think the 5 Cs are a good way to focus your efforts. For me Clarity is the most important and it needs to be backed up by Consistency.

Do you think there were any learnings for Infineum?I’m trying to do something similar here. We don’t use the 5 Cs, but it’s very important to have a few things to focus your organisation on. Things you constantly communicate because reinforcing these points helps people understand what you intend to do and starts to create a culture of improvement. I believe that what matters for a leader of any organisation, big or small, public or private, is credibility and to be credible you have to be clear and consistent. Whatever you say and whatever you do must be consistent with the strategy you’ve put together. You need to think through your strategy and make sure that all the pieces fit. It doesn’t have to be perfect, it’s OK over time to say ‘I thought I would do this, but actually we’re going to do this’. But you then have to explain to people why there’s a change and the way to do that is to be extremely clear in your communication.

What did you take out of the evening as a whole?I really enjoyed it and it was very useful. The guests were of a very high quality and Russell’s keynote speech was the trigger for a very meaningful conversation.


reviews

Doug McIldowieGroup Director of HR, GKN Group Plc

If you had to pick out one aspect of the Managing HPGOs speech, what would it be? For me, it’s about Clarity for the organisation. We spend a lot of time making sure that all our employees understand exactly how their role impacts on the ultimate performance of the company against our overall strategy. That increases their ownership of the plan and engages the organisation to deliver it. So Russell’s point about Clarity of purpose was the thing that reconfirmed, if we needed it reconfirmed, our belief about how vital this is for a successful organisation.

Do you think there were any learnings for GKN Group Plc?We already put a lot of work into checking that when our employees come into work they understand how their job fits into the bigger picture because we feel that when people understand they’re more engaged and we’re a better place. The other area that Russell spoke about where we’re doing a lot of work is around Capability. If people engage with what you’re trying to do as an organisation and you can give them more skills, they’re going to contribute more. As you invest in the individual and increase their capability, it will pay back multiple times over.

What did you take out of the evening as a whole?It was very enjoyable and a great networking opportunity. You always pick up something from somebody else’s perspective because it’s very easy to become wrapped up in yourself and think that you’re different. It was very interesting to hear from lots of people with different backgrounds that at the end of the day, no matter what sector you’re in or what business you’re in, there’s a lot of commonality in what we’re trying to do. Events like this prove that we’re all faced with the same problems.


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