REDEFINING BUSINESS LEADERSHIP

Issue 03/2012 www.hqasia.org

Grow your leaders fasterThe five paradoxes behind leadership development in Asia

No longer copycats? Page 16

The AsianAdvantageInnovation

ISSN 2251-387-6

9 772251 387001

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Why Tata embracesfailure on the roadto success Page 38

Pradeep PantReflections on leadership, life lessons and a fear of flying

Dare to Try

ISSUE 3 / 2012 HQ ASIA 01

Contents 02 Editor’s letter

06 Talking numbers

08 Virtual round table

10 Doing businessin Myanmar:A beginner’s guide

14 Six keys to unlocking innovation in Asia

Cover Story

The Asianinnovation advantageNo longer copycats?

LeADING IN ASIA

22 Going global:Lessons learnt from Indian and Chinese companies

28 More from less, for many

30 How does Asia fare? The Global Innovation Index

34 Understanding context in emerging markets

LeADING BUSINeSS

38 “Dare to try”:Culture change atTata Chemicals

42 Firing up innovation engines in China

46 Collaborating across boundaries

50 SustainingVietnam’s growth:The productivity challenge

LeADING PeoPLe

54 Five leadership paradoxes:Accelerating leadership development in Asia

58 Harnessing diversity, powering innovation

62 How top companies in Asia build leadership brands

66 Pushing the boundaries:Human capital management in a networked world

68 HR Solutions forCEO challengesA new study highlights the HR community’s role in solving key human capital problems being faced by leaders in Asia.

LeADING SeLF

72 The first chapter: Yaya Winarno Junardy

78 Pradeep Pant: Reflections on leadership

82 Avoiding organisational blindness

There is a stereotype that Asian companies do not innovate — they only imitate. In fact, they are innovating in interesting and impactful ways that companies all over the world would do well to learn from and emulate.

89 Quotes and quips

90 Executive summaries

92 The last word

reSeArCH revIeWS

84 Catalyst for innovation: Money or intrinsic motivation?

86 No laughing matter: Linking a leader’s humour, innovation and effectiveness

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What does it take to be recognised as a top company for leaders? Robert P. Gandossy, Laurence Smith and Dave Ulrich discuss their findings from their recent study.

ver the past decade, we have been studying how great companies identify and develop talent, and connecting their actions to clear business

outcomes. Our study, entitled Top Companies for Leaders, is probably the most comprehensive longitudinal study of talent management and leadership practices around the globe. We have conducted the study six times since 2002. This year, 470 companies participated, including 152 from the Asia-Pacific region, among which Aditya Birla, Hindustan Unilever, ICICI Bank and China Vanke head the 2011 list of Top Companies in Asia.

One question we are often asked is “How do they get there?” This year’s study sheds light on their success factors and what we can learn from them — the path forward for developing leadership capability.

The path forward: Building a strong leadership brand Top companies believe that generating market value should guide leadership development activities. In fact, all successful programmes and initiatives for developing leadership talent at top companies are implemented to support important business needs.

Because they fundamentally believe that talent drives value, human resource and leadership development actions are not simply aligned with the business strategy. Instead, their intention is

How top companies in Asia build leadership brands

imperative. While it is easy to say in rapidly growing markets that talent matters, it is more challenging to pinpoint how it matters and how a company will address the issue.

Nearly 85% of top companies say their leaders can explain how the investment in leadership affects financial performance, while only 54% of other firms in the study can say the same. In fact, 92% of top companies say their stakeholders understand how their leadership strategy creates value, compared to just 78% of all other organisations involved in the study.

Top companies are also more likely to have developed a strategy for individual leadership practices (selection, assessment, development, and succession) than other companies, and have explicitly aligned those practices to the overall business strategy and the leadership brand.

Linking leadership to business outcomes creates significantly higher levels of commitment to investing a leader’s most precious resource — time — directly on leadership activities. Executives who understand how leadership drives better business results will spend time on activities such as talent reviews, succession planning, coaching, creating development plans, leading education programmes, recruiting, or retaining critical talent. At every level and in every leadership activity, top companies have leaders who are more engaged in building leadership than other companies.

Top companies in the Asia-Pacific could improve significantly by having senior leaders more involved in identifying and developing talent.

to build a strong leadership brand. Other companies, in contrast, tend to focus on more generic leadership capability.

Leadership brand is a disciplined approach to building an integrated capability to sustain ongoing business results. Top companies develop a leadership brand by investing and aligning resources to: 1 Link the need for leadership to ability to deliver results, both now and in the future2 Define leadership competency models specifically for their organisations and integrate their competency models in all phases of talent and leadership development3 Assess both individual and organisational skills and experiences, evaluate the gaps, and create plans to close them4 Invest to acquire, develop, promote, and retain critical talent more effectively and broadly, by focusing on a few simple ideas and executing them well5 Have business-based measures for the organisation, and hold leaders accountable for developing leadership capability, gauging progress on leadership initiatives, and assessing risk and vulnerabilities6 Build a leadership brand and centre their reputation on talent and leadership

These are the six elements of the path forward.

Top companies have a strong business case for leadershipAll of the global top companies have articulated a clear business case for investing in leadership as a strategic

There are a number of examples from top companies that already do this.

For example, Warwick White, Managing Director of Coca-Cola Amatil in Sydney, has personally trained over 400 executives over a three-year period. CEO Abdul Wahid bin Omar of Malaysia’s Maybank sees employees as an extension of the bank’s brand to humanise financial services; to meet this goal, he conducts quarterly talent reviews and has 15% of his personal key performance indicators adjudged on talent development.

Top companies clearly articulate what a leader must know, be and doAll top companies in Asia have a defined competency model that describes a unified theory of what leaders at their organisations should know, what they should be, and what they should do. In contrast, only 78% of the other companies in the region do the same.

Most companies have models or frameworks that describe what they expect of leaders. However, many of these leadership models are generic, stemming from the belief that leadership is leadership. On the

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Leading people

contrary, when you take a customer-focused approach — the belief that a leader’s behaviour should be guided by what customers and other stakeholders expect — then certain expectations of leaders will be unique to each company, reinforcing the aspects that differentiate the firm in the marketplace.

RBL’s meta-analysis of leadership models shows that 60% to 70% of competencies are standard, while the 30% to 40% that are unique to each organisation drive differentiation in leadership — and thus business performance, as shown in Figure 1.

Top companies assess at both the individual and organisational levelsIn general, top companies have a larger menu of assessment options (360 surveys and feedback forms, personality inventories, assessment centres, behavioural interviews, and simulations) for

selection and development of leaders than other firms.

All top companies (versus 56% of other companies) assess leadership capability as part of their succession-planning process, allowing them to identify gaps and create organisational strategies to address critical shortages. Assessment is not just for individual development purposes at top companies, it is also an organisational diagnostic to address future organisational needs.

Top companies invest more and differently than other companies in building leadership capabilityTop companies integrate leadership activities to create consistent expectations and results. The study showed they are more likely to integrate their competency models into the internal selection process, performance reviews, base pay and bonus,external recruiting, development, succession and promotion, and long-term incentive plans.

Examples for such an approach are GE’s Crotonville, IBM’s Corporate Services Corps, the Value Leaders awards at Aditya Birla, and talent panels and talent scouts at ICICI

30—40%

60—70%

LeadershipCompetencies

Leadership differentiators

APAC top companies are more likely to emphasise differentiating competencies (80% vs. 67%)

Leadership fundamentals

APAC top companies have more of the leadership fundamentals (Leadership Code) represented in their competency model (83% vs. 71%)

Figure 1: RBL's meta-analysis of leadership

Good competency models include more than just generic competencies

1. Aditya Birla Group2. Hindustan Unilever3. ICICI Bank4. China Vanke5. Infosys6. Wipro7. Mahindra & Mahindra8. Bharti Airtel9. Whirlpool of India10. Kotak Mahindra Bank

Asia’s top 10 leadership brands, according to RBL Group

OF TOP COMPANIES SAY THEIR STAKEHOLDERS

UNDERSTAND HOW THEIR LEADERSHIP STRATEGY

CREATES VALUE

92%

OF TOP COMPANIES IN ASIA HAVE A DEFINED

COMPETENCY MODEL THAT DESCRIBES A UNIFIED

THEORY OF WHAT LEADERS AT THEIR ORGANISATIONS

SHOULD KNOW, WHAT THEY SHOULD BE, AND WHAT

THEY SHOULD DO

100%

64 HQ ASIA ISSUE 3 / 2012

Bank in Mumbai. These programmes meet clear business needs to surface and accelerate the development of talent. But, their impact transcends their purpose. They become centrepieces, and the catalyst for broader and further-reaching initiatives. Their visibility and attention at the highest levels signal to others that to these corporations,

Measures the retention of leaders

Measures the diversity of leadership pipeline

Measures the strength of leadership pipeline

Have specific criteria used regularly to measure the overall effectiveness in achieving strategic leadership objectives

70%

92%

61%

55%

92%

31%

70%

92%

64%

100%

100%67%

0% 20% 40% 60% 80% 100% 120%

talent matters. And, in doing so, they extend the company brand around talent and leadership.

Top companies develop metrics for both the organisation and individual leaders Top companies are more likely to have business-based measures

Figure 2: Organisational metrics used by top companies to measure effectiveness of leadership practices

APAC top companies

Global top companies

Other APAC companies

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Leading people

comparison, Harvard University admits 9% of its applicants. They note this fact on their website.

Since the leadership practices of top companies are firmly rooted in the belief that leadership creates

for the organisation and to hold individual leaders accountable for developing other leaders. Nothing better characterises top companies’ disciplined approach to leadership and talent than their approach to metrics. As seen in Figure 2, whilst even top companies have much to learn, particularly in the Asia-Pacific region, they are far more developed in this area than other companies.

Top companies use measurement to gauge progress and hold leaders accountableLeaders at top companies tend to believe talent is important, and invest accordingly. They are, therefore, more likely to hold

leaders accountable through compensation for developing their direct reports; leaders are also rewarded for the strength of their talent pipeline, as indicated in Figure 3 above.

Robert P. Gandossy is the managing director at the RBL Group. Dr Dave Ulrich is partner and co-founder of RBL Group, and Professor of Business at Ross School of Business, University of Michigan. Laurence Smith is the managing director for RBL Asia.

For example, at Bharti Airtel in New Delhi, heads of business units are evaluated on a talent development index that includes high performer attrition, diversity, how often talent moves to another unit, and critical position succession. ICICI Bank in Mumbai uses a leadership cover index to measure and track the depth of the leadership pipeline for top roles, with each critical person having two successors.

Top companies intentionally promote their reputation as ‘factories for leadership’Infosys receives well over one million applications annually, yet hires less than 1% of those that apply. By

value, they are more deliberate and systematic in communicating the results of these practices to both internal and external stakeholders. With that, they have built a strong reputation as ‘factories for leadership’.

Over the years, there has been much discussion of unique Asian leadership models. Our research reveals that both global and Asian top companies have a single global leadership competency model, and one global leadership brand. They do not customise the model to each region. This counter-intuitive insight is driven by the clarity around the leadership brand architecture and the necessity for a single global model to support it.

Of course, how the leaders enact the behaviours in each market is context-dependent, and it is this ability, or agility, that stands them in good stead. The area in which top companies customise more than other firms is in leadership development programmes; generally they use fewer off-the-shelf or standardised executive education programmes. Thus, they do not customise the model, but they do customise the programmes.

Overall the gaps between the Asia region and global companies has decreased in most areas and this trend looks set to continue as the larger Asian companies increasingly work globally and compete for the same talent. However there are areas where Asian companies trail behind other leading companies. Most notably, we observed in the study that Asian companies are lagging in metrics and accountability for leadership, and in identifying and developing a diverse workforce.

Closing these gaps could be the opportunity for Asian companies to differentiate themselves and appeal to the best talent from this highly competitive region. Let us hope that they take this opportunity. //

APAC top companies

Global top companies

Other APAC companies

75%

88%

63%

50%

88%

37%

0% 20% 40% 60% 80% 100% 120%

Rewarded (i.e., promotions, compensation) for the strength pipeline in their business units

Hold leaders accountable through compensation for developing direct reports

Figure 3: How top companies measure and hold leaders accountable for key metrics of talent development