Heard of organisational resilience? No?  Neither had I before attending a conference last week, organised by Human Synergistics.

Gary Hamel first wrote about organisational resilience in 2003 saying: 

You can't predict what the world will look like in 10 years, so you try a variety of things.  Some will work. The crunch comes because in many organisations it's very hard to move resources from old things to new.  All the resources are devoted to perpetuating legacy programs.

He argues that most organisations defend the past rather than build their future.  That’s an interesting idea.  So would “building the future” have prevented the recession?  Unlikely because economies run to cycles of boom and bust.

So what exactly does building for the future imply?  And how do you move resources from old things to new?  The American automotive industry is a good example of defending the past and failing to build for the future.  Europe and Japan, by contrast, recognised the long term imperatives and continue to adapt. 

In the electronics sector, Apple certainly shows how it can be done - announcing their best ever Q2 results last month ($1.05 billion) achieved by selling innovative products at the right price.  Incidentally they are also sitting on a cash pile of $29 billion.  I guess that’s what resilience looks and feels like. 

Achieving organisational resilience can be a huge challenge, but here are some themes from the conference:

·         Resilient organisations need resilient leaders

·         Focus on the longer term; it’s the short term which got us into this mess

·         Don’t simply cut costs, productivity is the key to growth

·         Build organisational capability

·         Make sure that you have a clear sense of purpose which is based on your customers 

All of that sounds logical and sensible but in practice it’s not going to happen without effective leadership at all levels, a supportive culture and a robust strategy.  

Mike West 

www.novaconnection.com

It is easy for firms to become overwhelmed by recessionary doom and gloom at times like these.  The reality is that most firms survive; it’s just that some survive better than others and emerge much stronger.

This recession will almost certainly bite harder and deeper than the eighties or nineties recessions as a consequence of the dual effects of the financial (credit crunch) and economic crises.  It is true that interest rates and inflation are much lower than in the nineties, but the availability of credit is being reduced by the very institutions which led us into this mess. 

So what are the survival strategies?  I’ve been reading around to identify why some companies do better than others in a recession.  Here’s a summary of what I found:

• Ambition – drive, commitment and strong leadership
• Adaptability – the ability to recognise and respond to changes quickly
• Distinctiveness – forget “me too”, well-researched customer value propositions really matter
• Value for money – price is important and discounting is inevitable but don’t make the mistake of competing on price alone
• Optimal use of resources – a few extra pounds can be carried in boom times, but you need to be fighting fit now
• Finance – high gearing may be sustainable during better times but liquidity matters in a recession (of course, reducing debt is not easy at this stage of the economic cycle)

Just as banks are withdrawing established lines of credit, some organisations are allowing themselves to become over-whelmed by a siege mentality - becoming inward rather than outward looking - and not responding to evolving customer needs. 

Smaller firms have a real advantage in this regard; they tend to be more adaptable than larger organisations and have the ability to respond faster to changing circumstances.  This can make the difference between life and death, while the best organisations will seize the opportunities presented by the recession and emerge even stronger. 

If this blog has struck a chord, you might like to check out our strategy, change management and leadership development web pages. 

Best wishes for 2009. 

Mike West 

www.novaconnection.com

“You can’t manage what you can’t measure” is a quote dubiously attributed to one the wise men of management science, Dr W Edwards Deming.  Putting the attribution to one side for the moment, the quote makes a good point because what gets measured tends to get done.

But there is a problem with this in that we often go for easy metrics rather than the most effective metrics.

Take hospital bugs as an example.  We know the number of poorly people succumbing to C. difficile and we also know that it is spread by hand to mouth faecal contamination; in other words it’s caused by poor hygiene.  There’s no nice way of putting this – you have to ingest poo to catch it and one of the most common ways that this happens is by people not washing their hands after using the toilet.  Clearly, collecting personal hygiene information could inform a campaign focused on reducing the cause of C. difficile.  But these measures would not be easy to obtain.

Before I start sounding too much like Howard Hughes, let’s get back to Deming.  What he actually said was that the most important things cannot be measured  Well, there could be a good deal of debate around that.  He also said that the most important things are unknown or unknowable.  By this he was referring to Taleb’s black swans - large-impact, hard-to-predict, rare events beyond the realm of normal expectations.  A year ago, for example, few people predicted the credit crunch and even fewer anticipated its impact.  911 is another black swan example.

It’s true that we cannot anticipate and measure everything; it’s also true that we shy away from some of the more challenging measures which can have a profound long-term impact on our organisations.

I was with a prospective client last week who described the excellent work being done on leadership development and culture change.  When I enquired about measures for  culture change, there were none.  Culture certainly falls in the area of hard to measure but as I explained, there are now highly effective tools for doing this.

And what gets measured tends to get done.

Mike West

www.novaconnection.com

I like learning from others’ mistakes.  It’s satisfying and it can save a lot of hassle.  It’s true that mistakes are part of the learning process but there’s no point in making avoidable mistakes.

Amusing examples of avoidable but tragic mistakes can be found in the Darwin Awards.  Just in case you have not come across these, they salute the improvement of the human gene pool by honouring those who remove themselves from it.  The awards go to individuals who have not really thought things through – such as the armed thief who attempted to rob a gun shop!

So, when Change Management programmes fail – and research shows that the majority do fail - are these avoidable or unavoidable mistakes?  To what extent is it a case of organisations assuming too much and not thinking the process through?

Well, there’s a great deal of literature available on change management - just try “Googling” the subject.  Given the amount that is known about change management, it could reasonably be argued that most of the failures are avoidable.

Just for the record, so that you can avoid them, here are some of the widely-known mistakes made with change management programmes:

·         leaders not engaging sufficiently

·         failing to create a strong enough consensus and momentum for change

·         under-communicating the vision

·         not creating short-term wins

·         lack of continuity - changing priorities, moving on to next “flavour of the month”

·         misreading progress, declaring victory too soon

·         neglecting to embed changes firmly in the corporate culture 

Enough of reasons for failure.  Quentin Jones and his colleagues at Human Synergistics Australia have identified a meta capability which they found to be critical to success.  They call it reflexivity, which they define as “the capacity to become aware of self in relation to others and the organisation”.  In practical terms, this means:

·         building self-awareness through feedback

·         creating a reality check through appreciating others’ viewpoints

·         organisation-wide monitoring of progress towards the preferred culture 

It sounds like common sense to me but, hey, there’s nothing common about sense as the Darwin Awards demonstrate again and again.

Mike West

www.novaconnection.com

Thunderbirds are go!  The world seems to have stepped back from the brink, for now, with an international rescue package designed to unlock the world’s financial markets.  The cataclysmic meltdown did not happen as the IMF warned and the markets seem to be responding favourably.  But a week is a long time in the financial markets right now.

The hubris and greed of the financial services industry leadership worldwide is disappointing and bewildering.  To make matters worse, their failure in the UK was rewarded with £16.8 billion in bonuses according to the Office of National Statistics.   The failure of the government authorities to regulate is equally shameful, allowing obscure financial instruments to be traded and credit bubbles to be inflated out of all proportion, which would inevitably burst.

What on earth was going on and did they give no thought to the misery which will ensue?  We’re back to hubris and greed, placing responsibility firmly with the leadership for allowing such a culture to take hold.

The word “hubris” is taken from the Greek for insolence.  It is a defined as a tragic flaw; fatal arrogance towards the Gods; overreaching; over-confidence.  And it is inevitably punished.

So what is the answer?  It’s time to emphasise the importance of leadership and culture.

By leadership I am not just referring to the CEO, I mean the whole leadership infrastructure – that includes the Directors and Non-Execs who have onerous responsibilities in the area of corporate governance, senior managers and other influential individuals who may not be called leaders but are looked up to as such.

So far as culture is concerned, I am referring to the behaviours and values of the organisation.  A powerful way in which culture can be reinforced is through the reward system.  So if bonuses are based around short-term goals such as pumping up the credit bubble, then it’s inevitable that increasingly risky products will be sold and the bubble will ultimately burst.

It’s time for a more responsible leadership which is prepared to build for the future and values longer-term goals - a leadership which has a clear sense of direction and encourages an adaptive culture which balances the needs of employees, customers and shareholders.

Achieving these changes is expensive and the industry’s current addiction to short-termism needs to be overcome before there is a willingness to make this important investment.

Mike West

www.novaconnection.com

Perhaps a better title for this blog would be making the case for change management in uncertain times.  I cannot recall such uncertain times during the last 35 years.  Sure, we’ve had market crashes, major conflicts and tragedies such as 911.  But we’ve never experienced them on a daily basis before.  Yesterday we saw the biggest ever numeric drop of the DOW, the sub-prime rescue package voted out and three major banks being rescued – a contagion affecting the US, UK and mainland Europe.

It’s unsettling to say the least and it has an impact on most businesses and most individuals.  By this I mean that credit has all but dried up in the financial sector, mortgages are both hard to get and expensive while pension funds have fallen by about 30%.

We’re in uncharted territory and nobody is quite sure how to make a map.  So what do you do?  Well the natural reaction is to do nothing, find a cosy foxhole and pull over lots of cover.

Returning to the markets, that’s just what some people are doing but it was interesting that Warren Buffett is taking a contrarian view.  In the middle of this chaos and uncertainty he has written a cheque for $5 billion – buying into financial services (Goldman Sachs) of all areas.  Few would argue with his judgement given his spectacular track record over the last fifty years.

Uncertain times present opportunities.  But identifying and taking advantage of those opportunities requires a culture which is adaptive to change.  Having a smart CEO is not enough in this age of complexity; gone are the days when the boss made all of the decisions and everyone else implemented them.

Creating a culture which anticipates and embraces change is the real prize, but sometimes it can be hard to work out where to start.  Well, you could try examining the behaviours in your organisation to find out if they are really helping or hindering.  Our Introduction to Culture is a low-cost fast-track way of doing this.

Mike West

www.novaconnection.com

I remember the last recession in the early nineties; it kicked in shortly after I started Nova Connection.  Just like this one, it followed a period of excess.  It was not a pleasant time and the instinct was to batten down the hatches to weather it out.

Inevitably, cost cutting was rife and the usual targets went under the knife, with marketing and training almost invariably on the list.  But the difficulty with this type of surgery is differentiating fat from muscle.

Here are some reasons why customer surveys are muscle and not fat.  They enable you to:

• find out if your customers are likely to defect
• discover what you need to do to retain existing customers – after all it’s 4-6 times more expensive to win new customers than retain existing ones
• learn more about your competitors’ offerings and what they are up to
• uncover opportunities for winning a greater share of business from existing customers
• identify requirements for new products or services

It’s not an exhaustive list of reasons for doing a customer survey, but it doesn’t contain much fat.

Perhaps it’s time for some fresh thinking on marketing expenditure.  As Albert Einstein said, you cannot solve a problem using the same thinking that created it. 

Mike West

www.novaconnection.com

Rummaging through my in tray, I came across some interesting research by the Hay Group.  It claimed that poor working climates are costing the UK financial services industry a staggering £8.5bn every year in lost profits.

It went on to say that as much as a third of an organisation’s business performance is dependent on a positive working climate and concluded that only 20% of finance executives create a high performance climate, according to their employees.  Apparently, a lowly 17% manage to generate an energising environment.  It gets worse, 46% actually create a demotivating environment for staff.

If ever there was a sector under the cosh, it has to be financial services; one would have thought that there was some low hanging fruit for them to pick here.

The crazy thing is that it’s not that expensive, in the grand scheme of things, to address some of these issues.  Development programmes for leaders can make them more effective communicators, show them the impact they are having on culture and contrast this with the impact they would like to have.  A coaching programme can then be put in place to bridge the gaps.

What I find really interesting is that both effective and ineffective leaders tend to want a similarly constructive impact on those around them.  It’s an issue of leadership style and behaviours which, fortunately, can be learned.  And the outcomes are energising for all.

Now I am not claiming that leadership development will rebuild the balance sheets of financial services organisations, but the resulting performance gains will certainly improve effectiveness, efficiency and morale.

Mike West

www.novaconnection.com

Discovering the Myers-Briggs Type Indicator (MBTI) thirteen years ago was one of those epiphany moments.  It provided a perspective on how I was wired and what makes people tick.  I qualified as an MBTI practitioner a year later and have subsequently seen many others experience similar moments.

The MBTI describes personality in terms of preferences.  It can be used for coaching, career counselling, conflict resolution, team building and a range of other applications.  Follow this link to find out more about the Myers-Briggs Type Indicator (MBTI) .

So what is it that makes the Myers-Briggs so popular and so effective?  I think one of the reasons is that it provides an intuitive model which describes 16 different personality types.  Arguably this is also the biggest criticism to be levelled at the MBTI – that individuals can be pigeon holed into one of just 16 boxes.  For me, the response to that argument is compelling – that while we are all individuals, we tend to differ in similar ways.

Back to those epiphany moments.  When debriefing an MBTI, I’m often told “that’s really spooky” or asked “how could you know that?”.  The MBTI really does have the ability to get under one’s skin and just in case there is any suggestion that this might all be Myers-Briggs horoscopes, I often recount a summary of the opposite type to which the response is invariably “no, that’s really not me”.

The real value of the MBTI is that in learning about ourselves, we tend to learn about others too.  This is where the MBTI can be really powerful in promoting mutual understanding, improving communication and enhancing team work.

If all of this has fired up your curiosity, you can take the MBTI online and gain some personal feedback.

Mike West

www.novaconnection.com

Canoeing down the River Orb in Southern France, it struck me what a powerful team building activity this was.

Two men in a boat, my brother-in-law Richard and I set off with little idea of what we were doing other than our destination was four hours downstream.  Launching the canoe went rather well, but within seconds we were going in the wrong direction, by which time our “instructor” had disappeared with the empty canoe trailer and was returning back to base.

We were tous seuls and quickly realised that we needed to work as a team, but there was an added dimension in that we didn’t know what we didn’t know.  We had no idea how to negotiate the rapids; the eddies which veered us in the wrong direction were a complete surprise and the “invisible” rocks just below the surface were to ground us several times.

Each of these obstacles could be a metaphor for a business challenge and we soon discovered that dealing with them required some pretty nifty team work.  The alternative to team work was to capsize – another metaphor!

So what did we learn?  Firstly, we needed a plan and a shared understanding of who was doing what.  Just getting in the boat and paddling was not the answer; we remembered that the person sitting at the back is the capitaine and should do the steering.  Then we worked out a system for paddling in a straight line.  So far so good.

Then the challenges started coming thick and fast.  The rapids.  Everything had been in slow motion up to that point.  Crikey, which route should we take and how do we make sharp turns in foaming water?  Unfortunately, sitting at the back, the capitaine did not have a good view of the rapids so Richard was quickly promoted to navigateur.  This flexibility helped us to cope with the unexpected – up to a point.

Our next challenge was to extricate ourselves from the rapids; we were jammed sideways and facing an imminent capsize.  From the front, Richard had now lost the view and relied on me for instructions.  We remembered being advised to “kiss the rock” – or lean against it - to avoid a capsize.  That worked and we made our way down the rapids, albeit backwards, only to face the next challenge - the eddy which wanted to send us back upstream and into the trees.

We learned a lot, laughed a lot and had tremendous fun.  We were reminded that effective team working does not just happen – it takes some effort and is not just about technical competence.

Keen to demonstrate our new found proficiency, we did it all over again a few days later.  We had learned much from our previous efforts but still managed to go down a set of rapids backwards!

Mike West

www.novaconnection.com