Building better boards - Henley Business School Finland

The new BIG business question: are you really a value delivery leader?

Creating value requires a different kind of leader. Delivering on the promises made to stakeholders and the markets is enormously challenging, calling for not just political and leadership skills, but a distinctly different personal and organisational approach.

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Renowned business thinker, Professor Andrew Kakabadse recently presented the findings from his research into the characteristics of outstanding boards and top teams, and his views on what it means to be an outstanding global leader in todayโ€™s competitive environment.

According to Professor Kakabadse, “Creating value requires a different kind of leader. Delivering on the promises made to stakeholders and the markets is enormously challenging, calling for not just political and leadership skills, but a distinctly different personal and organisational approach.”

Drawing on his research of over 12,500 top teams and general managers plus 5,000 boards in 14 countries across the world, Professor Kakabadse highlighted what the best leaders do (or donโ€™t do!), and revealed some common problems, including meaningful engagement, leadership during change, and the challenges of effectively negotiating and satisfying multiple contradictory stakeholder demands!

But what are the critical challenges to effective delivery in an organisation?

According to a recent survey of entrepreneurs and senior business decision-makers across a range of sectors, the challenges are numerous and diverse, including:

  • scarcity of resources to match our ambitions
  • being good at agreeing what, but not the how
  • a culture of risk management
  • a company structure that can inhibit efficiency
  • IT which can be restrictive
  • diversity within the organisation, and the fragmentation that creates
  • maintaining a difference, and a competitive advantage
  • management styles and internal culture

Engagement is still the key

It is clear that there is a need to differentiate between value given and value gained; ideally we all want both, but is this possible? For example, the expectations of Generation Y workers are massively changing, and they expect the IT they choose to be delivered perfectly. The battle for management, between vision and delivery, rages on.

We regularly see a culture of fear of innovation, so the reality of any strategy can be very different at operational level, with the board imposing ambitious targets, unaware that the workforce is unable to deliver on the strategic aims because the IT infrastructure doesnโ€™t allow it.

And progress can be held back by our reluctance to reward innovation, or allowing politics to get in the way of what we seek to achieve. We have to make it clear that we can’t do everything, but set out the priorities, communicate clearly, giving context, as well as objectives and rationale. As with so many aspects of leadership, engagement is key.

The survey revealed more about their challengesโ€ฆ

  • Communication โ€“ there is a need for an inspiring framework to show the ‘why’ when presenting future strategies to employees
  • Hippo! (the Highest Paid Opinions are the only ones that matter!)
  • Risk aversion
  • Lack of shared view on how (even if not what)
  • Inertia โ€“ treading water โ€“ perceived lack of common sense and involvement
  • Tension between short- and long-term strategies
  • Stakeholder demands
  • Alignment throughout the business – communications and engagement
  • What IS value? Is it cash, or ethics, or something else?
  • The need to respond quickly to trends and problems?
  • The ongoing battle between continual improvement and operational delivery
  • How do we motivate and reward, against short- and long-term?
  • Entrepreneurship versus team objectives
  • Understanding the ‘why’ is more captivating for most employees
  • Chinese whispers โ€“ boards removed from reality

Professor Kakabadseโ€™s findings from his โ€˜Global study on leadership, engagement and value deliveryโ€™, highlight some of the variances in views expressed by top teams and their general managers, and gave examples of the need for a shared vision, including one globally recognised brand which was sold without the CEOs knowledge, and another whose 5,000 MDs had to physically meet up to discuss and agree the purpose of their role.

The number one question for both aspiring and existing board members is: โ€˜do they really understand their organisationโ€™s competitive advantage and how it should be positionedโ€™?

The top team and CEOs invariably think they know what the vision is, and are trusted to discuss sensitive issues. But general managers โ€“ those who Andrew believes are the most important in any organisation when it comes to value delivery โ€“ often disagree, and the inability to discuss such issues points to a lack of respect.

A selection of his other findings included:

  • 85% of board members didn’t share a view of their own USPs.
  • Top management down rated their boards by 40% lower than they rated themselves, by any criteria.
  • In well-led US companies, there was less inhibition, and more cohesive strategy.
  • And whilst trust in boards was high in Russia and very low in South Africa, the board dynamics appeared highest in Australia.

So diversity is normal, and honesty and resilience are important, but engagement remains the single critical factor that binds everyone, prompting the question: is it enough to have IQ without EQ (emotional intelligence)?

Equating value with strategy, engagement and alignment

From his research, Professor Kakabadse has devised an equation that links the elements of value delivery, and established a clear pattern that shows the greatest value:

S + (E x A) = V

[where S= strategy, e=engagement, a=alignment, and v=(value delivery)]

So where the effective engagement is based in evidence, there is a stronger probability of high performance.

This contrasts starkly with the 90% of businesses where the equation is based on a leader or value proposition, rather than value delivery, where a subtle change in the format creates a very different outcome:

S x (E + A) = V

So evidence (or lack of it) may be one of the blockage points, rather than it being the strategy itself.

And the outcomes are different when the board owns the culture and the management owns the strategy.

Andrew also looked at how individualsโ€™ personality traits impact on their propensity to base strategies on value-delivery rather than value-proposition, revealing that: โ€œThe level of resilience needed to deal with the uncomfortable truths is much greater with the evidence-based model.โ€

He looked at how various learning methods affect decision-making (“Leadership is about learning and until the body does something, the mind isn’t learning”).

In short, Andrew said, some executives get it intuitively, but 55% just learn by experience but developing through trial and error can be a painful, destructive โ€“ and expensive โ€“ route.

Learn more about the Boardroom Skills programme.

This article originally appeared in CEO Today.

Professori Andrew Kakabadse - Henley Business School Suomessa

Professor Andrew Kakabadse

Professor Andrew Kakabadse is Professor of Governance & Leadership, Programme Director for the Board Directorsโ€™ Programme and Boardroom Skills programme as well as Chairman of the Henley Directorsโ€™ Forum. He has undertaken global studies spanning over 20,000 organisations (in the private, public and third sector) and 41 countries. His research focuses on the areas of board performance, governance, leadership and policy.

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