4D Leadership

Competitive Advantage Through Vertical Leadership Development

Alan Watkins

• Publisher: Kogan Page
• Year: 2015
• ISBN:
  9780749474652
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Liderazgo

Today's leaders need to change radically to meet the challenge of complex organizations in business landscapes that are in flux. This requires a step-change in development in three fundamental dimensions: how you do things, who you are, and how you relate to other people. 4D Leadership is what happens when this step-change in doing, being and relating takes place. When you move up to the next level of ability and sophistication in these three dimensions, you will have unlocked the fourth dimension (verticality) and you will receive a significant competitive advantage.Neuroscientist and leadership coach Dr Alan Watkins draws on groundbreaking research into adult development to present a framework that will transform your ability to excel as a leader. 4D Leadership isn't just a software patch for leadership skills: this is an upgrade to the next level of the human operating system, the next level of leadership development. 4D Leadership is the book for: anyone who feels overwhelmed by the competing priorities of their jobs; anyone who feels stressed by trying to maintain competitive advantage through innovation; anyone looking to develop a more responsive and rewarding strategy, drive change and take people with them, and become a truly rounded and 4-dimensional leader.

Part one

The objective world of ‘doing’ (‘IT’)

01

The escalating leadership challenges in the VUCA world

Late one Friday afternoon I received a call from a CEO who was desperately worried about his COO. ‘I think he is on the point of some sort of breakdown’. The two leaders had been working incredibly hard and very closely to turn their company around under extremely difficult circumstances. They had been wading through numerous organizational, market and operational challenges whilst under considerable financial pressure and media noise. The COO was an extremely able leader, a real hard worker, genuine and really trying to do a great job for the company. He was putting in increasingly longer shifts and seemingly getting nowhere. He was becoming more and more frustrated by the lack of progress and was starting to feel as though he was letting others down and was annoyed by his own inability to single-handedly make a big enough difference. Thankfully, we were able to intervene quickly enough and initiate a plan to turn him around so he could then go on and turn the company around.

Unfortunately such stories of executive pressure are not isolated incidents. Keeping up with the relentless pace of change is part of the ‘modern game’ of business. It goes with the territory and is all part of the exhausting challenge that most executives buy into. Most leaders feel time poor, work long hours to try to keep on top of their huge workload, carry around an extensive, never ending ‘to do’ list. Executive teams wrestle endlessly with their organizational priorities, negotiating the various cross-functional trade-offs and trying to strike the balance between cost reduction, customer value and profit margin. The belief is that if they can keep their organizational ‘to do’ list down to a manageable size then there is a real chance they will be able to execute their strategy, deliver the promised returns to the shareholders, meet market expectations and make a pile of money via their L-TIP (long-term incentive package or bonus).

The kind of pressure that most C-suite executives are under is not for the faint-hearted. Working at this level of intensity in complex multi-national businesses takes its toll. The cost is normally paid by the senior leaders themselves in terms of their health or their family relationships, who may rarely see their father/mother/spouse/children. In 2014 Mohamed El-Erian stood down as CEO of finance company Pimco for this very reason. His wake up call arrived one evening when he was trying to get his daughter to brush her teeth and reminding her that in days gone by she would just do what he asked without having to be told multiple times. His daughter then produced a letter she had written which contained a list of 22 things that she had asked him to do which he had not. On the list were 22 important events he had missed in that year alone including a parent–teacher conference, a Halloween parade and her first day of school. The letter prompted El-Erian to reassess his priorities and he stood down to spend more time with his family (Thomas, 2014).

Alternatively the company itself pays the price in terms of failed strategies, poor decision making and loss of market share. Corporate history is littered with stand out examples from high street jewellery business Ratner’s that was effectively destroyed by some ill-thought-out remarks by their then CEO Gerald Ratner to the most recent departure of Phil Clarke as CEO of Tesco. Clarke famously worked his way up from shelf stacker to CEO over almost 40 years but during his reign the company began to flag amidst stiff competition from discount retailers such as Aldi and Lidl. Under pressure to continue the success of his predecessor Clarke decided to cull most of the top talent and created a power vacuum but did little to improve the brand or the culture. He was forcibly removed from office after just three years at the helm.

And if the pressure doesn’t get you then the job insecurity often will. The life expectancy in the job of an average CEO is not great. Plus all of this is now conducted in the public eye with the business pages of most newspapers awash with stories about executive failures, greed, hubris or other sorry narratives which often simply fuel excessive caution or excessive risk taking.

Many argue that the massive rewards available to the C-suite should be compensation enough for such pressure and cite that there is no shortage of people striving to make it to the top. But what kind of leaders make it to the top of corporate systems that reward aggressive action; that are often built around power hierarchies with hub and spoke leadership structures? Are such individuals adequately equipped to deal with the current rate of change and complexity? Why is leadership so difficult these days? Let’s pull back for a moment to when the world was a little simpler. When running a company was a little more straightforward.

Business then compared to business now

Forty years ago business was much more straightforward. A company was owned by shareholders and there was an Annual General Meeting (AGM) to which the CEO had to report progress. Aside from this the Executive Board could pretty much do what they liked without a great deal of interference. If a poor year occurred they could create a story to explain to shareholders and press on with their plan in whatever way they wanted. If they needed to raise more money they would normally just issue a few more shares. A one-page organizational chart was often sufficient to describe the relationships, reporting lines and hierarchy leading up to the CEO at the top of the business. The CEO for his part, and it was almost always he, was the boss. The buck stopped with him and he made all or at least most of the major decisions. It was a busy role and it had its pressure but it was manageable and not overly complicated. Today the CEO’s task is considerably more complicated. They have to lead and integrate a wider range of functions and operations, every one of which is significantly more complicated than it used to be. The same is true of the lives of the CEO’s main Executive Board members.

In the 1970s the CFO or Financial Director performed an accounting function and was basically the person that balanced the books. They would have been responsible for issuing reports to the market and keeping shareholders happy but that was about it. Even in a large global company it really wasn’t that complex. Now the funding of most big businesses is mind numbingly complex. For example we work with a leading retailer and they have 13 separate investing banks that back them. Investor Relations (IR) has become a huge function in its own right for most big businesses.

Today the CFO must go repeatedly to that community and keep them onside. In addition they must meet with analysts and constantly feed the media and the City stories of how well the business is doing and will do in the future. Most modern multi-nationals have whole teams of people engaged in tax avoidance accounting, off-shoring and other ‘non-domiciliary’ manoeuvres which most people would consider cheating the public purse. When these manoeuvres are uncovered by some enterprising journalist they often appear on the front pages of tabloid newspapers. For example a Starbucks store in London required police protection from protestors after it was discovered they hadn’t paid corporation tax for four years! But they are not alone – Amazon, eBay, Facebook, Google and Ikea were all discovered to have paid little or no corporation tax despite having large UK operations (Neville and Malik, 2012). Comedian Jimmy Carr and singer Gary Barlow were also exposed for using ‘aggressive’ tax avoidance schemes (McLennan, 2014). And whilst people clearly feel outraged around such activity condemning it as ‘morally wrong’ it’s usually perfectly legal.

Indeed maintaining the legality of such activity adds a further layer of complexity to financial management. And that’s not to mention having to comply with increasingly tough corporate governance rules such as Sarbanes-Oxley. Finance departments must perpetually accrue large sums of money and set them aside in anticipation of future financial demands. Operating in multiple geographies can often mean some of the biggest swings on their balance sheet are fluctuations in currency prices. In fact some companies can make more money from playing the currency markets than they can from their own operational activity. If they want to raise funds for geographic expansion, mergers and acquisition or investment in product development their options are so varied they are almost bewildering. It is no wonder that most large companies’ finance departments now lean pretty heavily on the big four accounting firms, paying them millions of pounds a year for tax advice and auditing support. So the CFO or Financial Director role is no longer straightforward. It’s extre...