Companies reached a turning point and have to act, and they have to act fast with utmost flexibility and creativity.

On one hand the economy is not growing and markets are changing rapidly, on the other hand the management profession has reached a turning point and current management style has to change.

Especially in this period of the year, when we reflect on the past year and look forward to a next year, with new opportunities, this is the challenge for today’s leadership. It is not an easy assignment but it is certainly doable because it already started..

Reflection requires openness and honesty to one self in the first place. Next step is to have the guts to deal with it and take concrete action. I will explain this in four parts.

1 - Change always arrives before strategy

Unexpected developments and changes are often denied at first. Whatever is new, it first has to fit in  our brains and minds and then, after some time, we become aware that new systems, like e.g. web 2.0 has different ‘playing rules’ with new players in the market, the early adaptors and the niche players. In ‘change management’this is a well-known phenomenon.

Change occurs in society all the time but management does not accept new developments and fail to see its possible effects. Twitter exists since 2006 but not until 2010 companies started to create a Webcare department to think about their 2.0 strategy.

In the old world of the 20^th century companies shut themselves and their employees off from internet and social media.Now, in the new world of the 21^st century, all are concerned about the web image of their organisation. Even if you are not interested in the Chaos theory, Chaos theory is interested in you. A lot of companies like e.g. T-Mobile and Starbucks know exactly what this means; small causes, like a wrong message on Facebook or a stupid tweet, have big consequences for the company brand. (noticehere another impactful development: the power of the consumer is growing faster than ever before!)

We are always more afraid for new developments because it destroys the old order and habits we are used to and comfortable with. However, sooner or later we reach the turning point and that often feels like crisis because,when we finally realise it, wefeel, and actually know, that we are too late.

2 –McKinsey did a macro analysis of the EU economy

From 2007-2011 the EU market ‘only’ decreased with 0,7%, total of some 81 billion euro. It is not really bad, given the situation. EU export in this period went up with 178 billion euro. Then, how could the GDP go down with 81 billion? The simple explanation (McKinsey,December 2012) is that it had not much to do with the decrease of private consumption (‘only’ 17 billion), but with the collapse of the investments of private companies which was unprecedented. In fact, during this period private investments in the EU-27 plunged by a combined total of €354 billion, 20 and 4 times the fall in private consumption and real GDP, respectively.

Investments of EU Governments (12% of EU total) and Governments consumption are on hold because of their goal to reduce public debts. Private consumption is under pressure as unemployment rises and households rebuild their financial situation after years of high borrowing.

According to McKinsey, first and foremost companies have to invest their huge ‘buckets with money’. Cost cutting proved not to work, in fact had a negative effect; private investing is the only solution to solve the crisis.Publicly traded European companies had cash holdings of € 750 billion, close to their highest level in two decades.

By removing regulatory barriers, European governments could, at a relatively low cost, unlock short-term private investments that would contribute to growth and inspire confidence in firms that have hesitated to launch their own dormant investment plans. We already see this happen in Germany, Holland and Scandinavia, other countries will soon follow because it is the ‘law of the market’. 

3 - What does it mean for your strategy?

Economy is bad and stays bad for at least another year, this affects all companies.As markets stagnate, consumers spend less. Old strategies then do not work anymore, which requires rethinking!It means taking a critical look at your current business model, strategic plan, portfolio, products and services, customer loyalty, marketing plan, segmentation etc.

Who will be first with a good approach is a winner!

Re-thinking your strategy

In every country most companies are constantly reviewing their portfolio, strategy and positioning. Not only influenced by a constant faster change in markets and increasing competition.Other drivers they are aware of are e.g. scarcity of raw materials, growing care for environment and demand for sustainability, consumers with many choices gain more power, increasing role of social media etc.

Crowdsourcing your strategy may sound crazy, but a few pioneering companies are starting to do just that, boosting organizational alignment in the process. Should you join them?

When was the last time you did a Destep-analysis for your company?Did you think which internal adjustments you should take? When was the last strategy session you had with your team?

Business models are changing

Many companies are rethinking their current business model. Several companies startedto cooperate in innovation, sharing investments for research and development with other companies, co-creating new products for new markets. A revolutionary business model was recently developed in a Dutch health care organisation;it will be copied by many other organisations. Not only because it is 30% cheaper than their classic model but especially because of the scarcity of the labour market in this profession. A similar ‘revolution’ takes place in other European countries and in different sectors.

When was the last time you discussed your business model with your team? On how you should create, deliver and capture your companies’ added value in a new way?

What can you do to stay successful in these difficult circumstances?

• Practise benchmarking

Learn from other companies, preferably from other sectors; see what they do and think creative about possible applications for your company. Go through the Forbes’ top 100 list of most innovative companies in the world; what ideas do you get from them? Is your marketing or business intelligence department fit to provide you with actual developments? Is it a standard subject in your board meetings?

• Take actions that provide growth of your turnover:

Reinforce customer loyalty, communicate and co-create with your customers, broaden your offer, expand your geographic distribution. Do you use a CEM system or are you still in CRM?

• Take actions that support this growth:

Simplify your company, throw handbooks and procedures in the garbage bin, educate and develop your employees, introduce sustainability,create entrepreneurship in your company.

• Especially, do not do this alone or with a standard ‘select’ group: Create a top team:

Invite your best and smartest people and gather them around you, don’t bother about seniority, status etc. In order to improve (or maybe to survive),you need the best crew you can get.

Today you will benefit more from critical but constructive people, than employees that only agree with whatever you say or, who provide you with the ‘social desirable answers’.

4 - What does it mean for your management style?

Management as developed some 100 years ago by Fredrick Taylor is changing rapidly, even in the USA where management was invented. USA professor Gary Hamel says: ‘The only sector where since 100 years no innovation took place is the management sector’. A year ago he wrote in Harvard Business Review: ’First let us fire all the managers’ as a plea for more self-management by employees and less managers. A good example is Morning Star, the producer of canned tomatoes where no managers work. The 400 employees cooperate based on annual agreements they make together. And there are more, similar examples.

Re-thinking your management style

This means a turning point in thinking. You can already see that managers in many organisations play another role and have another status. This is increasing fast. At the same time a re-evaluation of professional workers takes place, they are now facilitated by a manager instead of receiving directives, because it is about productivity and innovation. And we know since long that creative and knowledge workers cannot be ‘ordered’ to think when the boss tells them to do so, that kills creativity and professionalism. The manager becomes the coach of his/her employees and yes, the management profession actually becomes more interesting, more satisfying and more challenging.

Of course, one can (still) deny these changes, but then, who wants to be an ostrich?

Who is the Leader that Inspires You?

Most successful leaders have someone who inspires or inspired them. You may call them heroes, mentors or use any other name to describe someone who has directly influenced your

personal thinking and professional career. Who are your heroes and why are they important to you?

Answer this for yourself and then reflect on your personal performance. What are values that are typical for your management style? Why would someone follow you as a leader?

Your answer explains the culture you are building in your company!And your success.

How do your people feel when you are around?

Have some open talks with your employees, especially with the talents and high performers.

Ask them openly to give a short description of how they perceive you; what values do these employees attribute to you? Do they find you authentic?Respectful?Do they trust you? Do they think you are honest and open in communication?

What can you do to improve your management style?

• Create a top team:

A recent Gallup report revealed that the world’s top performing organizations understand that employee engagement is a force that drives performance outcomes and is a strategic foundation for the way they do business.The commitment of these top companies that place an emphasis on employee engagement is a fundamental component of their operation.  

• Involve and commit your employees:

You know a lot but, your combined employees know more and even better than you what is going well, what the strong points of your company are and what your customers say.

Get over your pride and accept that your employees have the key to solutions in their heads; and these keys will come out their heads only if you ask them openly to cooperate, only if they feel they are involved, that gives them spirit and leads to commitment for the decisions you are going to take.

• Ask your staff: ‘Where are we going?’

Of course you give them your vision, mission and framework. You also tell them why the company will win, and which strengths will enable you to do so. Paint a compelling picture of what winning looks like for your organization. Start with asking them to fill in the framework further; ask for their ideas, opinions, create an open dialogue to explore all ideas they have.

People need to know where their company is heading and what it will take to get there. They will feel appreciated and become highly motivated and proactive if they are invited to be part in this creative process.

• Have open team exchanges:

Not only talk regularly about the progress you make together, also ask questions like e.g.:

• What do you like about this team?
• What qualities do you respect in those around you?
• What do you love about your job?
• What’s going right?
• What should we improve?
• Do you have suggestions? Ideas? Solutions?
• Who will take which action and report when?

And… close every meeting with affirmations, congratulations, and recognition.

Saying: “You all did a great job” because… that keeps everyone doing a great job.

John Lodder M.A., MSc.
If you would appreciate more information please contact me at:
www.balance-consultancy.com
info@balance-consultany.com

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