“Business is 1% strategy and 99% execution!” a client of ours is fond of saying at every opportunity. What Jim, the CEO of a large, national, multi-format, retail company, means is that he and his team find it relatively straight forward to come up with new and big change ideas, but difficult to mobilize the organization to implement and sustain them. They’re not alone. Most of our clients struggle with implementing large scale change, be it new strategies, structures, operational models, enterprise risk models, mergers or acquisitions. At Oliver Wyman, Delta, Organization and Leadership, our focus is on helping clients identify the success factors that are critical to their change efforts, and work through a disciplined process of executing their strategic intent
One of the most critical – and most often neglected – success factors is “top team accountability and alignment.” We have noticed that members of the executive team find it easier to be clear and focused on their accountability to run the business within the budget year, than to figure out what they need to do to simultaneously change the business in the longer term.
Based on our 25 years of experience working with CEOs and their senior teams, we believe there are ten questions that must be answered with brutal honesty to determine whether the top team is ready, willing and able to lead successful, sustained execution of major change.
Aligning the Senior Team
1. Do you have the right top team for the future? The first and perhaps the most difficult question for the CEO to answer is this: “Do you have the right executives to effectively lead the future state you envision?” The core of the problem is that the team that got the organization to where it is today is often not the right team to take it in new directions. Some of the executives may not be willing or able to make the transition. As CEO, you will need help in assessing which ones are keepers (and what further development they may need), and which ones must be removed from their roles. Asking questions 2 through 5 will help you assess the potential of your top team.
2. Does each member of your team have sufficient intellectual horsepower to lead enterprise-wide initiatives? It’s not enough for people to truly like and respect each other. If there is too great a divergence in their intellectual horsepower or ability to process information, they will find it difficult to operate as a team. They will view and articulate a situation or issue from very different perspectives. If some members continually get lost in the details and lack the capability to get themselves “out of the weeds,” they will not be able to join their colleagues “on the balcony” who are looking at the issue in a holistic and systemic fashion. They will be speaking two different languages. Impatience and frustration will reign, and little will be achieved.
3. Does each member of your team have the emotional intelligence to perceive, adapt and use the emotional content of the team dynamics for the best overall good? Are they able to actively listen and learn from each other, so the “assembly bonus” is greater than the effort of working as a team? It takes a large measure of self-awareness and personal mastery to truly understand, engage with, and appreciate others. It takes empathy to build the trust that is critical to effective engagement and collaboration on complex, large-scale change.
4. Within your senior team, is there sufficient mix and diversity to effectively hold enough “point-of-view” tension and lead from a full enterprise perspective? “Group think” is most likely to occur when all members of a team share similar backgrounds and perspectives. While it can lead to fast decisions and quick action, it can also be disastrous. A certain amount of diversity (with respect to gender, age, point of view, tenure, technical background) on a team is likely to engender the kind of healthy debate that leads to innovation and ensures potential downside risk has been identified, assessed and mitigated. As CEO, you will need to bring out this diversity, and turn it into a healthy debate, within the room, moving it toward resolution and common ground. If you don’t bring out this debate, it will occur anyway, but in non-productive ways, outside the room. A variation on group think is role stereotyping. People who have grown up together in a firm may have fallen into thinking of themselves and their colleagues in certain roles: “the challenger,” “the maverick,” “the nurturer.” While an argument could be made that this is simply an explicit recognition of the diversity on the team, we fear that it encourages people to abdicate their accountability to play whatever role is required for the situation at hand – to think, “I don’t have to challenge that idea, because I know Carmen will. He always does.”
5. Does each member of your executive team have the requisite leadership skills and tools to align the organization and mobilize change? Have the executives been taught the fundamentals of change leadership? Do they know how to mobilize their direct reports to work effectively and collaborate in taking the organization in new directions? Have they been taught how to build a case for change, manage conflict with their direct reports, give constructive feedback and coaching to their team and each other? It is one thing to be “clear” on this expectation (question # 6); another to be “capable” of meeting it effectively.
6.Have you made it clear to the members of your team on their individual and collective accountabilities? Has the new direction been translated into clear performance targets and measures for each member of the senior team? Do leaders understand not only the concrete change-the-business outcomes they’re expected to deliver but also how they’re expected to deliver – the way they’re expected to behave as leaders? While each member of the team will likely negotiate his or her performance targets directly with the CEO, it’s also important that these be shared and discussed among the team. Change is too often constrained by horizontal misalignment – conflicting and/or competing targets and measures among the different individual accountabilities of top team members – or vertical misalignment, conflicts with what’s being measured and rewarded at other management levels. In other words, do all goals and performance objectives relate in some way to the CEO’s objectives?
7. Are all members of your top team passionate about and committed to the future direction? Once you have decided that you have the right individuals on the team and they have a clear and common understanding of expectations, you will want to have confidence that each member is fully committed to the change. It’s not enough to have the “head” engaged – to have their intellectual acceptance of the future vision – you need the “heart” and the “guts” as well, their emotional commitment and their courage to drive change forward. Many factors are at play here, the most critical of which we explore in questions 8 through 10.
8. Does the team value collaboration and know how to work together effectively? Do the senior team members value the work of enterprise-wide team leadership and cross-unit collaboration? Or do they pay it lip service, while their real commitment is to the success of their individual units? Does every member know how to balance unit goals with what’s best for the enterprise as a whole? We have noticed that many members of top teams don’t know how to wear two hats simultaneously: the enterprise hat and their unit hat. They are unwilling to make necessary trade-offs between their unit’s performance and that of the enterprise, or between their unit and other units. They do not readily accept input and advice from each other. They don’t know how to challenge issues and each other in a constructive and objective manner, to distinguish appropriately between attacking an issue and attacking a colleague. They are not comfortable with managing conflict. To operate as a high-performing team in a context of large-scale change, leaders need to learn the power of creative tension, building skills in holding that tension and using its energy to mobilize each other and the organization.
9. Does the incentive system encourage leaders to appropriately balance their unit goals with the enterprise-wide goals and with your objectives? An improperly designed or out-dated incentive system can be a major barrier for an executive working simultaneously on short-term operational objectives and longer-term change objectives. No matter how capable, clear and committed they are to the change, if the incentive and reward system largely supports the status quo and running-the-business, unit-specific outcomes rather than changing-the-business, enterprise goals, the implementation will be compromised.
10. Are the values of the members of the senior team congruent rather than competing? Extreme competing values make it extremely difficult for people to work together effectively. Conflicts may exist in personal values (team-oriented versus lone ranger) or organizational values (growth versus profit maximization). While diversity of perspective and creative tension are healthy, top teams polarized at the level of fundamental values are rarely able to engage in productive dialogue and solve problems collectively. At best they tend to avoid each other; at worst, attack each other. Sometimes otherwise high performers need to be moved out of the top team because they hold values that are making it dysfunctional.
As CEO, can you answer a confident and resounding “yes!” to each of these ten questions? If so, you have created the pre-conditions for successful implementation of your change agenda. If you have more “somewhat’s” or “no’s,” then we urge you to make the up-front investment in building top team accountability and alignment. It will pay off in faster, better execution of your change strategy.
Oliver Wyman – Delta Organization & Leadership can help get you there. We know how to work with you to ensure your top team leaders:
- Are the right leaders for the task at hand
- Are clear about what’s expected of them, individually and collectively, to take the organization in the desired new directions
- Are committed to what’s best for the whole enterprise, not just their units
- Have the skills and tools to work collaboratively to manage and monitor successful strategy execution
- Know how to facilitate cross-unit cooperation and collaboration
- Are being incented to stay the course and sustain the change, not to sacrifice the long-term goal for short-term results