Two Minds Are Better Than One: The Theory of Twin Leaders

Management processes are developed over time to facilitate, enable and ensure success. Organizations create departments around functions and identify managers to lead. Organizations are also corporations with departments, all headed by CEOs as singular leaders conducting corporate management in the quest for success. Organizational practice, over time, also got concerned about vesting singular powers in individual managers and leaders, and has tried to use departments as mutually critical of each other while requiring them to be collaborative.  Individual managers and leaders are trusted to deliver through such singular power or face consequences later (Google Nest is a recent example). Concerns are delayed recognition of failures has led to organizations being layered vertically and horizontally with departments that oversee each other.

The zig-saw puzzle of ‘trust and verify’ is reflected in several organizational structures. Production produces but Production Planning counts while Quality verifies. Accounting records and Finance tallies. Internal audit checks veracity of all these processes. This has been the traditional structure. It has not stopped some business failures and occasional malfeasance. Investors and regulators became concerned, and new departments such as compliance, risk management and ethics came into organizational mainstream. There is another dimension too. In early days, all departments used to be consolidated into just two broad divisions: technical and commercial. Over time, not merely due to increasing scale but also due to avoid departmental cartelization, every department (almost) started getting a C suite officer. Despite all this, looking at the broad range of business failures one would wonder if the management processes, as they have evolved, provide an infallible solution.

Which two?

The efforts to find the right balance continued to extend, and that too to the higher levels of organizations. The Chief Executive Officer (CEO) or Managing Director (MD) is required to hive off day to day operational responsibility to the Chief Operating Officer (COO). The roles of Chairman and MD are now expected to be different. MD and CEO are expected to operate under the superintendence and guidance of a board of directors with diversity of experience. The Board itself is divided into independent (non-whole-time) directors and non-independent (whole-time) directors, independence being related to material pecuniary relationship with the company of a director over a sufficiently long period of time. In further addition, the Chief Financial Officer (CFO) is expected to report also to the Board. An audit committee of select directors of the Board acts as an independent reviewer of accounts, interacting with external and internal auditors. And, there exist other board committees for investments, risk, compliance, and so on.  

The audit committee also acts the ultimate stop for the whistle blowing mechanism in the company and as an ombudsman of sorts. There are many further nuances, both from regulatory and company perspectives, which are expected to support the endless divisions and superintendence. All these mechanisms expect remediation to be carried out only by the CEO and the other C suite officers who alone have the day to day knowledge and execution capability. The audit committee and the board may go through all the internal audit recommendations but will only have to look at the CFO and CEO to implement the remediation plan. In battles between heads of production and purchase, production and sales, finance and all other departments, only those respective departments have to implement corrective processes. All this discussion leads us to wonder if different functions, departments or responsibilities that are headed individually are the solution (or the problem?) and something else is the problem (or solution?).  

Root cause 

The root cause for bad performance is usually bad decision or bad execution, or both. Without addressing the root cause for bad performance mere structural redefinition would not help. Better processes do help to an extent but essentially, individuals need to be better at decision making and execution. There is one reason other than leadership skills as to why leaders do make bad decisions or do turn bad at execution. That reason is that leaders are also human! We may aim to achieve precise and clinical leadership through various efforts of leadership development. However, leaders as humans are subject to pressures, internal and external as well as biases, internal and external. While it is part of leadership skill set to be confident and objective (which should address issues of pressure and bias, respectively) it is indeed humanly impossible to be extraordinarily virtuous. It is, therefore not uncommon to see even seasoned leaders wilt under pressures of the Street or get mesmerised by their own pet ideas.

When the issue is within the native profile of human behaviour, there is only a limited alleviation that organizational structures and processes can offer to offset the impact of pressures and biases; particularly when such structures are in the nature of dividing responsibilities, and reviewing decisions and actions sequentially.  The key here is that the primary decision or execution is singular by an individual; so is the secondary review of decision or execution. Though review by a board is plural it is also a post-facto delayed quarterly review of singular decisions or actions. It is important to enable challenges, debates and superior outcomes in decisions and actions. This cannot be achieved just through a discussion between the boss and his subordinates as the former eventually displays positional power and the latter eventually succumb to career growth issues. This cannot be through peer level discussions either as peer groups tend to eventually “live and let live” rather than aim at the best outcome.

Two minds

It is often said, “Two minds are better than one”. In fact, the concept of synergy lies in being “One plus One becoming Three, rather than an arithmetical Two”. The first is a typically social adage that implies that two minds can bring to the table viewpoints that would not be obvious to just one person. The second is a typically corporate adage implying that when two minds get together some sort of catalysis takes place. There is a saying related to individual experience that plays spoilsport though: “I am in two minds”! In corporate setting, indecisiveness is frowned upon. This has been one evolutionary reason why singular authority has been encouraged in all organizations. As we have seen in the earlier sections, this concentration of power has the potential to lead to inappropriate decision making or execution. A bold new experiment could be to have two leaders responsible for a single function. For example, key functions such as Finance, Operations and Commercial could have two equally titled top executives lead each of them. All decisions could be taken and executed only by the two together.

The rationale for two minds taking one decision or supervising one execution is clear: two minds are better than one, especially when the function is too complex to decipher or when multiple solutions require multiple viewpoints. Having two equally endowed executives enables each of them to overcome their pressures and biases through the critical thinking of others. Having another powerful co-sharer of decision making and execution enables the two member team take bold decisions which each individually would not probably be taking. There are, of course, risks that the two leaders could form a conveniently colluding cartel rather than critically thinking team. As long as this two member team concept is not limited to just one function but covers a few other important functions besides the CEO role itself, the risks of such cartelisation would be low. There would be higher costs associated with the concept but can be overcome with greater infallibility and greater value building through such pooling of strengths.

Left and right

The general approach in a Twin Leader deployment could be to select them based on complementary domain skills. For example, of the two to head the commercial function, one could be a sales oriented leader and another a marketing oriented leader. Of the two, heading the finance function, one could be a growth oriented fund raiser and another precision oriented cost accountant. In the operations domain, one could be a production expert and another quality expert. At the level of CEO itself, one could be conceptual and another analytical or one could be thinker and another implementer. The logic is that by putting together these skills at the leadership level one gets the best domain leadership capability. There is much to support such a skill based approach. There is another approach too that could be very viable that is rooted in neuroscience.

Ever since Roger Sperry, the 1981 Nobel Laurate, brought out the concept, lot of research has focused on lateralization of brain through left brain and right brain functionalities. Right brained individuals are expected to be more intuitive, thoughtful and subjective while the left brained ones to be more logical, analytical and objective. It is not that the two sides of the brain are completely compartmentalized; the brain does work together with the various parts of the brain including the left and the right conversing through the corpus callosum which joins them. The point here is that the twin leader approach has an enormous potential to bring together not only complementary domain skills but also a winning fusion of intuitive and logical, thoughtful and executional, and subjective and objective skills that are so essential to accomplish top-class leadership. If organizations look beyond the immediate costs of twin leadership approach, the organizational value that could accrue would be immense.

Posted by Dr CB Rao on June 5, 2016       

Five Sequential Facets of Effective Execution: Integrating Events, Outcomes, Results and Accomplishments, and Actualization

Execution is the key to competitiveness. Even a suboptimal strategy can be made to work with superior execution while even a great strategy can be rendered suboptimal by inferior execution. There is lot of management literature on planning, strategy and the like but very little on execution. Two books  merit mention: the first is “Execution: The Discipline of Getting Things Done” by Larry Bossidy and Ram Charan and the second is “The Four Disciplines of Execution: Achieving Your Wildly Important Goals” by Sean Covey, Jim Huling and Chris McChinsey. Probably, execution is seen as simple as as following a set of instructions or rules embedded in budgets and plans, developed pursuant to goals. The book by Sean Covey focuses on the behavioural aspects of execution, and brings out Focus, leverage, engagement and accountability are considered the four critical disciplines of execution.

Execution at shop floor level or in construction site is rather easy to monitor. However, execution of a business is more challenging due to the involvement of countless agencies and people, both internally and externally, operating under conditions not fully under ones control. One may draw up an SOP for shop floor activity or a PERT/CPM chart for a construction project but would find the idea rather out of place for a business initiative. Programme management has emerged as a discipline for monitoring execution but it only provides a partial and ineffective answer. The reason is simple. Just as quality has to be embedded in production processes and operators, execution has to also be carried out only by people entrusted with execution. Execution is not a monitor’s job, although monitoring may be part of execution, and if carried out by other agencies helpful to execution. This blog post proposes five facets of effective execution.

Execution chain

Execution is the practice of converting a plan into an action to achieve a goal. Execution, therefore, starts with goal setting itself, as Sean Covey’s book argues. If the logic is so clear, why is it that there tend to be huge differences in the execution effectiveness of different individuals or entities? Some attribute ineffective execution to inadequate goal setting and insufficient planning.  People subscribing to this view believe that as long as goals and actions are articulated clearly execution would happen automatically. Yet, execution tends to be weak in high-planning companies too. Some believe that execution has a significant behavioural content. Sean Covey’s book proposes that the four key elements of focus, leverage, engagement or accountability can be ensured in teams with appropriate behavioural conditioning. It advocates systemic ownership around key goals with execution itself being both an action and reward.

The planning based view is simplistic while the behaviour based view is elaborate. It is important to understand execution from different viewpoints, align them and integrate them under one execution value chain. At the lowest end, execution can be seen as a series of actions or events. An example of this is organizing a leader summit as an event that aligns the leadership team. However, organization of the event is just a start. At the next higher step, organizers tend to look for outcomes. In this case, successful conclusion with 100 percent participation and no dropouts and with at least 50 percent of participants providing active inputs could be outcomes. Even this, however, is not complete execution. At the next higher level, one would look for results, in terms of new collaborative networks being created or platforms created for post-summit follow-up. Most execution experts believe that the execution is completed with good results.

There are, however, two other important milestones towards the higher end of the execution value chain, namely accomplishment and actualization. Results are metricised numbers of performance. Quarter after quarter companies publish their results, and even if they are in line with goals companies may not have a sense of accomplishment. A sense of accomplishment in execution happens when the executing individuals and teams have sense of ownership, right from goal setting to accomplishment of results. A sense of accomplishment is not the final end, however. A feeling of actualization is the ultimate endpoint of execution. Actualization is a challenging concept, and has been dealt with by the author in his blog Strategy Musings on three occasions: “The Journey of Self-Actualization: A Leadership Process of Discovery, Development and Delivery”, August 28, 2012 (http://cbrao2008.blogspot.in/2012/08/the-journey-of-self-actualization.html), Self-Actualization by One’s Self for Oneself: An Enlightened Process for the Elusive Goal”, April 21, 2013 (http://cbrao2008.blogspot.in/2013/04/self-actualization-by-ones-self-for.html).

Leader reflections

If one has to travel the full length of execution value chain, the journey would require leader-follower interactions that focus not merely on any of the transition points of the execution chain but instead focus on the actualization end-point. The leader would need to typically evaluate himself or herself first; what would really fulfill himself or herself. A leader who is considering a leadership position in a turnaround setting would need to introspect or reflect which of the following could be the real trigger for his actualization: revenue, stock price, employee security or hall of fame. While one may say that all of the factors would be reflected in company valuation, the sense of fulfillment could come from completely different factors. It could, for example, be from a sense of learning that he has become a master of turnaround, which he may not be expressed or measured at all. For the employees involved, it may come from stepping that extra mile to give novel suggestions and have the fulfillment of accomplishing them.

A sense of actualization occurs by focusing on transformative goals rather than mundane goals, and by focusing on a few prioritized ones among them, rather than on every one of them. The leader should be able to identify the goals which are predominantly individual dependent, team oriented or business leadership specific. Delivering a lecture in the leader summit is an individual accomplishment while organizing the summit is a team accomplishment. Using the summit to transform the business is a business leadership accomplishment. Leaders need platforms and forums to articulate, prioritize, and focus on actions, and monitor outcomes and results on each of the groups. Once the forums are in place, taking them seriously, and staying engaged is an essential mind-set, for both leaders and followers. Continuous engagement helps in mutual reinforcement of leaders and followers towards fulfilment of goals. It also sets up mutual accountability which is a logical culmination of ownership.

Follower reflections

Admittedly, followers are unlikely to have the same uniqueness of perspectives or levels of motivation that leaders would have. Followers are generally a part of larger teams with significant interactive noise. Each team tends to have its own group dynamics in terms of behaviour towards performance. Followers tend to be of two categories; those who are determined to be leaders and those who are content to be followers. It occurs naturally for the first group to be highly execution oriented and for the second group to be passively participative. The relative mix of aspirant leaders and passive followers is not necessarily a driver of relative performance differentials. It does not, for example, follow that if there is a high proportion of aspirant leaders in a group, that group would automatically perform better. On the other hand, such a group could be more fractious and more energy dissipating.

Followers need to reflect on what could make them really a fulfilled part of a group. Some may like their performance to be outshining others in a group while some others may derive happiness from their group being more effective overall. Be that as may, followers usually struggle to arrive at a common understanding of the right dynamics for the group. This is partly due to a lack of understanding as to how group success, rather than individual success, can spell overall business success and partly due to a perception linking individual performance to career growth. Those groups which have a natural performance culture rather than a rewards driven performance culture tends to have more harmonious group dynamics.

Leader responsibilities

Visionary execution is what sets out a leader from others. Execution is a complex value chain starting with goals and ending with fulfilled delivery. Most leaders see a high performance culture in their organizations as an enabler for effective execution. That may be a necessary condition but not a sufficient one. Some others see their own personal productivity as a key driver of effective execution. Again, it may be an inspiring factor but not a sufficient one. Most boards believe that linking rewards to individual, group and company performance would motivate people appreciate the value of performance. This helps but not without some rancour of comparisons. Effective execution, like quality and safety, is a behavioural state.

A leader’s ability to mentor his organization on the various stages of execution is an important condition for setting in place a natural and inclusive performance culture for the company as a whole. From establishing critical, top priority goals in focus to guiding the team on a journey that extrapolates from actions, outcomes to results, accomplishments and finally fulfilments is the essence of effective execution. Even institutions derive actualization through effective execution. See the author’s blog post “Institutional Actualization: The 5A Process of Virtuosity”, Strategy Musings, May 19, 2013 (http://cbrao2008.blogspot.in/2013/05/institutional-actualization-5-process.html). There is a clear need for more contributions on effective execution practices in management and leadership literature.

Posted by Dr CB Rao on May 04, 2016

Short Term Versus Long Term, and Other Distinctions: The ‘One Horizon - One Domain’ Concept

From the 1950s till now, long range planning, also called strategic planning, has been serving as a prescription for growth. The concept has become so ingrained in organizational psyche that potential managers and leaders are expected to acquire, develop and demonstrate skills for crafting and executing strategy over a long career span. Superimposed on this is the ability to visualize a future and channel the strategies towards realizing this future. This has percolated to individual domains too with the responsibilities and competencies for operational management and strategic management becoming differentiated. In terms of understanding managerial and leadership processes, the distinction has become, over the years, rather sharp. The long term is seen to require strategic and planning approach while the short term only tactical and execution approach. Extending the philosophy a bit, it is believed that if one has a good long term plan and executes as per that in the short term, the job is done.

This approach, good for most parts, has a few unanticipated consequences. Firstly, the separation of execution in the short term and planning for the long term weakens the feedback and course correction loop. Secondly, the differentiation of long range planning as an annual, fixed period exercise and short range execution as a daily routine actually disconnects the perspectives. Thirdly, the differential approach makes the young professionals, scientists, technicians, who constitute the young talent base with fresh thinking and new knowledge, mechanical and controlled in thinking. As a result of these deficiencies, the intellectual and leadership wealth of the organization tends to get sub-optimized. Merging the paradigm of planning, long range and strategic, with the paradigm of execution, short term and tactical, is a challenge; the differences of approaches and skill sets between the two paradigms would still need to be maintained for orderly planning and execution. This blog post tries to separate the fiction from facts between the two paradigms and explores ways to optimize the wealth of talent through three optimized organizational processes.

Definitional optimization

The differences between what constitutes the long term versus the short term or the strategic versus tactical, or even planning versus execution are relative. Even in a steady state industrial and economic environment, technology shrinks or extends these definitions significantly. With regulatory changes and environmental volatility superimposed, the irrelevance of the long term plan to the short term and the relevance of the short term to the long term become highly pronounced. Let us take the example of the Indian airlines industry. The top national carriers (except possibly IndiGo) have posted a combined loss of USD 1.7 billion (Rs 10,201 crore) in 2013-14 and are expected to post another huge loss of USD 1.4 billion (Rs 8,408 crore) in 2014-15. In fact, the cumulative losses of the industry over the last seven years have hit a staggering USD 10.6 billion (Rs 63,633 crore)! It is estimated that the ailing firms require an immediate capital infusion of USD 1.6 billion (Rs 9,610 crore) just to stabilize operations.  No wonder that the long range plans of all the ailing (and possibly non-ailing) firms are anchored under external capital infusion on one hand and cost reduction with operational efficiency on the other.

Even before the ink could dry on the plans, news is out that AirAsia has launched its operations and Tata-Singapore Airlines would launch its operations in October 2014. Tougher still, six new airlines have also been given approval to fly by the new Government. Stable oil prices become volatile with every geo-political crisis. Rupee value becomes unpredictable every equity cycle. On the positive side, a resurgent India could see the development of at least 25 new international airports and 75 new domestic airports, and a helpful Government may just provide a relief in terms of tax burden.  Clearly, the airlines industry cannot rest on long range planning of conventional mode; it would need to make a long range plan possibly once in a quarter or each time there is a material change. This is a perfect example of the short term being more relevant than the long term and the long term getting secured with the short term. Many other industries are witnessing the need to merge short term and long range approaches rather than separate them.

Talent optimization

Today’s talent is commonly judged on a variety of skills; technical skills and communication skills, hard skills and soft skills, conceptual skills and analytical skills, to name a few. More important than all of these, which will be present in one measure or the other, are two sets of skills or competencies which are hard to get. The first is the ability to see a firm’s value chain on an end to end basis, and appreciate the impact of the value chain on one’s role, and vice versa. The second is the ability to understand the relationship between short run performance and long run plans of a firm. Typically, it is felt that these two skills of critical thinking get developed with experience in an individual. If this were to be true, the tendency to separate short term delivery and long term planning under two sets of talent pools (for example, front level executives and senior level managers, respectively) would only deny further the opportunity for frontline executives to acquire the two critical skills. In addition, the separation of (only) doing as the (sole) responsibility of front line executives and (only) planning as the (sole) responsibility of senior managers serves to delay the development of such critical skill in young professionals.

At the firm level, opportunity to promote the ability to perceive end to end thinking and think of short term and long term simultaneously helps organizations develop the intellectual capital of a firm better and make the firm more competitive. A marketing executive who is trained to understand the design connectivity will be able to relate customer feedback to potential for product improvement. In fact, without end to end thinking approach, the executive may even fail to observe a whole sweep of market triggers. Similarly, the executive who understands how easy or difficult it is to remove costs of a component would understand if a particular product design has reached the end of life, or there is potential to extend the product life cycle with a next generation of product. In addition to the above tangible benefits, the nurturing of creativity that takes place results in an overall creative organization. This requires that senior managers and leaders make it a point to integrate the short run execution and long run planning processes, and to promote value chain thinking.

Technological optimization

Technological change is profound but essentially continues to be incremental. Optimizing rather than accelerating technology holds the key to ensuring that short run product plans stay on for a longer term in a company’s life horizon. When the progress of product design in an industry, be it automobile or computer, is reviewed over a long period, say over two decades, one would be puzzled that the changes that looked major improvements each time look merely incremental over a longer time span. As an example, minimization of bezels in a phone or tablet to  provide greater display size within the same form factor is not a rocket science discovery but it took close to ten years and an LG G3 to take it to perfection (and Apple is yet to get that)! With the rapidly growing popularity of ‘selfies’ it again is not breakthrough thinking to incorporate high performance front cameras (equal in capability to rear cameras) in smart phones, yet only one or two phone models go beyond 2 MP front cameras!

Like with the other two thought processes discussed earlier, technological optimization is a matter of mindset. It requires a mindset to think of all technological features in a totalistic manner and get the best of the technology package. This requires that every member of design school understands the limits to which each sub-technology can be pushed and how such frontier-testing technologies can synergize themselves in combination. A light weight gearbox and a fuel-efficient engine, cannot, for example, be effective on a chassis with high tare weight. A light weight suitcase need not skimp on multiple sub-folders just to drive down total carried weight. Managers and leaders must go all out to give out the best technology package each time rather than hold back available knowledge for future use. Delayed deployment of technologies could, in fact, be counter-productive. ‘Develop now - deploy later’ has never been, and will never be, a winning proposition in techno-commercial thinking; in fact, it has proved to be counterproductive as being ‘too little - too late’.

One horizon, one domain

A review of the above three thought processes which correspond to certain organizational processes reveals that the various differentiations we have, namely short term versus long term, strategic versus tactical, planning versus execution, firm-level versus unit-level, executive versus leader – are all certain convenient methodologies to manage division of responsibilities and accountabilities as well as hierarchical differences in an organization and not necessarily the most optimizing processes. Given the range of external and internal factors (“factors”), and their unpredictability, firms need to have one horizon for planning whose time span is limited by the first material change in any of the factors, and one domain whose relevance is defined by firm level competitiveness accruing through individualization and collectivization of all the organizational functions or units. Young executives and mature leaders must embrace the ‘one horizon - one domain’ concept so that intellectual capital in the firm is built up for competitiveness and growth.

Posted by Dr CB Rao on August 3, 2014

 

Strategy, Structure and Execution: The Essential Leadership Trilogy

Leadership is all about delivering results. It could be through capital assets and human resources; it could be through business for profit or service for non-profit. Leader may have qualities that fit exactly the requirements of an entity; he or she could possess generic leadership capabilities applicable for diverse entities. Much research has focused on what makes a leader deliver superior performance; there is an even greater level of research and hypotheses on generic and specific leadership qualities. There is thus a surfeit of pronouncements on what makes leaders performers and what makes leadership tick. As with everything else in management, leadership is about a process; a process that makes ideas take shape as plans and get executed to deliver results.

This blog post considers the trilogy of leadership in terms of strategy, structure and execution. These are probably sequential steps in startups but in most other cases, they are continuously iterative and mutually adaptive. There is research that establishes that structure follows strategy, and also that results are more about execution than about strategy or structure. While this may be true, a perfectly optimized leadership process requires that strategy, structure and execution are well aligned. This blog post addresses a few issues: (i) achieving alignment between strategy, structure and execution, (ii) adaptive adjustment amongst the three components and (iii) leader influencers on the leadership process trilogy, and vice versa. This theory is important because no leadership challenge or no leader is akin to each other, and it would be helpful to have a process that is both personality and context neutral.

Crafting a strategy

Strategy, simply put, is defined as a plan that is intended to achieve a specific purpose. In management jargon, strategy has assumed a larger connotation of a process or an outcome that involves an overall corporate plan, duly supported by functional plans, to achieve a long term goal over a period, usually of three to five year duration. Strategy formulation is considered as a process that brings all key personnel of an entity aligned on to certain objectives. Strategy is also considered to incorporate several methodologies such as integration, diversification, merger, acquisition, cost leadership, differentiation, niche, all at the corporate level, backed by functional level strategies such as market share building, product portfolio development, operational excellence and so on.

Strategy, whether seen as a plan or a comprehensive process, is the foundation of all developmental actions for a firm. A leader has the opportunity and responsibility to put his stamp on the strategy or strategy development process. The Tata Group under the previous chairman, Ratan Tata, had a strategy of development in industrial sectors such as automobiles, steel, telecommunications, beverages, power and airlines, backed by a strategy of globalization. The same group under the current chairman, Cyrus Mistry, has a new strategy of operating in several infrastructure sectors. Many times, strategy formulation has a context based on the growth or profit position of the company. Although the process itself is complex, strategy becomes referred to in simple phrases of turnaround, revival, expansion or diversification. The leader must continuously evaluate the best strategic options while ensuring change with continuity.

Establishing a structure

Structure is one of the fundamental means available for leaders to deliver the results. Structure means the organizational structure encompassing the processes of coordination and talent management as well. There are different organizational structures that are available for a leader but structure must follow the strategy. A focused mono-product startup would require a simple functional structure while a global multisite network would call for a complex organization structure. No single organization structure has the capability to provide complete solutions, particularly if business is constantly evolving. There exist many choices in designing an organizational structure, several of which also present paradoxes. Concepts such as centralization and decentralization, empowerment and accountability, formal and informal reporting on one hand and flat or multilayered, functional or product, project or matrix, and regional or global engage the attention of organization leaders. The main concern, however, should be on another important factor.

An organization structure is an important aid not only for execution of strategy but also for developing leaders. There tends to be an alignment between these two purposes on the face of it; good talent leads to good execution while good executors qualify themselves to be good leaders. The real alignment, however, comes only when a profit and loss (P&L) responsibility is integrated into the organization structure. For example, it is easy for a business leader to splurge resources on projects when he has no responsibility for the revenues and profits accruing out of the projects (in a functional organization these are largely driven by marketing and finance departments). Similarly, a business leader may not ever get to understand the total nuances of organizational management if he or she has no linkage with profit and loss management. The apex leader’s biggest challenge lies in designing an organizational structure and establishing management processes that ensure functional efficiency as well as business effectiveness.

Ensuring execution

The third part of the leadership trilogy relates to execution. Strategy can be spoken about, structure can be seen around but it is execution that institutionalizes a business. Execution is often seen as undertaking a set of activities within budgeted resources and timelines. Effective execution, however, is more than that; it involves continuous calibration against strategy, being aware of developments in the competitive landscape and developing leaders who have execution doggedness and environmental resilience. The leader has the primal responsibility to ensure end-to-end execution. A well executed factory, a well designed product and a well executed launch may not necessarily get translated into a well executed business. Tata Nano car is a striking example of the well executed functional parts failing to make for effective business execution.

The leader’s responsibility lies in calibrating functional execution against a backdrop of business execution. That is where a well developed strategic plan which is extended into functional strategic and execution plans counts. In most organizations, however, strategy is seen as an annual mechanism independent of execution while budgets (that flow out of strategy) and execution (that is authorized by budgets) are seen as more aligned. In some organizations, strategic investments are considered as sunk costs rather than as investments that can be repurposed. Viewing execution in a strategic perspective is a leadership skill larger than evaluating execution against budgets. Wise leaders ensure that execution provides for flexibility for strategic flexibility or course changes even while executing. Reliance Communications has, for example, ensured that its strategy and execution of CDMA based plans have not prevented them from moving on to GSM bandwagon at a later stage.

Effective trilogy

The foregoing establishes that strategy, structure and execution are equally and simultaneously important for effective leadership. An effective leader is one who, for each objective he or she chooses, visualizes an end-to-end picture of strategy, structure and execution. The Malaysian low cost airliner AirAsia’s decision to enter Indian domestic airline sector reflects such leadership trilogy approach. Way back in October 2012, the firm decided to enter the Indian domestic airspace with a truly low cost (not promotional fare) model, stimulating traffic in virgin routes on the planks of both cost and quality. The strategy was followed up with a new hub in Chennai, and a scaling-up business model, including hedging of fuel costs for three years. The strategy involved tying up a joint venture with the reputed Tata Group which had an interest in civil aviation historically.

Even as AirAsia awaited various government approvals from February 2013 onwards, the  parent company started establishing a structure in India. An Indian subsidiary was set up, and a board was constituted. A chief executive officer and a chief commercial officer were promptly recruited who in turn started setting up the operating organization. The firm took on board Ratan Tata, who has a passion for flying and civil aviation, as the Chief Advisor and S Ramadorai, former Chief of TCS as the Chairman. Tony Fernandes, the founder-CEO of AirAsia himself joined the Indian board as the Chairman reflecting the importance attached to the Indian operation. The firm also started executing by signing up travel agents and booking agents for the network, and ordering the aircraft, having applied for and received in-principle approval to import 10 A320-200 aircraft. AirAsia, as a brand, has also started becoming visible in India by extending and advertising its international routes to India.  

Coping with surprises

If the crux of leadership is the strategy-structure-execution trilogy, the essence of success lies in how well aligned and integrated these three components are. The above brief account of AirAsia India, a case study in the making, demonstrates how these three are to be aligned and integrated from a forward thinking. It involves proactive risk-taking, and also a belief in the model to overcome all competitive opposition. Despite the well laid plans, there could always be surprises; for example, AirAsia did not imagine that the Tata Group would form its own joint venture with Singapore Airlines for the Indian civil aviation market. Only when strategy, structure and execution are aligned with due flexibility and continuous calibration, firms can cope successfully with surprises. 

The ability to cope with surprises comes with flexibility in trilogy components rather than making them risk-proof. There will always be internal and external variables that cannot be forecast which could impact the starting assumptions of any venture, organic or inorganic. Depending on the nature of the surprise, one or more of the three elements of strategy, structure and execution would need to be differentially emphasized to manage the surprises. Rather than an elaborate organizational bureaucracy, a small leadership group often provides the drive for a successful trilogy. Tata Motors’ success in achieving a successful bid and an even more successful turnaround of the JLR infrastructure is a case study in itself of strategy-structure-execution operating in impactful alignment.

Posted by Dr CB Rao on April 19, 2014

Dispassionate Analysis and Passionate Execution: The Winning Combination for Optimal Outcomes

Business and administrative organizations are constantly focused on positive outcomes. The outcomes vary across organizations but there exist some common threads. Business organizations look for growth with profitability. Administrative organizations look for development with equity. Executives delivering business activities and officers taking administrative actions depend on certain visions, strategies, plans, policies, systems and processes (collectively, the Organizational Processes) to achieve results. Many times, however, despite considerable academic and practical knowledge, executives are often at a loss to understand why all the Organizational Processes, or simply the Processes, do not deliver the intended outcomes. In fact, it is the differential performance on the Processes that determines why some organizations tend to be more competitive and successful than others.

In parallel to this, there is an oft held belief that if passion is injected into the Processes, the outcomes would be efficient and effective. This is, however, only partially true. In an organizational context, passion is a strong feeling of belief for, and enthusiasm on, something, mostly an outcome. People with passion are easily differentiated from those who lack passion. People with passion lead others while people without passion merely manage, at best. Passion, however, is not an all-inclusive mantra. Competency constitutes the basic platform for performance while passion provides the additional thrust. Even so, competency and passion, even if together, do not still explain the differential performance in firms possessing similar competency-passion profiles. The reason, probably, lies in passion itself. As we have seen, passion has a strong emotional component of belief and faith. In human endeavor, there exist some activities that are moved by faith and belief but there are quite a few others where passion is not required, and could even be counterproductive.

Passion with balance

Human traits are multifaceted. At the core of one’s performance lies competency. Competency is acquired over the years as a result of aptitude; an innate and natural preference to acquire certain specific types of knowledge and skills, and operate in certain specific domains. When passion is built on both aptitude and competency it becomes a tremendously positive force driving positive performance. If there is a lack of such alignment, for example passion without aptitude and competency or vice versa, the performance outcomes would be poorer. Passion to be a leader works but it would be even better if the leader has genuine aptitude for, and competency in, his or her field of performance. Similarly, high aptitude and competency may not be effectively translated into the full potential of performance without passion. Ability to introspect where one’s aptitude, competency and passion lie is an important component of one’s leadership journey.

In leadership journey, no leader can usually be successful unless he or she is truly passionate. At the same time, all passionate leaders need not necessarily be successful. The reason lies in the characteristic of passion itself, which is the determination to pursue an activity or execute a project till the desired outcome is achieved, and the willingness to undergo any personal or professional sacrifice in this pursuit. A mindless pursuit of passion can lead to an emotional overinvestment in causes that have outlived, much to the detriment of business. Passion requires the balance of logic and perspective to ensure that the business or administrative purpose is not lost sight of. If these filters are not applied in passionate pursuits, the changed reality may be lost sight of, or more dangerously reality itself may be viewed in a distorted manner.  Healthy passion for one’s business or administration brings clarity of purpose and focus, and leads to sustainable growth.  To understand how balance in passion could work, we have to dwell on the two core processes of the typical human mind: analysis and execution, which form the core pillars of all business and administrative action.

Analysis and execution 

We have defined Organizational Processes as being visions, strategies, plans, policies, systems and processes. Of these, the first three require, and support, the faculty of analysis in a significant manner. The last three require, and enable, the faculty of execution. Analysis is the faculty of understanding the nature and structure of anything. Analysis involves the ability to grapple with multiple data points and develop patterns that aid decision making. Analysis is not only about quantitative parts of business or administration. Analysis also is relevant for intrapersonal and interpersonal aspects, including feelings and relationships. While conceptualization, the faculty of forming an idea or a construct, is an important faculty, it is the analytical faculty that develops rational pathways to achieve business or administrative objectives. Analysis is one of the critical faculties that continuously occur in human mind, even as all other faculties from conceptualization to execution keep working. Probably, only the level of analysis would vary across people; but some analysis is integral to every human being.

Execution is a faculty that enables people undertake a task in a structured and skilled manner. While analysis leads one to arrive at what could be appropriate decisions considering available inputs, execution enables implementation of the decisions. Vision without strategy, strategy without plan and plan without execution would remain as pipedreams. The way to outcomes is through execution. Execution requires all of the Processes that are mentioned herein. The better formed they are, the better would be the execution. Successful companies take their time in putting the Processes in place prior to execution. Probably the best model to describe this is the way a construction project gets done, from architectural vision through construction strategy to engineering plan that are executed as per construction policies, systems and processes. In construction projects it is understood that unless all the six elements of the Processes are in place, construction cannot be flagged off, except at the project’s or people’s peril. Unfortunately, the same does not seem to be the case in respect of ordinary business and administration projects.  

Dispassionate analysis   

Contrary to popular perception that analysis and execution are sequential, they are in fact integral to each other. Analysis would be unfocused if the desired outcomes and execution capabilities are not kept in perspective. Execution could lead to wrong results if contemporaneous realities are not taken into account. Analysis requires dispassion and execution requires passion, and both analysis and execution require each other. It is easy to get biased while undertaking analysis; bias that gets influenced by one’s own past successes and failures or others’ current successes or failures. As an example, if an airliner is passionate about being a leader in the Indian airlines industry, despite the inherent loss-making and consolidation, such an airliner, despite its losses, could still place multi-billion orders for new aircraft! If one is dispassionate about ensuring profitable growth in a bleeding industry, the same low-cost airliner would apportion just a minute fraction of the multi-billion capital investment to several on-ground and in-sky investments to improve user experience and win customer loyalty on considerations other than crash fares.

In perpetually evolving industries with fast changing technologies, yesterday’s execution passion could be today’s outcome liability while being dispassionately analytical could be an asset. Being dispassionate means a state that is not influenced by emotion and an ability to take a calm and impartial view of things. Nokia’s decision to embrace Android operating system (for low and mid range phones) despite its rejection earlier in favor of Windows (which continues all across the smart phone range) is an example of being dispassionate about the past, and objective about new decisions. Microsoft’s reported decision to license its Windows OS for free for select emerging markets is yet another example of dispassionate analysis. While some may dismiss such decisions as mere opportunistic plays or practical exigencies, the truth remains that such decisions have strategic import and cannot be taken without dispassionate analysis. Dispassionate analysis enables leaders in some cases steer clear of emotional overinvestment in strategy and execution that could have lost their utility, and in other cases compensate for the underinvestment in opportunities that emerge from time to time unanticipated.

Passionate execution

Execution gains immensely from the Processes being in place in an organization. Passionate execution overcomes the limitations in the Processes. The high performance of entrepreneurial startups is driven by passionate execution. So is the completion, against odds, of complex construction and infrastructure projects. The successful execution of Delhi Metro Rail is attributed to the passion of its Chief, E Sreedharan.  The successful development of India’s first indigenous car by Tata Motors is attributed to the shared passion of Ratan Tata, its Chairman, and V Sumatran, its Chief Designer.  Yet, successful execution, however passionate, also requires continuous dispassionate analysis. Nothing illustrates this requirement more than the surgeon undertaking a surgery. Prior to commencing a surgery, the surgeon would have all the Processes laid out, and assimilated but when he or she opens up the abdomen or the chest in the conventional way or peeps inside the skull with robotic assistance, he or she could face a completely unexpected situation. Successful surgery under such a circumstance requires not only passion to save the patient but also dispassionate analysis that balances a new reality with the pre-formulated hypothesis.  

Leadership journey would be truly rewarding for organizations and their leaders when their passion for execution is balanced by dispassion in analysis, and their relentless focus on execution is accompanied by a continuous update with analysis. Professionally, analysts and executors could be different specialists but in leadership they are one and the same. If leadership is one of managing paradoxes, the most challenging paradox is one of reconciling passion and dispassion in one’s own leadership personality. This does not come easy; requires a high degree of reflection and introspection on one hand and a healthy respect for value of alternatives and the value of time on the other. Certain leaders are able to manage the paradox by having leaders around them who have dominant streaks of these attributes, and collaboratively manage them for effectiveness. Whether a leader achieves such balance of passion and dispassion singularly or through the leadership team could be a matter of choice but to ensure an appreciation, across the organization, of the winning combination of passionate execution and dispassionate analysis for optimal outcomes is mandatory to ensure sustainable growth and profitability of business organizations as well as development with equity of social organizations.

Posted by Dr CB Rao on March 16, 2014