BOOK REVIEW. Why business leaders often lose it

The success of an organisation is defined by its ability to create value. In his latest work, The Success Formula , Andrew Kakabadse offers a compelling framework to demonstrate how the best organisations deliver value to stakeholders. His presentation is based on vigorous research and industry feedback garnered through interviews with the top leaders of over 100 organisations across 14 countries.

And he pulls in a slew of vital building blocks, the symphonic orchestration of which forms the anvil for drawing up the organisation’s value proposition and taking it to fruition. Kakabadse highlights some important leadership skills critical for achieving this, thus rendering it a must-read for leaders.

The framework comprises three crucial elements — strategy, alignment and engagement, which ride upon the foundation of strong organisational values. He demonstrates the efficacy of these building blocks through captivating stories and gripping case studies.

The success of a strategy, Kakabadse avers, hinges upon a strong platform that synchronises organisational values, structures, systems and processes, on the one hand, and brings about an alignment of views amongst stakeholders across the organisation on key issues such as customer needs, market developments and the strategic plan, on the other.

Moves that matter He highlights the need of alignment in several contexts. Sample this: at Stryker Corporation, CEO Kevin Lobo had sought greater collaboration within his management team by facilitating a higher degree of interaction and identification of common metrics and goals.

Catapulting Deutsche Bank into the league of the global American banks, on the other hand, had necessitated a dramatic transformation of culture, from one that was singularly revenue-focused, to one that valued systems, processes and client relationships just as much. And at Kellogg Worldwide, former CEO Dave Mackay had the uphill task of unwinding the structure to decentralise decision making by empowering business units with the right blend of authority and accountability.

Alignment is tough, and calls for a leader with finesse at working through the organisational politics and exercising persuasive advocacy in bringing the stakeholders to a common platform. Rene Obermann, CEO of Deutsche Telekom, reminisces about the time when foreseeing the internet revolution, he could predict that IP messaging would eventually replace his company’s current model around text messaging, but had a hard time convincing the key stakeholders to and find alternative models.

It requires dexterity in diagnosing the world of the stakeholders, understanding their contrasting objectives, presenting one’s case persuasively, anticipating and proactively addressing counter arguments and an openness to new perspectives, to achieve this.

A strategy can be set up for success only when people buy into it are committed, motivated and excited about implementing it. A high degree of engagement is, therefore, the second mainstay of a strategy. Engagement, says Kakabadse, is based on the twin pillars of trust and dialogue.

This calls for three important leadership qualities. First, unmitigated integrity and moral consciousness, especially in situations that test ones moral worth. Second, the ability to navigate the organisation through complex situations through superior intelligence — cognitive and emotional. Third, a passionate commitment and belief in the organisation’s mission.

Put it to test Any strategy based solely on the vision of a leader, or a closed group at the corner office, is unlikely to succeed. A case in point is the time when the former CEO of Hewlett-Packard, Carly Fiorina, had forced her way through the controversial merger with Compaq. Consumed with her belief, and failing to interrogate the evidence around her, she was unable to achieve the alignment crucial for the success of the strategy, leading to her exit from the company in 2005. Similarly, blinded by success, Fred Goodwin, the former CEO of the Royal Bank of Scotland (RBS), under whose aegis RBS saw a meteoric rise from a regional to a global banking powerhouse, had failed to recognise that the high risk, aggressive strategy that had served the company so well thus far, had to be revisited to gauge its relevance in the new context, leading to his eventual downfall.

It is imperative, says Kakabadse, for a leader to constantly put the strategy to test by interrogating its efficacy against evidence. He calls this evidence-based leadership. Strategy, alignment and engagement, therefore, need to be dynamically linked and work in tandem for creating sustainable value.

It is ironic, he says, how in a world where analytics is the order of the day, critical decisions are often coloured with egos, prejudices and misconceptions rather than emerging from solid evidence, causing a disconnect between the strategy and ground realities and leading to its eventual failure.

Mobilising this evidence calls for an organisational culture that is lined with robust communication channels that facilitate a multi-directional information flow, thus bringing the leader closer to the ground realities, and allowing her to see the picture through the lens of multiple stakeholders.

Role of the board Another important building block is the critical role of the board in offering high quality governance, as is apparent from research that points to a high degree of correlation between the quality of governance and business performance. Governance has two important dimensions — monitoring and mentoring.

While monitoring is about instituting controls and procedures that provide early red flags pointing to potential transgression or bad decisions, mentoring is about guiding and nurturing the management team through the richness of perspectives and experiences brought in by the board.

By focusing more on compliance rather than mentoring, however, corporate governance seems of have fallen short, as is apparent from the myriad corporate scandals unravelled over the past 50 years.

Kakabadse quotes a Russian tycoon to sum up the spirit of the board’s role —“This board is not a committee. It is a hard working unit that adds value to my business. Even though I am a shareholder, I expect them to scrutinise me in my role of CEO.”

The final guiding principle, when leaders find themselves at the crossroads of a dilemma, is wisdom, says Kakabadse. Hard to manage by its very nature, the reconciliation of a dilemma is contingent upon wisdom that brings in the right blend of expediency, judgment and ethics. Exercising wisdom requires immense discipline in being able to stand back and reflect, restrain the urge to act in a hurry, and to learn continuously.

The reviewer is the director of Delta Learning

MEET THE AUTHOR

Andrew Kakabadse is a highly successful author with a following in Europe and parts of Asia, and a growing influence in the US. He is professor of governance and strategic leadership at Henley Business School, and emeritus professor at Cranfield School of Management. He has published 41 books.

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