Leading Through VUCA: CEOs Focus On Culture – Chief Executive Group
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Leading Through VUCA: CEOs Focus On Culture – Chief Executive Group
In part 1 of this two-part series, six corporate leaders shared how they were using culture—and a set of clearly articulated and shared corporate values—to guide them through the pandemic. Below are the leadership strategies they found most helpful, and the lessons they’ve learned along the way.
Communicate, Communicate, Communicate
During VUCA, there is no substitute for frequent, clear and transparent communication; all other strategies depend on effective communications. The executive leaders we interviewed used a variety of platforms to meet virtually with their leaders and employees. Communication techniques included regular leadership team meetings, frequent all-hands meetings, skip-level meetings, and one-on-one check-in sessions with employees.
Insight CEO Ken Lamneck stressed the importance of communicating with his employees: “The one thing we found that we had to do more of [during COVID], of course, was communication. The communication had to step up quite a bit. We did lots of outreach, lots of videos, lots of roundtables, where we actually met with two to three levels down in the organization to really talk to individuals. [We] did a lot of creative and fun things throughout the organization to break up the monotony and to really keep people connected.”
At EMCOR, CEO Tony Guzzi “expanded what would have been routine communication. Instead of just having eight people on the call, we had 30 people on the call…we would share ideas. And then we actually had calls every week with all subsidiary leaders at various times, so they could hear from each other what they were experiencing.”
“In times of uncertainty,” added Ameet Mallik, EVP and Head of U.S. for Novartis Oncology, “you don’t always have all the answers, but it’s important to keep people informed and connected, provide a forum to ask questions and maintain an open dialogue. We did this in a few ways. We increased the frequency of our organizational town halls from quarterly, to every 10 days. This allowed for continuous check-ins, updates, and information sharing. And even if we didn’t have answers to all questions, we could still connect and keep people engaged.”
Intent and Priorities
In all cases, the executives began to address the pandemic by communicating the mission, leader’s intent, and priorities, all centered around the organization’s values. In doing so, they provided clarity of purpose and reinforced the culture. Not surprisingly, their leader’s intent statements emphasized mission and people.
“I think what’s most important is that you stay focused on your core purpose and your culture,” said Mallik. “That is what carried us through each day. In those first few months of the pandemic, we really focused on two principles. First: how do we make ensure every patient who needs access to our medicines gets them? And second, how do we keep all our associates safe, engaged, and supported?”
At Insight, establishing intent was a priority, said Lamneck. “We as a team developed a leader’s intent, with all the appropriate pieces [purpose, end state, key tasks] to cascade it a couple of levels down into the organization. But became our blueprint. When you look what we identified as the key tasks we had to undertake, as part of the leader’s intent, first and foremost it was the safety and wellbeing of our teammates. Second was that we were classified as an essential business because, as an information technology company, we supported many companies that were essential to the COVID crisis, such as healthcare providers, government agencies and so forth, that were really essential to ensuring that we could address the pandemic. So that was the second priority, to ensure that all our facilities (warehouses, integration, advanced services type facilities) had to stay open. And then third, was to make sure that we were preparing inside our company for the inevitable outcomes of the pandemic, which we didn’t know at the time, basically ensuring that we were positioned well for the future.”
At 7-Eleven, the leader’s intent was fourfold, explained CEO Joe DePinto. “First and foremost, it was making sure that we kept all our employees, franchisees, and customers safe and healthy. That was number one, top of the list. Second was to stabilize the supply chain, and look for alternative supply chains, which we continue to do to this day. We knew that neighborhoods were going to need our retail stores, that a lot of communities were hurting, people were hurting, and that we could serve a real purpose in supporting them and providing them goods and services. And third, to keep our company and our franchisees financially stable. That was the leader’s intent back in March 2020 and it remains the leader’s intent today. It has served us really well. In a truly VUCA environment, having a set leader’s intent, and then a plan around that, is critical. We start every conference call reviewing the leader’s intent.”
Verify and Reinforce the Message at All Levels
How did these executive leaders know if the message was received throughout the entire organization? They made sure they regularly verified and reinforced the mission, intent and priorities. In addition, with VUCA, they knew they didn’t have all the answers, and they looked to others for good ideas. They valued two-way communication across the organization, talking and also listening to leaders, mid-level managers, and employees on the front lines. They did this through listening sessions, town hall meetings and weekly roundtables, all done virtually. Mallik recognized that “in times of uncertainty, you don’t always have all the answers. But it’s important to keep people informed and connected, hear from them and ask questions, and have an open dialogue.”
At Lord, Abbett, managing partner Doug Sieg wanted to increase communications. “So every Friday, we have four town halls to ensure that we reach every individual on Zoom. Despite the limitations of the tool, it serves a vital need for connection across the organization—enabling me to see people and get a sense of how they are doing.”
“We’re all about validating the leader’s intent,” added Antonio Pietri, CEO of AspenTech. “‘What do you mean by that?’ ‘Is this correct,’ and so on. We use the digital systems that we have put in place to get that feedback. Do they understand what we were saying? And that was a way to validate that.”
Empower People at all Levels to Respond Quickly
All the executives had initiated cultural transformation before the pandemic arrived. Their focus was on creating adaptive organizations that empowered leaders and employees to take initiative appropriate to their level consistent with the leader’s intent. At Lord Abbett, Sieg had been creating a culture where “people operate in a principles-based environment, where every individual is empowered to make decisions based on the leader’s intent for the good of the team. This preparation enhanced our organizational agility and enabled our people to respond instinctively and know what they needed to do as we went into the pandemic.” Mallik at Novartis Oncology saw his role as setting the vision for the organization and then empowering his team by removing obstacles that get in the way of achieving that intent.
Build and Maintain Trust Internally and Externally
Maintaining trust with employees, customers, and other stakeholders was critical to the success of these organizations. The leaders recognized that new external demands and internal processes created untold risks and that trust was critical to exercising influence in the crisis. They did this by demonstrating competence to deal with the pandemic, maintaining strong relationships, and communicating candidly with all stakeholders.
Working with trade unions that provided frontline essential workers in the construction industry, Guzzi knew that at EMCOR “the first thing we had to have is trust; they knew that if something did happen, we would do the right thing by them, from their healthcare to their pay and everything else.”
Mallik saw the importance of maintaining a trusting relationship with the community and essential health care providers. Novartis “made sure to help the community where we could. For example, we donated any excess Personal Protective Equipment (PPE) equipment from our labs, whether it be N95 masks or gowns, to support the local community.”
Sieg makes the point that trusted relationships formed prior to Covid allowed his workforce to be successful when work-from-home protocols were implemented. “We have a lot of people who have known and worked with each other for years, so they knew what they had to do. The crisis brought everyone even closer together, uniting them around a shared purpose. As a result, the organization is stronger now—and will be even stronger in the future.”
Align Structures and Processes with Values, Intent and Priorities
The approach these executives took to align their structures and internal processes varied by industry. Some had to downsize because of decreased market demands, others reorganized internally to adapt more rapidly to the VUCA environment, and still others started new businesses in order to secure a stronger future. To illustrate, EMCOR, an engineering and construction conglomerate, experienced business slowdowns in communities where construction was halted. Guzzi’s approach to restructuring at EMCOR was informed by the corporate values and implemented to reinforce the culture and maintain trust with remaining employees. “We had between a 7.5% and 12% salary and headcount reduction. Sometimes you have to make big tough decisions, because you care about the organization for the long term. You have to focus on who’s going to be with you, but you also have to treat people with respect as they exit the business. We did a lot of things around [promoting our values, such as making] sure we kept their health benefits while they were furloughed.” EMCOR employees also changed roles in order to meet the new demands of the pandemic.
Lord Abbett restructured aspects of its investment teams in order to focus its investment professionals on dealing with the circumstances presented by the pandemic. The pandemic also surfaced a need for more cross-functional governance structures that allowed the firm to be more responsive externally and nimble internally. As Doug Sieg noted, “Our crisis management committee ultimately morphed into the executive committee. This highly functioning team continues to operate exceptionally well, meeting every morning for an hour. We also set up an investment committee to oversee our investment teams and process. As a result, we now have two groups focused on managing and running the firm, the Executive Committee and the Investment Committee. This streamlined approach to governance has allowed me to get closer to the key leadership within the firm.”
On the other hand, technology companies such as AspenTech used acquisitions and organic restructuring “to launch a whole new organization,” said Pietri. “We didn’t reorganize, but we announced an AI IoT solutions business, which is the outcome of multiple acquisitions and some organic development in order to position ourselves better in this new environment, which is where technology evolution is much more accelerated. Having that agility as an organization; that is willing to, from one week to the next, say, now we need to go in this direction, is extremely important, and I think it’s a big part of what we’ve learned.”
Continue to Invest in People
As we mentioned earlier, all six companies had participated in leadership training before the pandemic hit and were in the process of cultural transformation. They all continued to invest in leader development during the pandemic, but development moved from the classroom to the workplace. Formal leadership training gave way to learning by doing, taking advantage of the pandemic to stretch leaders in new ways to foster their growth. AspenTech’s Pietri put it this way, “We went from training to doing. I see what we have learned, and I’ve told the organization I’m very proud of how they reacted. The April to June 2020 timeframe was learning by trial and that happened.”
Sieg reinforced this point, “Nothing trains a leader better than real life experience. I think the concept of 70/20/10 makes people stronger leaders, meaning 70% of leader development is experiential, 20% is training, and 10% is personal reading. The one thing we really stress with our Leader Development Committee is to continue bringing new tools to the game.”
Mallik noted the ongoing experiential learning and coaching that took place in his organization following the leadership training that his leaders took prior to the pandemic. “It wasn’t just an immersive couple of weeks, but it was a year-plus of coaching and support within their cohort teams. It was not a ‘one and done’ session; it was part of a more lasting and powerful change journey. This has been one of the more important aspects from a leadership development standpoint.”
Leverage Technology to Lead Effectively and Efficiently
Like many other industries, these corporations converted many of their business operations to virtual platforms during the pandemic, with most employees working remotely. The technology plans these leaders had implemented prior to the pandemic were accelerated in order to position the company for success in the work-from-home environment. To the extent that they had built a culture of resiliency pre-Covid, they were able to adapt earlier in the crisis.
At AspenTech, Pietri had already created a culture of resilience, so when the disruption hit, they were ready. He had been investing in technology for several years in order to be prepared when he needed to leverage it in a crisis. DePinto at 7-Eleven had also enhanced his business operations with technology solutions and was able to shift quickly to remote collaboration. Lord Abbett made technology an early priority in the pandemic, so they could support remote working with a strong infrastructure and continue to adhere to regulatory protocols.
EMCOR “probably invested a million dollars in people’s homes,” said Guzzi. “The traders needed multiple screens; high-bandwidth hard-wired internet access so they can be able to trade. We took Zoom cameras and put them in everybody’s house right next to them. So, when you turn it on, it was like you were talking to the person next door.”
Insight discovered new applications for the technology they were already creating and marketing, allowing them to respond the new market demands for the safe operations of office spaces. For example, they had already developed thermal sensing technology for restaurants to promote food safety, so Insight converted that technology to help companies detect Covid symptoms such as fever and protect employees at work.
Prepare for the Next Normal, Post-Pandemic
Finally, the executives we interviewed kept one eye on the post-Covid future as they addressed the immediate challenges of the pandemic. They looked at the forces that would shape the next normal for their industry and their business, and they worked to position their companies for long-term success.
“Step one was to organize a group to immediately start thinking about the shaping forces that were going to change the environment post-Covid,” said Sieg. “Over the course of a month, we came back with four that were not only industry-related, but important to us. One was that the operating environment was going to be a major challenge for a long period of time. Second was that there would be a level of government intervention in the markets and various other aspects of the economy not seen since World War II. The third was the capital markets environment in which interest rates would remain low for the foreseeable future. And the fourth shaping force was the battle for relevance and relationships, in which firms must defend and strengthen strategically important relationships with partners across distribution, trading, and banking. Based on these four forces, we proceeded to shift our strategy accordingly.”
Pietri reinforced the importance of anticipating the future of the technology-industry in a dynamic environment. “Investing during that time period was important because when we come out the crises, the robust upturn is actually substantial. A lot of companies hunker down and are not ready for that upturn that occurs very quickly, especially in the technology space. We’re shoring up our business today, but also investing in key areas to ensure that we’re well positioned for when we do come out of the crisis.
Big Takeaways—Strategies for Leading During the Pandemic
To summarize, what made the difference in these executives’ ability to lead during the pandemic?
• Start building an adaptive learning culture before a crisis. If culture change is needed, use the crisis to unfreeze your organization and prepare for the next normal.
• Frequent, open, honest, two-way, multi-level communication around values, purpose, and leader’s intent is job one for executive leaders.
• Learn by doing. Experiment, learn from experience, and share best practices quickly across the organization.
• Continue to invest in people. The crisis provides an important opportunity to stretch leaders and allow them to develop on the job.
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January 20, 2021 at 09:49PM