e x e c u t i v e f o r u m How Global Companies Are Really Led Robert J. Thomas, Joshua Bellin, Claudy Jules, & Nandani Lynton A sk senior leaders at global companies today to identify their “top teams” and the likely response may be another question: “Do you mean the CEO’s direct reports or the various committees we use to get things done?” That’s just what a good many of the fifty C-level executives said to us when we interviewed them as part of a study to learn how leadership was evolving, particularly at companies that derive a significant chunk of their revenue from global operations. In most of the companies we studied closely—a total of thirty-nine, on five continents—multiple “top teams” exist to perform a variety of functions. And many of those groups are not “teams” by any dictionary definition. We realized that companies are bridging a host of differences—in language, culture, time zone, experience, and more—with a new approach to leadership. Bridging those management differences requires a level of agility more closely resembling that of a 38 leader to leader musical ensemble than the usual executive board composed of a CEO and his or her direct reports and the handful of standing committees that most companies maintain. Consider: The secret of a successful musical ensemble resides in the ability of musicians to perform equally well in the intimacy of a quartet, the relative formality of a chamber group, or the tight structure of a symphony orchestra. An ensemble leader may be called upon to be strong and visible, as in the case of a symphony, but at other times, for example, in a chamber orchestra, the conductor will lead while playing in the midst of the group. On occasion, there will be no conductor. Shared understanding—commonly forged through the experience of tackling difficult music pieces—and a conviction to improve through practice give a musical ensemble the agility to operate under such widely varying conditions. A top management ensemble, which may be thought of as the top 1 to 2 percent of executives and experts, similarly consists of the right people in the right configurations. As Herve Borensztejn, former executive vice president at Converteam (a French subsidiary of General Electric), put it: “Sometimes we have to make decisions immediately in order to keep up with the speed and pace of our competitors, even though not all of us are available at the same time. Other times, we need to gather a much larger group to thoroughly debate our options.” Across the companies we studied, we found top leaders coming together in four distinct ways, each of which represents a pattern of behavior and roles that can be taken on as needed for a specific purpose and period of time. The four ensemble configurations we observed are 1.Kitchen Cabinets. Executives frequently described the “kitchen cabinet,” or the inner circle of trusted advisors, as the place where important decisions get made. With members nested in adjacent offices or dispersed globally but connected by video and voice, kitchen cabinets are usually chaired by the CEO. These ensembles tend to be good at recognizing familiar problems, in large measure because participants have a history together; they’re also good at moving quickly to action once a decision has been made. Where they tend to struggle is in avoiding “groupthink,” the kind of self-assured but insular mind-set that comes from excessive familiarity and a desire to arrive at decisions quickly. 2.Tiger Teams. Composed of experts and divergent thinkers, but tasked with an explicit goal, tiger teams are usually quite comfortable with unstructured tasks and ambiguity. They are seen to be most effective when given a challenging assignment, such as revisiting business strategy in the wake of disruptions in the market, or contemplating an acquisition with enterprise-wide implications. They are not, however, well suited to repetitive, routine assignments. And although they are likely to commit themselves fully to the course of action they choose, they tend not to arrive at those big decisions quickly. 3.Advocates. Described in several instances as “teams of rivals,” advocates are usually groups of senior Kitchen cabinets are usually chaired by the CEO. e xecutives and experts assembled specifically to review a situation and to generate, through debate, a wider and deeper understanding of causes, consequences, and options. The strength of the advocate configuration is its ability to parse complex problems and arrive at a wide array of potential solutions. However, members of this type of group can easily get lost in the complexity of their debates and are prone to taking firm stands that do not yield to negotiation or compromise—which sometimes results in a “tournament of kings” that makes it difficult to agree on and implement solutions. 4.Operators. The operator configuration is often made up of people executing responsibilities related to a specific function, process, or location. Most of the companies we studied had the equivalent of an operating committee, consisting of the COO and business unit leads that coordinated and integrated operations. Operators are usually quite strong at analyzing problems in their areas of responsibility and making decisions quickly; indeed, their decision rights are often explicitly defined. However, operators tend to stick to their script; they may have difficulty “thinking outside the box.” CEOs and senior executives were emphatic that agility ultimately resided in their ability to match the right ensemble configuration to any given situation, with a minimum of delay and maximum odds that the group in question will produce satisfactory results. See Figures 1 and 2 for details on how these configurations differ from each other, and how each of them is suited to a different type of group leadership task. WINTER 2 0 1 4 39 Source: Copyright © Accenture. All rights reserved. Fig u r e 1 . Fo u r e ns e m b l e c o n f ig u r at io ns As Ian Cheshire, CEO of Kingfisher (one of the world’s largest home improvement retailers with stores in the European Union, China, and Russia), told us, “In the last three years, we have increasingly mixed up the team so that we can get not just the scale benefits from being international but also the diversity benefits of different perspectives and experiences.” In order to do it, Cheshire explained, Kingfisher tries to make sure that the people making decisions on any given issue are both representative and also relevant—an approach that requires periodic calibration. The ensemble approach, according to Cheshire, helps the company operate “as a collective and intelligent network” rather than as a hierarchy. Ellen duBellay, vice president of learning and development at Four Seasons, offered a complementary perspective on ensembles: “We can’t just make decisions that seem right for us from where we’re sitting. The cross-fertilization of ideas is key to our future success.” To get a sense of what an ensemble approach looks like in practice, consider what Manuel Rivera, the 40 leader to leader CEO of the global automotive company Nemak shared with us. At times, he said, Nemak leaders are called upon to be a tiger team, aiming to reach a broad consensus on the company’s strengths and weaknesses. At other points, certain members are assembled as advocates for their function or business unit. What makes it work in either configuration, Rivera noted, is “discussing lessons learned and sharing experiences across regions. The participants learn about the challenges in other regions and then collaborate on how best to offer support.” When an ensemble is successful, individual members, and by extension, the group as a whole, move from what Chris Argyris and Donald Schön call “single loop learning”—actions that are purely in response to unquestioned assumptions—to “double loop learning.” The latter means they have the ability to reframe questions and better understand the underlying variables needed to tackle challenges and make decisions. Take, for instance, how a tiger team at the Brazilian airline Azul resolved the question: “Why aren’t more Brazilians taking advantage of Azul’s low fares?” Source: Copyright © Accenture. All rights reserved. Fig u r e 2 . Cho o sin g th e r i g h t c o n f i g u r at i on f or th e ta sk ecause of the ensemble’s charter, the group was able B to brainstorm effectively; they quickly realized that the problem wasn’t with the fares, it was that the taxis to the airport—which sometimes cost 40 to 50 percent as much as the airfare—were too expensive for the average customer, and transit services were too infrequent. The team therefore decided to implement free and frequent airport shuttles. As of 2012, passengers were booking more than three thousand free bus rides per day to the airport, and Azul is the fastest-growing airline in Brazil. Global beverage giant Diageo offers another useful example. According to Gareth Williams, head of human resources, when the company’s executive team gets together to assess performance and operations, the agenda is often routine; the group assembled can be called operators. However, when the discussion turns to future growth, the composition of the group changes with the addition of regional executives; and the dynamic shifts accordingly, resembling an advocate configuration. The shift isn’t simply cosmetic: In one series of advocate meetings, group members explored a variety of qualitative and quantitative data focusing on creating value for customers. Challenging past Diageo assumptions, the ensemble determined to shift the company’s strategic intent and investment with regard to emerging middle classes in new high-growth markets. Incentives often get in the way of a successful ensemble dynamic. WINTER 2 0 1 4 41 It takes a lot of effort to play well together. Too Many Soloists? Pulling off an ensemble approach isn’t necessarily a natural act. Just as with any musical group, it takes a lot of effort to play well together. Some of the biggest barriers arise as a result of the very characteristics that have made the company’s senior managers successful as individuals, along with the rewards systems that predate ensemble configurations. Incentives, for example, often get in the way of a successful ensemble dynamic. An individual leader might have a strong enterprise outlook, but performance objectives and bonuses tend to reward those who focus intently on their own business or functional portfolios. A top executive at a North American-based retailer reminded us that “people are managed based on results. As a result, they are less willing to invest in something that is going to result in better long-term performance but might hurt them in the short term.” Internal competition for scarce spots at the pinnacle of an organization also perpetuates the bias toward individual contributions and “great” or “heroic” leaders. And senior managers are often drawn from a pool of individuals who succeeded early in areas of individual contribution, while those more adept at leading with or mobilizing peers are eliminated early in the competition. The skills, capabilities, and personalities that help people reach the top tiers of management may bias against truly collaborative work. To overcome these hurdles, it’s important to be explicit about the way in which the ensemble is expected to operate. Satish Pradhan, who heads up leadership 42 leader to leader development for the Tata Group, asks executives to consider how each member of the ensemble will add value and why. He tells them to ask, hypothetically, “Am I in this room because of my role as head of Asia, or as head of outsourcing, or as a functional leader of finance? Am I anchored in one role, or am I sharing the burdens, the responsibilities, the perspectives of the top leader and looking at the whole of the organization?” What about the person to my left? What about the next person? Other types of activities can prove useful for leadership groups as well. Playing devil’s advocate is one; another is explicitly spelling out the assumptions and evidence behind each contention an ensemble member makes. In the end, ensemble members need a shared sense of purpose as well as a common level of expertise in areas such as decision making and group process. These shared attributes will help the ensemble configurations become “plug compatible”—able to tackle any problem with the right group at the right time. Rehearsing for the Future Another huge challenge is stockpiling talent that can take on ensemble roles in the future. Virtually every one of the top executives we interviewed agreed that developing such leaders was critical. But few thought that they were on track with the “next generation” in several key areas: building teams that would be as diverse as their company’s global footprint, global enough in their mind-sets, and capable of leading collectively as an agile ensemble. Companies that take an ensemble approach to global management, however, can expand the number and variety of candidates for future leadership roles. We saw that happening in several instances. Beyond conventional “hi-po” (high-potential) manager development programs, for example, such companies task promising managers with global projects in tiger teams and advocacy groups as part of their development as global leaders. Far from make-work assignments, these projects require managers to collaborate by means of the latest Adopting an ensemble approach is a complex prospect. Web-based technologies on topics of strategic importance to the firm. They also make it imperative for ensemble members to gain familiarity and trust with one another across culture, space, and time. For example, Katie Taylor, CEO of Four Seasons, explained that her company employs tiger teams as part of transformational initiatives: “We’ve tapped our most promising leaders, so we have a chance to watch them in roles that are very cross-functional and where they have to interact with and influence a wide range of people.” The South African energy company Sasol provides another example. As Bill Graham, a global HR manager, explained, “We have short-term assignments where we send people for up to six months to another country to do a project or job. We also have people that are given global roles where they stay in their own country, but they have to work, lead and interact with people from other countries. For example, they would manage a project, or have a permanent global job across countries, and then travel extensively to do that.” One important caveat to all such training: A global résumé and a well-traveled passport—even with directed development—does not necessarily predict a global perspective. Equally important is something that the CEOs and other top executives variously referred to as “learning agility,” “curiosity,” “openness to learning,” or “the ability to extract real insight from experience.” Shiv Shivakumar, managing director of Nokia India put it neatly: “Two characteristics tell me if someone has a global mind-set. The first is learning ability—the ability to learn and unlearn quickly. The second is a deep sense of empathy.” It may just be that learning agility at the top is the key to organizational agility— with the ensemble as a bridge between individuals and the enterprise. Conclusion Steering a global business is hard work, and adopting an ensemble approach is a complex prospect. But global companies have a real opportunity to use ensembles to deploy executives and managers in a network that can flexibly “surge” to solve problems and explore new possibilities as they arise. Whatever the “top teams” are called in a given organization, that’s an outcome that any company today should welcome. Robert J. Thomas ([email protected]), the global managing director of the Accenture Institute for High Performance, is the author of Crucibles of Leadership: How to Learn from Experience to Become a Great Leader (2008) and The Organizational Network Fieldbook (2010). His previous article for Leader to Leader was “What Leaders Can Learn from Expert Performers.” WINTER 2 0 1 4 43 Joshua Bellin ([email protected]) is a research fellow with the Accenture Institute for High Performance. Claudy Jules ([email protected]) is a senior principal in Accenture’s Management Consulting practice. 44 leader to leader Nandani Lynton is a professor at China Europe International Business School and a manager at Maersk in Copenhagen.