Flourishing organizations and flourishing individuals

May 31, 2013

The Fowler Center at the Weatherhead School of Business has recently published an article on the practice of self-reflection as a means of promoting reflection within an organization. The intention is to support discussion and initiatives for promoting change in the way organizations treat employees in order to create flourishing businesses

LWD is pleased to be able to promote this initiative by summarizing a recent item from The Fowler Center:

The Fowler Center at the Weatherhead School of Business has recently published an article on the practice of self-reflection and promoting reflection within an organization. The intention is to support discussion and initiatives for promoting change in the way organizations treat employees in order to create flourishing businesses

The article, to appear in this summer’s issue of The Journal of Corporate Citizenship,is a prelude to a forthcoming book titled The Flourishing Enterprise: Connecting Sustainability and Spirituality. It will be the final product of the Fellows’ research and careful thought on “the journey to a greater sense of connectedness” as central to business success.

The idea is that if individuals can find and create spiritual contentment in their organization, they can enrich their whole organization and help others flourish as well. The journey to a flourishing organization begins with the self. The Fellows argue that since knowledge workers’ productivity is deeply influenced by the workers’ inner states, cultivating optimal internal states becomes the responsibility of management.

Appreciative Inquiry is an excellent tool to cultivate reflection on the best of what is and to co-create the best of what could be. Created at the Weatherhead School [Case Western University] Appreciative Inquiry is a strength-based approach to whole systems change and is an excellent tool for creating large systemic change.

The Fowler Center hopes that its work will proliferate and create deep meaningful conversations about ways to transform businesses into agents of world benefit–where flourishing individuals create flourishing organizations that lead to a flourishing world.


Inferno by Dan Brown. Not another Review

May 29, 2013

InfernoI bought Inferno by Dan Brown to see if I could detect its deep secret, the explanation of the commercial success of the author. I believe I have cracked the code

Dan Brown is a genius whose insights will save the world from itself. The critics laughed at him, but we know what they did to Christopher Columbus, Homer Simpson, and Ron Hubbard. Yes, they laughed at them too.

They aren’t laughing now

As the world-renowned comedian Bob Monkhouse said: “when I was growing up, I said I wanted to be a comedian. They laughed at me then. They aren’t laughing now.”

To avoid plot spoiling

To avoid plot spoiling, I will offer only the broadest outline of what happens. The central character is “the eminent Harvard symbologist Robert Langdon”, hero of earlier books including the best-selling Da Vinci code.

Langdon, accompanied by the young medical doctor Sienna Brooks (IQ 208) face and solve numerous puzzles and threats on their lives mostly in and under the historic architecture of Florence. The threats in this “breathless race-against-time thriller” also produce philosophic dilemmas for the reader who is able to pause for breath long enough to contemplate them.

Cracking the code

Mr Brown has cracked the code of producing a best-seller. But I have cracked his code, deeply hidden in the text of his latest block-buster. You will need to study each page carefully before you will see the symbolism.

Brown is creating magical new usages of the English language. At first the results are unfamiliar enough to invite scorn from the critics, the scholars blinded by their own expectations. There is the playful use of adjectives, deliberate parodies on pulp fiction writing in descriptions of cathedrals and cupolas, museums and mausoleums. From these cleverly concealed clues we see the workings of genius intent on concealing what needs to be concealed – the secret of writing a best-seller.

Where’s the sex and violence?

Another part of the secret is to break away from the increasing pornographication of the novel. There is the acknowledged sexiness of Sienna Brooks but not a lot of sex. There are quite a few violent deaths, fifty shades of gore you might say, but no extremes.

Don’t listen to the critics

My advice is “don’t listen to the critics”. Borrow a copy of Inferno from a friend who will be happy to pass it on to spread the Brownian message. Study it with eyes wide open and strangely you will see the secrets concealed in its 461 pages printed on forest certified paper.

Acknowledgement

This post was guest edited by Dr John Keane of Urmston University


Puma Adidas rematch as Bayern beat Dortmund in the Champions Cup

May 27, 2013

Bayern DortmundThrough a series of coincidences, the 2013 European Champions cup final between Bayern Munich and Borussia Dortmund was also a reminder of the historic rivalry between the Puma and Adidas firms

The Champions League football final [May 25th 2013] took place in Wembley stadium before a capacity crowd. The fancied Bayern Munich eventually overcame plucky resistance from opponents who also had chances to win.

Puma Adidas

By coincidence, Bayern was sponsored by Adidas and Dortmund by Puma, two brands which have a remarkable historic rivalry. You can read about it in Leaders We Deserve [2009] in a post which describes another football match which attempted to head a seventy year old rivalry:

The charity Peace One Day plays a part in peace initiatives around the world. On September 21st, among those symbolic actions were those taken by Puma and Adidas, two firms whose existence reflects a long-lasting family feud within a small Bavarian township. They played a football game football together and watched the movie “The Day after Peace” by Jeremy Gilley, director and founder of PEACE ONE DAY.

The Adidas Puma story seems right for a Hollywood movie. In the 1920s, two brothers grew up and worked in the laundry shop owned by their mother in the 1920s. They started in business together with a shared idea which created the marketing of clothing exclusively for sporting activities. In the 1930s they equipped Jesse Owens for the 1936 Olympics in Berlin [a story in itself]. But the brothers rarely agreed over anything, and sibling rivalry must have contributed to the split into two firms, still operating in close proximity in a little township in Bavaria.

Whatever, the story tells of a feud during the 1939-45 war which was to split family and employees in the little village of Herzogenaurach for decades afterwards. Today, the old rivalries are mostly muted and symbolic. The Day of Peace celebrations confirmed existing practical realities of life in the township.

Branding wars

As Reuters reported [May 2013]

Adidas is the long-standing kit supplier to Bayern and owns a stake of around nine per cent in the Bavarian club, while Puma became the sportswear partner of Dortmund a year ago.
However, while Adidas and U.S. rival Nike dominate a football market estimated to be worth up to 4.5 billion euros, Puma is playing catch-up after years of focusing more on fashion than performance sportswear.

Its decision to partner with Dortmund yielded an instant return when the club made it to the Champions League final – the biggest prize in European club football and [attracted] a global television audience of over 150 million …[According to reports in the English media ]Puma are set to agree a deal worth more than 30 million pounds a year to provide the kit for English Premier League club Arsenal, replacing Nike.


First Group plans derailed by shareholder activists

May 25, 2013

First GroupThe First Group transport company has run into difficulties compounded by the loss of a Government contract after a battle with Richard Branson, and board room resignations influenced by shareholder activists

LWD subscribers were alerted to a leadership story at First Group the bus and rail transport outfit last year [Oct 2012] . The post noted that

Richard Branson called foul when his company Virgin Trains lost the franchise recently for the West Coast Main Line services from Scotland to London. His reaction was justified when the Department of Transport was forced to admit there had been flaws in the bidding process.

Virgin Trains has run the West Coast Main Line since 1997. When it recently lost its bid to renew the contract to rival operator FirstGroup, it claimed the evaluation was flawed, called for a review, and started court proceedings over the government’s decision.

On 3rd October 2012, Government ministers announced that there were “significant technical flaws” in the way the risks for each bid were calculated, justified the legal case that Branson had brought against the decision.

The fun fighter

Richard Branson, for all his business is fun image is not a stranger to fighting his case through the courts. His success contributed to problems building up for First Group.

Difficulties pile up for First Group

This week [May 2013] First Group is shown to have encountered further difficulties after the hole in its financial plans resulting from the loss of the contract. The Guardian reports

FirstGroup, the train and bus operator, has turned to shareholders for £615m, scrapped a final dividend and parted company with its chairman in an effort to reduce its debts and avoid a credit rating downgrade.

The shares fell 30% after the cash call was announced alongside a sharp fall in full-year profits at the company which employs 120,000 people. It is struggling with almost £2bn of debt largely as a result of its acquisition of the US bus company Laidlaw in 2007. The company came under further pressure last year when the government announced in August that it had won a lucrative contract to run the west coast main line rail franchise between London and Scotland, only to scrap the decision in October citing flaws in the bidding process.

Shareholder activists

Other reports suggest that shareholders have played an important part in “encouraging ” the company to take major actions to deal with its problems.

FirstGroup’s problems finally caught up with it [on Monday 13th May 2013] . Its CEO, Tim O’Toole, had repeatedly denied that FirstGroup needed to raise capital. But, with the credit rating agencies threatening to downgrade the company’s debt to junk, it launched a humiliating three-for-two rights issue to raise £615m. It was priced at a 62 per cent discount to the prevailing share price. Shareholders were also introduced to a “new progressive dividend policy”, otherwise known as no final dividend this year and a slashed pay out from next. The shares fell 68.2 to 155.6p.
For this, someone had to pay the price. And, after 27 years at the wheel, it was Chairman Martin Gilbert, ushered off the clattering train by shareholders keen to make a clean break with the past. It was either him or O’Toole – and at least the American-born former London Underground boss had the excuse of only having been at the controls since April 2011.

A similar shareholder spring-cleaning is underway at J P Morgan.


Google accused of being evil, doing evil by UK politicians

May 21, 2013

Do no evilGoogle stands accused of acting in a way contrary to its slogan “do no evil”. This continues a debate over tax avoidance, tax evasion and corporate social responsibility

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Last week [May 18th 2013] Google’s European leader Matt Brittin appeared before The Commons Public Accounts Committee in London to defend his Company’s tax arrangements in the UK. A pivotal point was the practice of declaring sales were completed in another country [Ireland] with more generous Corporate taxation arrangements.

The Chair of the Committee, Margret Hodge, was particularly vehement in her criticism of the firm’s methods of tax avoidance in the UK. The criticism had moved on from tax evasion (illegal) to tax avoidance (legal) in a way that amounts to serious departure from the corporate claims of good citizenship.

The Guardian reported that

“[The] Commons Public Accounts Committee Members reacted in disbelief on Thursday [16th May 2013] after it emerged that they paid just £3.4m of tax on £3.2bn of sales taken from UK customers last year as their sales were technically “closed” in low-tax Ireland.”

Writing in The Observer a few days later, Google CEO Eric Schmidt noted:

“It is tempting for every government to assume that they will benefit if and when the current [tax] structure changes. But in reality, it’s probably only a significant increase in corporation taxes globally that would make every country a “winner” – and the consequences of that would likely be less innovation, less growth and less job creation. That said, the UK government has the perfect opportunity to take the lead in shaping this complex debate at the G8 summit next month. We hope George Osborne seizes the initiative and makes meaningful tax reform one of the top items on the agenda.”

It’s a Tax Dodge, says Hodge

Margaret Hodge had made clear her view at the Committee investigation, telling Google’s European CEO Matt Brittin, that his company’s behaviour on tax was “devious, calculated and, in my view, unethical”.

[Mr Brittin] had been recalled by MPs after being accused of misleading parliament over the firm’s tax affairs six months ago. Hodge said: “You are a company that says you ‘do no evil’. And I think that you do do evil.” Hodge was referring to Google’s long-standing corporate motto, “Don’t be evil,” which appeared in its $23bn US stock market flotation prospectus in 2004.

Do no evil image

Image from grokdot

To be continued


Musical conductors and surgeons share leadership skills

May 19, 2013

Eye SurgeryThe leadership skills required of musical conductors and surgeons are highly situational and yet applicable to many other leadership roles

This idea is not particularly novel, although I have not come across it in the introductory leadership textbooks prepared for business executives. The closest is an infrequent reference to improvisation, or creating within accepted principles or rules.

Distributed leadership

LWD subscribers may have noticed recent posts mentioning musical conductors. I also interviewed the promising young conductor Duncan Ward a few years ago.

Overall, the impression I received of musical leadership was of a form of distributed leadership. The conductor symbolizes and ‘orchestrates’ the performance, and coordinates its execution, assisted by the contributions of the leaders of various musical sub-groups within the whole.

The surgeon

More recently I had direct experience of a highly skilled surgeon at work. My contribution to the performance was as his patient, but was able to witness the procedure to some degree because of the absence of a general anaesthetic.

Distributed leadership as a non-zero sum game

The surgeon was clearly the leader of a team. However, again there were sub-groupings each with a formal leader. Distributed leadership again. This not the simple splitting up of the tasks as was made famous by Adam Smith’s distribution of labour or Henry Ford’s efficiency concept of a production line. Power is not asserted top-down as in a zero-sum game. The conductor or surgeon creates within constraints imposed by the situation and its interpretation. The other lead players and ‘team members’ are not de-skilled (as they are in the classical model of a modernist business production line) but enabled. In other words, it becomes a non-zero sum game.

Footnote

A similar metaphor was used by footballer Robin van Persie in an interview. he talks of football training as being in an orchestra with the coach as conductor.


Sir Richard Branson in drag. How an entrepreneur wins even if he loses

May 13, 2013

Richard Branson Air Hostess

Richard Branson is an entrepreneur who prefers to gamble when he wins whatever the result

A wager is reported between owners of two competing airlines, Richard Branson, owner of Virgin Airways and Tony Fernandes of Air Asia.

Charity Bet

The charity bet was over the performances not of airlines but of two Formula One racing teams. Did I mention that the two were sufficiently wealthy to own their own racing teams? The owner of the team performing worse would dress as an air hostess and serve passengers on his rival airline. Yes, serve actual travelers with actual refreshments dressed as what the Press called a trolley dolly.

Branson frocks up

Branson’s airline lost. A suitably frocked- up Sir Richard paid his debt. [Reported May 2013]. It was very much a mile high dare..

Who loses wins

So here’s the thing. The story revealed the ‘loser’ of the bet camping up his role on Asia airlines. The publicity was not invaluable but far from damaging for the company. Sir Richard ‘lost’ by doing what he most enjoys, being the centre of attention. Go figure. There must be a leadership message in the story somewhere.

Postscript

LWD subscribers in England may remember another recent gamble by Mr Fernandes. His football team, Queen’s Park Rangers, was relegated from the football Premiership. The gamble of switching manager with ten games to go did not pay off.


HBOS Leadership without the benefits of hindsight

May 10, 2013

180px-ripvanwinkle.jpg The following post anticipated the financial crisis of 2007-8 under an earlier title. HBOS changes: Too little, too late? It is reissued following the news this week of the fall from grace of the bank’s three leaders

Over the last few weeks, pressure has increased on HBOS executives following a government report and calls for former CEO James Crosby to give up his knighthood and part of his pension rights. The Original post indicates the perspective in 2007.

ORIGINAL POST

This week [Nov 2007] saw a little-heralded leadership change in the retail division of the financial giant HBOS. When a bank changes one or two members of its management team, it does so to reassure investors of continuity as well as to signal change. Has HBOS been too complacent over its business environment? Are the changes too little, too late?

According to a BBC report this week:

HBOS has announced a revamp of its retail division, including the departure of its head Benny Higgins … finance director Phil Hodkinson will [also] retire at 50 next year, and will be replaced by a former incumbent, Mike Ellis …”The structural changes we have introduced in our retail business are right for the group,” said chief executive Andy Hornby. Mr Higgins, who moved from Royal Bank of Scotland last year to head the retail unit, will leave HBOS at the end of 2007. [CEO] Mr Hornby told the Reuters news agency that Mr Higgins’ departure was not related to a recent 8% drop in profits at the retail unit. The business was hit by a sharp drop in its share of mortgages earlier in the year after a new pricing strategy went wrong, although the bank says its share has since recovered.

So there we are. No change there, then. Banks are as prone to jolts and change as any other business. Arguably they have become as accustomed to dealing with change as companies in many other business sectors. Their corporate advertising increasingly seeks to present images of innovative and dynamic set-ups. Yet, they also work hard at maintaining a corporate image of stability and reliability. Which just goes to show that effective creativity in advertising can be pretty challenging. How would you send out a convincing signal that you are reliable and adventurous, dynamic and prudent?

HBOS doesn’t stand for anything

I used to think of HBOS as an abbreviation for two big names in Banking after a recent merger, namely the Halifax and Bank of Scotland. Wrong. The (usually) reliable Wikipedia tells me we shouldn’t connect it with some earlier entity or entities. Same with ICI. which is initialized not an abbreviated Imperial Chemical Industries. Anyway, let’s just say that what is now HBOS used to be the Halifax Building Society of Halifax, Yorkshire, and The Bank of Scotland of Edinburgh.

Background to the story

Earlier this year [2007] the bank announced satisfaction with its profits. CEO Andrew Hornby said HBOS was optimistic about the UK economy and growth in its main markets, and that the UK business environment was “generally benign”.

How benign is benign?

Hornby’s view was not widely shared

“Overall the quality of these figures looks poor and the guidance of 2007 on loan growth, margin, costs and bad debt looks disappointing,” analysts at Fox-Pitt, Kelton said in a note

. AS it turned out, the HBOS retail business environment was to prove far from benign. Over Christmas 2006 there had been unfortunate publicity for the bank’s role in the sad tale of the collapse of Farepak. In 2007 it became clearer that the shared business model of the retail banks was failing. This relied on offering ‘free’ retail banking, partly subsidized by high charges for non-agreed overdrafts. HBOS faces substantial losses. It also proved non-competitive in mortgages, and failed in its retention strategy.

Anatomy of a high flier

In 2005, CEO Andy Hornby was assessed as one of the FTSE’s ‘power players’ for among other things being remunerated with ‘biggest directorship’ of the FTSE 100 at around £ one million sterling for his HBOS responsibilities. The young city high-flier was a former Blue Circle and Asda executive, and could take credit for his part in steering through the HBOS merger successfully. The deal was a coup for The Halifax. However gently the merger was presented, Halifax emerged with the better hand. Hornby became its CEO, and Lord Dennis Stevenson (another Halifax man) became Chairman of the new company. The Bank of Scotland had recently lost out in several take-over bids, including its wooing of National Westminster Bank, when it had lost to its bitter rival, the Royal Bank of Scotland.

What’s going on?

Perhaps researching this blog has made me over-sensitive to leadership battles. But the story leaves me with just that suspicion that there is more to unfold. Has HBOS been complacent over its business environment? The kindest that can be said was that it did not rush into hasty action recently. More unkindly, maybe it could be accused of being too reactive. I haven’t picked up the signals of stakeholder discontent that indicate real ‘trouble at the top’. No comments about excessive remuneration packages. But those city analysts have already sent out signals suggesting the business environment is not as benign as HBOS would like it to be. I have a very small shareholding in one of the group’s financial products. I’m not planning on selling. I’m not planning on acquiring any more either. And maybe there will be a business case to be written on leadership style and proactivity.


End of an era as Sir Alex Ferguson retires as Manager of Manchester United

May 8, 2013

Sir Alex FergusonSir Alex Ferguson retires in a relatively smooth fashion. Nevertheless, his departure means an inevitable period of transition for the global club he helped to build. Front-runners are emerging as a successor

The announcement today [May 8th 2013] should not have been surprising. Sir Alex announced his retirement once before, some years ago, and the shock waves around the news prompted a recantation.

Age shall not weary them

I do not need to check his age. He was born of December 31st 1941, making him a few days younger than myself. Our careers took us on very different paths, although over the last two decades I have found myself regularly writing and talking about his leadership style and achievements.

The most bizarre of those efforts was at an event in Miami where I had been asked to compare his achievements with those of Pat Riley, the iconic coach of the Miami Heat basketball team.

What they do teach at Harvard Business School

Much later, Harvard business School invited Sir Alex to talk about his leadership style. My envy was only slightly lessened by the comforting thought that at Manchester, business students had been studying a case through the textbook Dilemmas of Leadership [Edition 1 only : maybe a revised case is possible for Edition 3, if I don’t retire before it comes out].

The Ferguson touch

The story of his exceptional career and robust style is becoming well-known. [Use the right-hand vertical side bar to find the tags to the various LWD posts written since 2006].

A period of mourning

On hearing the news, someone with inside knowledge of the club told me “It’s a period of mourning. I’ve followed them since I was a child. I love the club. For young people, he’s the only manager they remember.” She listed a range of well-known names as possible future managers, including an insider.

The 3Ms

Speculation on succession throws up three early front-runners, David Moyes of Everton, Jose Mourinho of Real Madrid, and Roberto Martinez of Wigan Athletic. One a Scot, one Portuguese, and one Spanish. I would not want to place a bet although I expect there to be a name already close to being announced.

Footnote

Another list of front runners from The Independent

Later, the three names were linked as follows. Moyes replaced Ferguson; Mourinho went to Chelsea, and Martinez replaced Moyes at Everton.


UKIP offers a lesson in leadership: but what is it?

May 6, 2013

NIgel FarageThe United Kingdom Independence Party [UKIP] made considerable gains in the County Council elections this week. The three major parties have their reasons to fear its continued advances. We assess the leadership lessons for them and for UKIP

Last week, [Thursday May 4th 2012] I suggested that the County Council elections and the performance of UKIP were blogworthy, noting:

In the UK, local elections this week are seen as a measure of protest votes away from the traditional political parties. The anti-immigration and (even more anti -European Union) party UKIP is tipped to poll well under the leadership of its somewhat unconventional leader, the ebullient Nigel Farage

UKIP polled better than was expected

Results justified my interest. UKIP polled well enough for their success to be the main media story.

The bare statistics [BBC summary] show that UKIP won over 140 seats and averaged 25% of the vote in the wards where it was standing. Projected to a dubious concept of projected national share of the vote, the figures in a general election translate to the Labour Party in the lead with 29% of the vote, the Conservatives with 25%, UKIP 23% of votes and the Lib Dems with 14%. Mr Cameron’s conservatives are the most vulnerable to a voting switch, and UKIP’s policies on immigration (bad) the European Union (very bad) have appeal even among as many as a hundred Conservative MPs. Labour has concerns that the popularist line is attractive to some proportion of its own working class constituency.

Most commentators share the view that the results do not translate easily to the next general election, which is two years away.

What might be happening?

An attack of UKIP votes as clowns may have strengthened the resolve of some voters, although in a dozen or so interviews I heard this was mentioned more as source of belated satisfaction rather than a vote-changer. What was more widely mentioned was the view communicated via the candidates that UKIP was the only party listening to the electorate.

Was it Nigel wot done it?

Nigel Farage , the leader I described as unconventional and ebullient, at very least seized the headlines during the last weeks of the campaign. His style is pure charisma, plausible, utterly convinced of the rightness of his opinions, appealing to his supporters. I suppose I should confess it is not a style that appeals to me, whatever I may think of the broadly social conservative position he presents. He rather blatantly chose to be filmed in pubs, pint in hand, a man of the people contrasting with the privileged class from which, he suggests, all his opponents come. His successful candidates repeated this view with equal conviction.

Did Nigel make a difference?

I suggest that he did, for better or for worse. It is hard to find another factor that converted general discontent into so many votes. Even that is not totally convincing, as in the same interviews I mentioned above, Farage did not figure as prominently as I expected

What happens next?

Espoused theories

The downside of a charismatic leadership style is sometimes a tendency to espouse the common touch while losing it in private. The social scientist Chris Argyris distinguishes between espoused theories and theories in use. One disenchanted defector from UKIP suggests that this is already the case.

Mr Farage dismissed the defection of Marta Andreasen , a senior figure, in these typically robust terms

‘Having left the OECD, the European Commission and UKIP in unpleasant circumstances the Conservative Party deserve what is coming to them. The woman is impossible.’

A Harbinger?

One defector doth not a battle lose. But if this is a harbinger of what might happen, I expect to be writing more about Mr Farage and UKIP.