Embracing the Future: Nine Key Strategies for Business Leaders to Thrive in a Changing World

 

How Successful Leaders Deal with an Uncertain Future

In today's rapidly evolving business landscape, executives face an increasingly complex array of leadership challenges. With technological advancements, geopolitical shifts, and generational diversity shaping the workplace, successful leaders must adapt their strategies to stay ahead.

To get more leaders future-ready, we chatted with Stephan Meier and Dan Wang, co-directors of the Executive Development Program: Leading into the Future, to get insights into the pivotal trends they see that are poised to change the way most leaders approach critical business decisions now and in the future. They share ways to future-proof business as well as get future-ready and provide key strategies that can empower business leaders as they navigate this ever-changing world.

Trends that Will Impact the Future of Work

One of the most important trends that Professors Meier and Wang see impacting the future of work is automation. Analytics, AI (artificial intelligence), and machine learning are here to stay. While most leaders see this trend, what may be a little harder for them to grasp is the accelerating pace of their adoption across industries. For example, the demand for robotics has increased exponentially over the last 20 years. If leaders are not prepared for what will happen in that market, they will lose out to competitors to take the initiative today.

From another vantage point, consider what has happened with digital platforms in the last decade. Internet and social media platforms have become extremely relevant. Leaders need to know how to digitalize their business, how to think about social media, how to think about digital marketing strategy and more. But, in the future, change will unfold more quickly. If executives are not flexible about how they operate now, they will fall behind quickly.

Not only will automation become more ubiquitous in the future, it will also be distributed across a more diverse set of stakeholders, connecting two key future technology trends with each other –automation and stakeholder complexity. Stakeholders refer to any party around a business that makes value creation possible for that business. For example, if you were operating General Motors in the 20th century, you would primarily be concerned about three types of stakeholders: suppliers, shareholders, and employees. Looking forward into the future, there are new types of technologies, like autonomous vehicles, that make the stakeholder map far more complex. For Nvidia, an important designer of semiconductors powering the AI boom, their stakeholder map entails not just suppliers, but also software companies, engineering firms, and even ride-hailing firms such as Uber that are involved in autonomous vehicles.

Adaptable Leadership

With the focus on data and stakeholder complexity being two key leadership trends that are becoming increasingly important to CEOs and leaders today, consider the experience of Uber Chief Executive Officer Dara Khosrowshahi during the COVID-19 pandemic.

In June 2020, a couple of months after the pandemic began shutting down the global economy, Khosrowshahi confronted social activists in front of his house who were demanding responses about what Uber was going to do about pandemic pay and other challenges. A few months later in 2021, Uber released a statement about how it was declaring new cultural values to combat the toxicity that had pervaded its internal culture. A couple of times that same year, Khosrowshahi made deliveries on behalf of Uber Eats or gave rides on behalf of Uber's ride-hailing app. This provided him with a first-hand perspective into both product and user experience to better inform his decision-making regarding customer experience. A few months after that, he was appointed to be on the board of Aurora Technologies, which took over Uber's autonomous vehicles arm. There, he had to be a technologist and R&D specialist. A few months after that, he led an earnings call, which required expertise in corporate finance. During that same month, he drew on his knowledge of regulatory strategy to work with the Biden administration on a national economic recovery strategy. Throughout these two years, Khosrowshahi had to employ many different skill sets that would have been difficult for the traditionally trained executive to respond to. An executive’s responsibilities today are not necessarily about knowing different domains, but rest on being open to constant adaptation and learning.

When it comes to the future of work and the future of business, the way to future-proof your business, according to Professors Meier and Wang, is that the "learn-it-all" strategy does better than the "know-it-all."

Becoming Future Leaders that "Learn-It-All”

Today's executives and future leaders need the skills and ability to exercise command over many domains. To accomplish this, Professors Meier and Wang shared a basic framework, that they call the Learning Executives Framework, which helps executives become "learn-it-alls."

The Learning Executives Framework zooms out from an executive's internal capabilities to all the external stakeholders. A learning executive has to practice having a vision, delivering values, and the art of persuasion because, ultimately, they will be managing both internal and external stakeholders. Their internal responsibilities in their organization entail empowering employees, catalyzing and motivating the executive team, and aligning the company's goals with those of their shareholders and investors. For many leaders who have received their MBAs over the past three, four, or five decades, this is familiar. What might be unfamiliar is how these same skills can be applied externally. Today, the external stakeholders, such as policy-makers are social activists, have just as much to do with how a company and executives lead value creation and value capture as the internal stakeholders.

There are also major changes that the learning executive needs to be attuned to including digitization, technological adoption, and automation in many organizations, as well as big changes in the environment due to climate change.

The Future of Work

With major changes coming to technology, digitalization, and automation, the Learning Executives Framework affects how we think about our future employees, it affects how we think about competition, and it also truly affects how leaders manage the future of work.

As seen in this slide from Deloitte, the future of work is decomposed into three parts that affect how we think about work:

1. What activities are humans doing?
2. What are machines doing?
3. How is the interaction between humans and machines?

This affects how we think about the future workforce including what skills are needed and how to upskill employees. Careers are going to be very different in the future because the half-life of knowledge and skills decreases so rapidly that within a couple of years what workers previously learned will have to be reimagined.

The future of work also extends from the workforce to the workplace. Will the future of work be onsite, remote, hybrid, or a combination of all three? Currently, there is a lot of uncertainty. Some companies, like Morgan Stanley, find being in person works best. Hybrid and remote don't work as well for their needs. Whereas some tech companies like to be all remote in the future. Then there are the companies that fall in between where it's a mix of in-person, hybrid, and remote. The future of work and the workplace is still in flux.

Reimagining the Future of Work

Reimagining the workplace forces us to ask three important questions:

When, where, and how do we do the most productive work?

We experienced during the pandemic that performing certain tasks remotely was more effective than in-person. While the traditional model was working in the office from nine to five, now we can think about unconstrained time. Does it matter that we have synchronous collaboration? Does it matter that we are in the office at the same time or can we come at any time? Does it matter where we are? Do we need to have synchronous time where we work together on Zoom or can we do work anywhere at any time?

What management and leadership practices need to change?

During the pandemic, we also learned that what we did before does not work in a remote or even in a hybrid workplace. We need to think differently about how we should lead whether leading small teams or a large organization.

What data do I need?

Pre-pandemic, it was clear that employees were mostly available nine-to-five. Now, the employee experience has changed. Some people prefer working earlier while some prefer working later. What data do you need to get that deeper understanding? During the pandemic, the number of emails that were sent between 6 p.m. and midnight increased by 52 percent. Do you know when your employees actually interact? In a consumer business, you wouldn't ask your customers once a year how they're doing and what they're doing. That's exactly what we currently do with our employees. Most company data points on employees come from a once-a-year engagement survey. That needs to change.

Nine Key Strategies for the Future of Work

In today's world, there is great uncertainty. With all the rapid change, it can feel like a new world almost every day. To gain a competitive advantage in the future, Professors Meier and Wang suggest the following:

1. Embrace the Learning Mindset

One of the most critical strategies for leaders to embrace is the learning mindset, a concept popularized in recent years by Microsoft CEO Satya Nadella. The learning mindset encourages continuous pursuit of new knowledge to improve and evolve. By adopting a learning mindset, executives can foster and create an environment where they and their teams are open to change and challenge, eager to innovate, and prepared for whatever challenge the future holds.

2. Leverage Emerging Technologies

The rise of technology has dramatically impacted the way businesses operate. Executives must be proactive in exploring and leveraging emerging technologies to streamline processes, enhance communication, create, and optimize efficiency. It's important to stay informed about the latest technology advancements, such as artificial intelligence, blockchain, and big data, and incorporate these advancements into their organizations.

3. Navigate Geopolitical Challenges

In a globalized world, geopolitical events can have far-reaching consequences on businesses. As such, executives must be well-versed in the current geopolitical landscape and be prepared to adapt their organizational structures and strategies accordingly. Executives should consider the potential impact of global events on their business and develop contingency plans to mitigate risks and seize opportunities.

4. Foster Inclusive Leadership

As the workforce becomes more diverse, executives must adopt inclusive leadership strategies to effectively manage generational diversity within their organizations. It is important for leaders to recognize and embrace differences, encourage collaboration, and promote a culture of continuous learning. This helps create an inclusive environment where everyone feels that they belong, feel valued, and are empowered to contribute.

5. Prioritize Environmental and Social Responsibility

Modern businesses must navigate the growing importance of environmental and social responsibility within most organizations. Executives are urged to prioritize sustainability and corporate social responsibility (CSR) initiatives within their organizations, as these efforts not only benefit the natural environment and society but also enhance a company's reputation and long-term viability.

6. Manage Remote and Hybrid Workforces

The COVID-19 pandemic has permanently altered the way we work, with many organizations embracing remote or hybrid work models. Executives are encouraged to develop strategies for effectively managing remote teams, ensuring clear communication, and fostering their teams' success through the support of a positive company culture, even when employees are not physically present in the office.

7. Adapt to Changing Consumer Demands

As consumer preferences and expectations evolve, businesses must adapt to meet these changing demands. Executives should stay informed about market trends, and companies regularly reassess their product and service offerings, and be willing to pivot their strategies when necessary to remain competitive and relevant in the marketplace.

8. Invest in Education and Executive Development Programs

Education is paramount in navigating and leading the changing business landscape not only for a leader's own development but also for leading their team. The Executive Development Program: Leading into the Future is specifically designed for seasoned professionals, offers an opportunity to refine leadership skills, learn new strategies, and network with other like-minded executives.

9. Build a Resilient and Adaptable Organization

It's important for executives to build a resilient and adaptable organization, capable of weathering the storms of change. By fostering a culture of agility, collaboration, and innovation, executives can ensure their organizations remain competitive and prepared for the challenges and opportunities that lie ahead.

Embrace the Future

The world of business is changing at an unprecedented pace. Organizations and executives must adapt their leadership strategies to thrive and lead in this new environment. By embracing a growth mindset, leveraging technology, navigating geopolitical challenges, fostering inclusive leadership, prioritizing environmental and social responsibility, managing remote and hybrid workforces, encouraging continuous learning and development, adapting to changing consumer demands, investing in education and executive development programs, and building a resilient and adaptable organization, business leaders can navigate the complexities of the modern world with confidence and success.

https://tinyurl.com/aemwc5j2

Turnaround in business. Part 1

 

turnaround

/ˈtəːnəraʊnd/

noun

1. 1.

   an abrupt or unexpected change, especially one that results in a more favourable situation.

   "it was a remarkable turnaround in his fortunes"
2. 2.

   the process of completing or the time needed to complete a task, especially one involving receiving something, processing it, and sending it out again.

   "a seven-day turnaround"

Business Turnaround Definition

There have been many attempts to place a definition on ‘Business Turnaround‘. However, these are quickly becoming ‘out-of-date’ as the restructuring and turnaround profession advances in our modern disruptive world.

At TurnAbout AU, we have thought long and hard on the topic. The most accurate Business Turnaround definition we have arrived at is:

The immediate intervention and implementation of short timeframe strategies for the purpose of achieving the sustainable recovery of an underperforming, yet potentially viable, business model.

It wouldn’t be right for us not to try and incorporate ‘restructuring’ when attempting a business turnaround definition. The restructuring process is where a business converts a period of loss into one of profitability and success whilst stabilising its future. Therefore, when providing a definition for ‘business restructuring and turnaround’, we believe it is important to include the following:

Whether scenario planning or instigating measurable changes, the overarching principle with restructuring is to preserve, to the greatest extent possible, a company’s enterprise value whilst attempting to maximise returns to key creditors and minimise risks to all other stakeholders over a predetermined period of time.

The above takes into account ‘going concern’ value, protection of intellectual property and employee skillsets (talent) as they might be linked to other tangible or intangible assets – such that the viable business model is saved holistically. The concept being that the ‘whole’ is greater in value than the sum of it’s various parts and components.

Obviously, when utilising ‘restructuring and turnaround’ practices, we need to avoid rescuing business models that are not viable (for example, lacking in technological innovation for longer term survival). Such businesses are often described as ‘zombie’ companies and do not contribute to the economy. With the recent crises that have drastically impacted human behaviour and our economy (COVID-19, fires, floods, drought…), it is logical that this urgent need for businesses to be adaptive and agile will result in turnaround and restructuring becoming the new norm. Disruption has been suddenly and forcibly thrust upon the business community.

Corporate Turnaround has been defined as:

‘The implementation of a set of actions required to save an organisation from business failure and return it to operational normality and financial solvency. Turnaround requires leadership and can include corporate restructuring and redundancies, an investigation of the root causes of failure, and long term plans to revitalise the organisation.’

BNET Business Dictionary

However, we much prefer our modernised definitions as they can be applied to sole traderships, as well as small and family businesses. Our definitions also fit closely with the fundamental concept and intended purpose of the ‘insolvency safe harbour‘ protection for directors from insolvent trading personal liability (s588GA – see our ‘safe harbour definition‘) – which provides breathing space for leaders (debtor in possession style) to take charge of the restructuring and turnaround strategies provided it results in a ‘better outcome’ for the company (creditors and/or shareholders).

Get in touch to learn more or discuss in further detail. Our objective is to rescue the value in small and family businesses.

Eddie Griffith https://tinyurl.com/3dctfnt8

Why Turnaround?

If your company or business unit is underperforming consistently and losing money, you likely need a turnaround project. That situation erodes cash flow and damage return on capital importantly. If this bad situation continues during the time, the company moves to insolvency. So urgent action must be taken. Turnaround project must be launched.

Corporate life cycle

Time for Turnaround

In economy we can talk about recession when continued decline in economic activity for two or more consecutive quarters. In the micro-economy world, I mean in the companies’ world the timing used to be different. Usually the review process in companies is yearly, and because management teams used to have a second opportunity, two years with losses could be considered a decline that needs a turnaround. Obviously if the losses are important, time is reducing.

Ideally, the turnaround process must start not too late in the decline phase in order not to allow deteriorating too much the situation. Although in many cases that decision is delayed until many quarters of losses, what will likely erode importantly the cash situation of the firm.

Someone could ask how we know that we are not to late in the decline phase. Well, this question does not have an easy answer. In reality the committee in charge of the turnaround decision must use their experience and intuition to realize soon that the firm needs a crisis management, and that those problems are not going to be solved for the current management team at least without the support of a turnaround team.

It is important to highlight that a turnaround project could take between one and two years. So we must not delay too much the turnaround decision, or it could be too late to recover the situation.

Many times CEOs used to protect their management responsibility delaying turnaround with different “strategies”:

Arguing that is a conjectural stage

Arguing that is a marketplace situation

Using “accounting engineering” to cover the problem during some while

Recognizing that a company has important problems is complex because that means that we have to realize that we are doing business in the wrong marketplace and/or time, or we have the wrong people managing that market. So there is a responsible, that took the decision to entry in that market or that choose the current management team. Many decision makers do not want to recognize the problem because means recognizing the responsibility. So they used to wait some time with the hope that “something” is going to happen that change the current bad performance. We have mention that “something is going to happen” because people that create problems do not use to know how to solve those problems.

In many companies bad performance in some quarters is not so “significant”, and they wait until the end of the year in order to review the situation. Be aware that in many cases companies offer a second opportunity to the current management team. This means that because the review process is a yearly basis rather than a semester or quarterly basis that situation could be deteriorated even more, if the current managing team is not able to recover the situation.

Where Should We Start in Turnaround? The “Bunker” Concept

We could simplify the causes of decline to three: poor management, inadequate financial control, and incorrect sales approach. If the decline cause is clearly restricted to finance or sales, we must start in turnaround for that area. Although we must be aware that sometimes the initial decline cause identified is incorrect, because we would realize that there are more than one cause of decline (many times turnaround situations are much worse than expected initially). However, the commonest cause of decline is poor management, in that situation is more complex to decide where we should start.

Turnaround in poor management situations could be approached trying to solve problems in many areas of the firm at the same time, or we could much more focus on one main area creating a “bunker department” as Keith Wiedersheim called. A “bunker department” is a company department that we are restructuring faster because we are allocating more turnaround resources  (oversizing) than in other areas of the company to prioritize turnaround speed of that area. The idea of creating a “bunker department” is eliminating the poor management practices in that department, and this one must influence positively to the rest of the organization. That area would act as a change management catalyst into the firm.

One of the first things to do with the chosen “bunker department” facing poor management practices must be to review processes. Because processes are cross functional, the “bunker department” processes are connecting with other areas of the firm which are going to be reviewed indirectly. So the concept is starting the turnaround from one main department and using the connections of processes with other areas to expand turnaround activities to the rest of the company.

Turnaround "Bunker Department" Approach

So if we agree to use the “bunker approach,” we must decide what it is the department in which we are creating the “bunker.” I suggest using supply chain or finance as a “bunker department” because those areas have strong links with the rest parts of the firm. Furthermore, those departments have the financial and operational control of the firm. Thus, any poor management practice in the company is likely being detected for those areas. However, turnaround people use to create bunkers in their areas of expertise. E.g. people with financial background create the “bunker” in the financial department.

A Framework to Asses and Monitor Turnaround Processes

There are two frameworks focus on the theory that a company to perform properly need to be aligned in some important hard and soft elements.

The “Star Model” was created by Jay Galbraith in the 1960s. This framework remains important to create the foundation for companies design choices. Thus, this model identified five main design choices: strategy, structure, process, reward and people. The model is based on that design will affect employees’ behavior that will finally influence in the company culture and performance.

The “Mckinsey 7S Framework” was developed by Robert H. Waterman and Tom Perters in the 1970s. This quite similar and still actual framework has 3 hard elements (strategy, structure, and systems) and 4 soft elements (shared values, skills, style, and staff).

The utility of “Star Model” and “7S Framework” for turnaround

Those frameworks help us not to forget any important element in the firm.

In restructuring any time we are conscientious affecting some of those elements, and the model is going to remember us that any change in one of the elements must be aligned with the rest of the elements.

Turnaround process use change management initiatives continuously and these models consider soft factor too.

So our recommendation is using the best of both models, we mean using all the factors suggested for both models. So “Star Model” compared with the “7S Framework” incorporates the reward factor and performance. On the other hand, “7S Framework” incorporates shared values, separate people in two factors (staff and skills), and shows systems (culture) like a new factor rather than a consequence of the factors.

The turnaround framework

Adapted from "Star Model" (Jay Galbraith) and "7S Framework" (Robert H. Waterman and Tom Perters)

• Strategy: What is the formula for success? How do we differentiate ourselves from our competitors? What are the organizational drivers?

• Structure: How are we organized? What are the key roles? How is the work managed? Who has power and authority?

• System/Processes: How are decisions made? How does work flow between roles? What are the mechanisms for collaboration?

• Performance: How are we doing? Why?

• Rewards: How is behavior shaped by the goals? How do we assess progress?

• Share values: What types of issues do the receive the least and most of the management attention?

• Style/Culture: How does top management make decisions? How do managers spend their time?

• Staff: How do we recruit and develop our talent?

• Skills: What is the company or team known for doing well?

Prerequisites for Change and Success

I am sure that many people have any time questioned themselves “Why do we fail in a project?” With the simple but powerful framework regarding the prerequisite for Change (elaborated by HP), you can easily answer that question. Moreover, even you can plan in advance any project in order to know if the prerequisites to success are in play or not. For example, a project without enough resources is going to produce frustration, and likely fail. So before getting fully on board on that project we should be sure that enough resources are going to be provided.

Source: HP way, Barry Newland “The four prerequisites for change”

System thinking teaches us that focusing on a few leverages points, we are able to create a big impact in our organization faster. The different between leverage points and other improvement initiatives is that leverage points attack problem root causes rather than problem symptoms.

Turnaround need to attack urgently the main problems and that means finding the leverage points quickly. But many managers fail to identify the right leverage points because they use a silo functional view (sales, manufacturing, etc.,) of the problems rather than a system/company view. For example, it is very common finding companies in which the sales department is focusing on maintain some overstock to satisfy “unpredictable” sales demand; manufacturing is creating overproduction in order to optimize production resources; and so on when other system solutions like lean manufacturing could improve much more the company results without overusing stock strategy.

Company Improvement Phases: How Do We Accelerate Improvements?

There is a classification about the improvement phases in a firm according to the degree of development of internal and external processes.

The Improvements Phases in a Firm

This classification has been widely used (Gartner, PRTM, SCOR, APICS, and so on) but most of the time the improvements have been related to the IT status of the organization, and now we are trying to briefly analyze that classification from turnaround, supply chain, and change management perspective using meetings tool to optimize communication, planning, synchronization, and execution.

Turnaround: The commonest cause of turnaround is poor management, so in this post we are focusing just in that particular cause. Multiple dysfunctions phase shows the poor management situation in which the company uses a very optimistic forecast; it has a huge overstock “just in case”; processes are not properly supported by IT systems and many activities are performed manually; staff is poorly trained and supported by managers/directors; purchases do not always follow the approval process; nobody (no sales neither finance department) is in charge of receivables accounts; etc. Therefore, we have mentioned many problems that turnaround teams can approach in the Weekly Improvement Functional Meetings.

Supply Chain integration: When we are talking about integration, we are talking about creating high performance teams. For that integration we suggest to build an ecosystem of teams (for example one team for each business unit) with cross-functional members that have weekly meetings to share integrated goals, responsibilities, and philosophy (lean approach, make-to-order, and so on) in order to get a successful and modern supply chain (lean, responsive, profitable and high quality). Moreover, we should not forget that nowadays “no business is an island” so the extended enterprise concept is the external integration priority.

Change Management: We are accelerating the improvements of the four phases almost simultaneously, creating four levels of meetings that work in parallel to identify improvement initiatives. Meetings are helping to share objectives and information, synchronize activities, and generate common action plan. It is important to highlight a couple of things regarding meetings. First, we are talking about productive meetings. I mean those meetings must be as short as possible (aprox. 30 minutes), with a well-defined agenda, and results must be monitored. Second, in order to produce turnaround results quickly, the periodicity of meetings must be weekly in most cases. Otherwise, we are losing several months just to align the teams or to execute the initiatives. Those meetings used to have the following results: staff ideas are listen by the company; communication and synchronization issues are managed; people proud of his job raise; people commitment with the organization rise too; and so on.

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