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Twitter recently hosted it’s billionth Tweet and Facebook had over 500 million users by the end of 2009, continuing its trend of doubling every nine months or so. It is difficult to continue to argue that social media is nothing more than a fad, and an increasing number of companies are starting to make use of these technologies.

But most of these companies are merely using social networks as a means to communicate (mainly with customers, but sometimes with staff as well) or to market their products and services. These are simple – and obvious – applications, and soon you’ll just be another voice in cacophony of online noise. Unfortunately, most “social media experts” focus only on these aspects of online social networking, and are overhyping the benefits and underemphasising the cultural shifts required for companies to truly benefit. They are missing a really important trend with huge implications for every organisation in every industry and sector.

The reason that social media has taken off so quickly is that it is more than a fad. It is, in fact, merely the technological expression of a values shift that has been taking place for a number of years. It will therefore be a shaping force in the world over the next decade. It might not be the answer to all your problems as many social media pundits are predicting. But it will definitely change everything, and more and more companies are starting to see the benefits it offers. A revolution awaits us.

You can hardly turn on a TV news channel or read a business magazine these days without being overwhelmed by requests to “follow my tweets”, “check out our blog” or “send us your videos”. Social media has gone mainstream. But most business users and organisations are treating it like a gimmick, and only gaining a fraction of the value they could. If they understood the true nature of what is happening, they’d know that social media is merely an expression of a deeper trend that has the potential to change everything. And they’d realise that the first companies to grasp this will have the opportunity to gain phenomenal competitive advantage in their industry. In fact, some companies have already started to do so.

Social Media 101

If you’ve missed this trend and are not sure what I’m talking about, here’s a quick primer: social media are the tools you can use to do social networking on the Internet. This involves connecting with other people, and sharing information with them digitally (yes, it’s just networking and connecting with others online). The most used tools are:

• Facebook – where people become your “friend” and can then see your status, photos, musings and anything else you want to upload about yourself; you can also create a farm, play Scrabble or take on the world in a Mafia vendetta if you really must.
• Twitter – a “microblog” that allows you to share anything you want to with your “followers”, as long as you use 140 characters or less.
• LinkedIn – a more business oriented networking site where you can link to other people and do pretty much the same thing as Facebook allows you to do, except there are no farms or Mafia wars.
• YouTube – where anyone can upload any video about anything, and share it with the world.

Although some large corporates are still a bit slow on the uptake, the use of social media for personal connections and business purposes is now well established. The Oxford international dictionary’s “word of the year” for 2009 was even “unfriend”. But this is not another in a pile of articles on how to use social media effectively. If you need more information, or want to know “How To Get The Most Out Of Social Networking”, just Google “social networking expert” and choose one of the 45 million or so websites that are listed (I kid you not). Most of them will oversell you the benefits and present social media as a panacea to solve all your problems. Basic business sense seems to often go out of the window. Basic business thinking needs to be applied to successfully implement a social media policy and to use social media to enhance your business or organisational goals.

But my concern, beyond the misuse or non-use of social media, is that in all the hype, companies are not seeing the significant shifts taking place. They’re not looking beyond the obvious and immediate. And they’re liable to miss something much, much bigger than they can imagine.

Beyond the Basics

Most companies that are starting to embrace social media are using it simply for marketing purposes, or as a means to communicate internally with staff. No doubt, those are useful applications – but they’re obvious, and pretty soon everyone will be using them. A few minutes with a carefully selected team, including a well-seasoned marketing pro, a social media expert and an intelligent 22-year old should get you up to speed and ready to go.

The real revolution will come when companies truly grasp that social media is actually an expression of a profound change in the way we will live and work in the near future. We now have the potential to connect with anyone anywhere – but do so without obligation. We have the potential to democratise decision-making and collaborate to innovate with no boundaries to get in our way. We expect to be able to tap into a collective wisdom to help us make even the smallest decision. And we can now make instant, borderless connections – but without commitments.

Your organisation would do well to consider how the mindset shifts that embrace and drive social media forward might change your industry forever. They’re certainly changing how people work, how they make decisions, how they develop trust and relationships, how they see the world, and how they communicate. More importantly, you need to consider how your organisation can engage with these mindset shifts, so that you can gain a competitive advantage in the next decade.

Here, then, are some of those mindset shifts and examples of companies who are beginning to harness them.

The minds of many, working for you

One of the most obvious ways in which social media will change our lives is the ability it has to allow us to share information. Webpages and blogs were the starting point for this, as people could easily publish their thoughts without being filtered or edited. Social media takes this a step further by allowing easy distribution and aggregation of these thoughts, and much more immediate interactions between authors and users of the information.

One of the most powerful examples of this social media trend is Patients Like Me (www.patientslikeme.com). Jamie Heywood founded it because his younger brother was dying of ALS (an aggressive, incurable, degenerative motor neuron disease). The website allows people with a variety of incurable diseases to share and track data on their illnesses, including all their therapies, activities, what pills they’re taking, their symptoms, aches and pains – in fact, almost everything they can think of. The combined data is used to create comprehensive maps of the progress and process of these diseases, and has enormous power to comfort, explain and predict. You can track your own progress against the aggregate of others who have the disease, and see the efficacy of various interventions and the life prognosis for someone in your situation.

The data on experimental drugs from Patients Like Me is proving equally as effective – and much faster by many years – than approvals or denials of licenses by the FDA. To see a short video on this amazing website, which has over 50,000 people already signed up, go to http://tr.im/patientslikeme

The key to their success was to tap into a group of people who have a reason for seeking a shared solution, and creating a platform for them to contribute their information – without filtering. The better the software that then aggregates this data and makes it visible, the better the wisdom that will flow out of it.

The concept behind Patients Like Me has the potential to revolutionise health care around the world. With the current debates about government vs private-run health care raging in the USA, it should be noted that (conceptually, at least) the National Health Service (NHS) in the UK has the best potential globally to implement something like this. They are the largest employer in Europe (fifth biggest in the world), with the most resources of any healthcare company on the planet. Imagine if they understood the power available in applying social media concepts to their customer base?

Putting the minds of many to work for you enables collaboration that can lead to innovation. No longer does innovation have to be confined to your current employees, your current locations and your current resources. InnoCentive (www.innocentive.com), for example, allows you to post a problem to a social media platform, requesting high-level inputs and solutions. Of course, you need to pay for these, but that provides the incentive for the world’s clever people to sign up to help you find your answers. InnoCentive was set up in 2001 as a marketplace where the world’s brightest minds could tackle the planet’s most difficult questions. NASA has its own channel on the site offering, for example, offering $30,000 for a way to forecast solar activity and $15,000 for a way to keep food fresh in space. Similarly, the Rockefeller Foundation is offering $20,000 for the design of a low-cost tank to collect rainwater. Anyone can offer solutions, and collaborate with anyone else in finding answers. That’s the power of social media – to collate distributed innovation capability.

There is no industry that need be excluded from tapping into the power of social media to reinvigorate their innovation efforts. The key is to tap into the motivations of people who might want to innovate for you. These can be purely financial motivations, but there are very often other incentives and motivators that are even more powerful. It does require you to think differently about your stakeholders and potential community.

Enable people to become invested

An industry which sorely needs to be dragged into the 21st century, and could benefit from social media mindset shifts, is publishing. TenPages (www.tenpages.com) is a Dutch company (unfortunately, the website is only in Dutch at the moment) providing opportunities for potential authors and readers to collaborate to select which books will be successful and should be published. Authors sign up for free and post the first 10 pages or more of their book. Others come onto the site and read these pages, and can buy shares in the book – up to 200 shares in any book for € 5 each. Widgets are provided to help them promote their favourites among their own social networks.

Books that don’t sell at least 2,000 shares in four months are removed from the site and investors are refunded 80% of their investment. Books that do sell at least 2,000 shares go into production at one of TenPages’ partner publishers (currently Pearson, The Workers Press and The House of Books). The author has 8 months to work with a professional editor to get the book written and ready for publication. Authors are paid € 1,000 from the initial funds raised, while the remainder is held over for publishing and promoting the final book. After publication, authors earn standard royalties of 10%, publishers earn 30% and the shareholders earn 10% for up to four years, divided according to the number of shares they bought (their names also appear in the back of the published books they helped discover).

Social media reminds us that when people collaborate, the outcome is often more than the sum of each of their individual contributions (this is known as Metcalfe’s Law when applied specifically in the context of a growing network). When people feel invested in the process, they contribute and engage even more.

Companies like Amazon have been pioneering this “minds of many” concept almost since they began. When you sign into their website, you see recommendations based on your past purchases. Linked to every product is an item which gently prods you: “Other people who have bought this item have also bought…”. It’s very compelling. Amazon understand that the best form of promotion is not their own adverts, but the recommendations of third parties. They have just been clever enough to integrate this into their own shopfront. They are not as good as they could be in extending this into social media networks and discussions, but at least they’re heading in the right direction.

There is almost no industry in which “minds of many” could not be applied. The trick is to work out where your potential “mavens” might be, and what they’re interested in. Giving these people a space to voice their opinions, express their interest, rate your products and services, and benefit from any outcomes, will enable you to leverage social media for business growth.

Everything is local

The Internet has allowed us to remove geography as a factor in our work and lives. We talk of social media allowing relationship without investment. What we mean by this is that we are able to find people with whom we would like to have a relationship without going through the long, drawn out (and often painful) processes required in a world constrained by geography. We are no longer limited by the accident of our physical location. We can seek out people who share very specific traits and interests, and form groups of people spanning many countries and time zones. We can find people who have specific skills or qualities for very specific purposes and we can interact with them directly and immediately. And it is very easy to do. Social media allows us to connect with these people and engage in the early stages of relationship building, without huge investments of time, resource or emotion.

A great example of “relationship without investment” is online dating – or more accurately: online match making software. By providing a lot of detail about myself, I allow the system to match me with others who would be compatible with me. Based on their growing database of successful (and unsuccessful) matches, these systems are getting increasingly better at making matches between people.

Statistics about online dating are difficult to find. Most of the available stats come from online dating websites, which make bold claims for their industry (as they would). Some suggest that as many as a third of marriages in the USA last year started with an online match. Whatever the current reality, there is no doubt that this is becoming increasingly popular and increasingly successful. The stigma of online match making is rapidly fading, as people realise the potential.

The key to “relationship without investment” is not that you can actually have a relationship without any investment. Rather it is that you can find the people with whom you want to have a relationship with minimal wasted effort. And that must be a good thing for everyone – personally and professionally.

In the business world, this removal of geography is true for online shopping (it doesn’t matter where you are, where the shop is, or where the warehouse is, as long as you’re happy to pay the shipping costs). It also means that you compete with everyone, everywhere – and that they compete with you, in your market. This changes who you are able to collaborate with and where you can look for resources.

One example is the funding agency, Kiva (www.kiva.org), who use this same concept to match donors with funding recipients. They did not want to be an aid organization, handing out money to poor people around the world. Instead, they wanted to find a way to provide micro-financing to entrepreneurs, who would use donated money to fund a small business, ultimately paying the investment back so it could be used to assist someone else. Kiva also wanted to allow small donors to be linked directly to the people they invested in. Using a social media platform, they have been able to do just that. As of November 2009, Kiva has facilitated over $100 million in loans around the world.

Crowdsourcing becomes Cloudsourcing

The easiest business example of this trend towards location-less and low-investment relationships is eLance (www.elance.com). This is a website where people can make their skills available and employers can contract out work that can easily be done virtually. This includes expertise such as programmers, designers, coders, writers, translators, marketers, researchers and administrative support. The key to the success of these systems is the many-to-many matching of suppliers and buyers, and good software to help them search, find and make appropriate matches. You also need the management software to help them maintain those relationships and deal easily with any transactions that may arise (e.g. payments for services rendered, or rating of services supplied).

I was recently introduced to a top insurance salesman in the city of London. The secret to his phenomenal success (outperforming other members of his sales team by at least double), was that he had taken the initiative to employ an administrative assistant on eLance.com. His employer company knew nothing of this arrangement, did not pay for his assistant or have a contract with her. It was a purely private arrangement, but one that was well worth it for him, given the commissions and bonuses he was able to earn given his outputs to his employer.

When Unilever wanted ideas for a new TV advertising campaign to sell its Peperami snack food, they decided to try and make use of the power of social media. They dropped their ad agency of 15 years and turned instead to IdeaBounty.com, an online marketplace filled with creative people trading in creative ideas. Companies or individuals post topics and requests to which creative suppliers respond with ideas and pitches. After a set time period, the client selects the best idea(s) and pays the winner(s). Unilever’s challenge generated over 1,000 replies and in November 2009, they paid out $15,000 for the two ideas they liked best. The new Peperami adverts are due to appear on British TV in 2010.

These are all examples of the new concept of the “cloud”. Cloud computing is a new concept whereby all your software and data is stored in an offsite system and not in your local machine. The benefits are that you can access your data from any device, anywhere. True cloud computing will also make sure that it does not matter which platform you use, your data will always be accessible. This concept can now be applied to the sourcing of certain skills and services. We could call it “cloudsourcing”, where a virtual workforce will undertake any task in the world of cyberspace for the best possible price.

A “Smarter Planet” with smarter objects

As with many other technology driven companies, IBM is currently focussed on trying to work out how we can use technology to solve real-world problems. IBM call this their quest for a “smarter planet”. As they see it, this involves three steps: instrumentation (putting sensors on everything and measuring any data they can), interconnection (capturing, distributing and processing this data), and intelligence (using the data to make decisions and inform actions). This is an expansion of the concept of “augmented reality” – that we can actually make visible the data associated with the real world that we can see around us.

At a recent IBM partner conference, I heard a presentation from Andy Standford-Clark, an IBM Master Innovator. In explaining some of the innovations that come out of the “smarter planet” labs, he gave a wonderful example of how social media is having an impact on the types of innovations he is pursuing. In particular, he is interested in “tweetjects”, or objects that tweet. If sensors can capture any information, then programs can be built to automatically share that data via social media platforms, and this allows it to be broadcast to anyone interested in watching the data.

Andy lives on the Isle of Wight, and commutes nearly every other day to IBM’s HQ in Hursley on the UK mainland. He was constantly frustrated by the lack of information on the ferries that transport him back and forth. But, being a tech innovator, he put his training and passion to work. He found out that every ferry had a device that broadcast its exact location. A simple piece of equipment allows you to pick up these broadcasts, and track the position of any boat anywhere. The Redfunnel Ferries (www.redfunnel.co.uk) he used had these devices, and each one had its own unique signature. It was a simple task to write some software that determined in which direction the ferries were travelling, and to convert this into tweets about when ferries were arriving or leaving various ports.

Initially, Redfunnel Ferries simply pointed their website to his Twitter feed, until (on 1 April 2009), he started messing with the feed, announcing that ferries were arriving at Milton Keynes, for example (that’s a landlocked British city, many miles from the coast). They realised that they needed to take over the feed system that he had created and integrate it with their own computer systems, thus owning the information that their clients now found so valuable. For more information on the “twittering ferries” see http://stanford-clark.com/ferries.html

Every company needs to ask what could be measured and shared in their company or industry. What would your customers, clients, staff, business partners or anyone else really find valuable? If the process of providing this information can be automated and shared (whether via social media or a more closed system), this adds tremendous value. The reason for making the information public (rather than trying to protect it) is for the reasons already discussed – to collaborate in order to innovation, to democratise decision making, and get the minds of many working for you.

There is another trend here that will become more evident over the next decade. The early years of the Internet have changed the monetisation models for most industries. Most young people expect everything online to be free, and all information to be equally (and freely) accessible. However, this will change. Apple’s App store and iTunes have proved that people will pay, when payment is made simple, in small units, and when the value one is paying for is clearly evident. Companies will need to start creating distinctions between freely available user generated content and their own company sanctioned information. They may or may not be able to charge for this information, but they will definitely need to budget to measure, analyse and distribute that information.

Making meetings meaningful

Increasingly, the idea of using social media to generate additional layers of data and meaning are being used at conferences and meetings. During an actual event, a separate data projector can show a Twitter feed of the hashtag linked to the event. Participants can be encouraged to interact in real-time with speakers and content at the event. I have been involved in such sessions, and it does require additional skills from a speaker to engage with these live streams of data – but, when done properly, adds a second layer of engagement and meaning. Younger people use IM (instant messaging) already in meetings to interact with each other silently while the meeting itself continues.

In addition to live interactions at an event or meeting, social media can be used both before and after an event to generate interest and excitement, engage with participants and even create shared content. To be honest, this is happening informally at many events anyway, so you might as well make the most of it.

Reclaiming the data stream

At present, there is a lot of user generated content freely available on the Internet. There may be a lot of information related to your company that is completely outside of your control or your systems. Working in an Academy for Chief Executives group last year, I met the owner of the company that supplies photographers to most of the world’s cruise ships. They have a rigorous interview process, ensuring that successful candidates are both excellent photographers and capable of working in the stressful conditions aboard a cruise liner. They discovered that a Facebook page had been set up by current and past staff, giving details of how to get through the recruitment process, moaning about the systems – yet giving helpful tips on how to manage them, and providing moral support to each other. The message was “this is a dumb process and there are management issues here”, but also “it’s a great opportunity and it’s worth sticking it out”.

Instead of banning the page, or disciplining the participants, the company embraced the idea. It helps them prescreen candidates, and they’ve used the feedback to improve their systems and processes. Now they use the portal to enhance staff communication and talent acquisition all at the same time.

In March 2006, Melody, a teenager better known by her YouTube name, “Bowiechick”, was feeling pretty depressed – she had just broken up with her boyfriend. So, she decided to record a vlog (a video blog entry). In order to cheer herself up, she experimented with some cool software that came with her webcam. By the end of the 75 second video, she had had a bit of fun and was feeling better. She posted the result at YouTube (see it at http://tr.im/bowiechick – this clip has now been viewed over 2 million times!).

People watching her video were intrigued by the special effects her software allowed, and more and more asked her about it. So she created a little video to explain how her Logitech webcam and software worked. This 2 minute video has been viewed over 3 million times. Logitech’s sales of webcams went crazy. Of course, this took the sales team by surprise as it wasn’t linked to any of their promotional activities.

This is the new world of marketing and sales promotions – where anyone, anywhere can say anything about your products and services. It could help or harm you. And you need to keep an eye on the world of social media so that you know what’s happening. If something good comes along, you need to be ready to support it and feed it.

Focus more on growing fans and less on retaining customers

It’s so obvious that it’s hardly worth saying: loyalty is dead these days. It may be a truism, but many companies still spend lots of money and effort trying to buy loyalty – with little lasting success. Social media provides alternative possibilities. Instead of trying to create a loyal customer base, you need to create a fan base. In fact, the more fanatical you can make your “fans” the better.

At its simplest level, you need to just provide information that will help customers make buying decisions. Around the corner from where I live there is a Krispy Kreme doughnut shop. They have a massive neon light in the shop window which they only switch on when they have new, fresh doughnuts coming out of the ovens. That light attracts my children like a porch light attracts insects. It’s simple, but remarkably effective as a sales tool. So, why not link that to a Twitter feed. You could even get clever and make the ovens Tweet automatically. The genius here is that, using push technology, as many people as want to would be informed immediately.

But, as I have been saying, this level of customer connection is only the beginning. What about engaging with that doughnut-crazed customer base and asking them to help you improve your menu or business strategy? This can be done at a very local level (each Krispy Kreme shop acting on their own with local clients) and at an international level (every Krispy Kreme follower aggregated into a doughnut uber-conversation that can help shape their future strategy).

One of the keys to leveraging a new social media mindset is to help your “fan base” become a self-sustaining “tribe”. In other words, you need to go beyond listening to them and talking with them, and create an environment where they can engage each other. There are a few companies that have found ways to create these fanatical fan bases. Apple and Zappos are probably the best of these examples right now (if you know of others, I’d love to hear from you about them).

Apple knows how to fire up that fan base in anticipation of new product releases, but could probably do a lot more to use social networking tools to tap the global Apple-nistas. They could do this to help improve their products, develop new features and find new markets. It is remarkable that 91% of Apple iPhone users would recommend the phone to others (Jan 2010 AdMob Mobile Metrics report). No other phone or telecoms device or operating system even comes close to this. And I am sure you all know at least one irritatingly smug Apple user. This is a fan base of note.

Zappos has lively Facebook and Twitter accounts. Zappos has its own Twitter account, but it also aggregates its employees’ Twitter accounts on twitter.zappos.com. They allow you to meet Zappos’ employees and build a connection with them. Their CEO, Tony Hsieh, has over a million followers. But one of the reasons they have been able to do this is that they have not just aimed to try and sell their product (it happens to be shoes) – their stated goal is to create a community of people who love shoes. There’s an important distinction there, and Zappos seems to have got it just right.

It’s not just the new upstarts that do this, though. Coca-Cola has a very large Facebook page with one of the highest number of fans to date. They tap into the “cult” of Coke, providing a wide variety of photos, products from all over the world, archive materials and Coke memorabilia. Cleverly, they allow most of the content to be driven by the fans – this is one of the keys to really unlocking social media value: you have to give control away to the “fans”. Interestingly, the fan page was originally created by two fans (not Coca Cola employees) and rather than compete with a page that had already gained great popularity, Coke asked the creators to represent them.

Many other companies are starting to do the same. One of the best is Vitamin Water 10 which is constantly engaging with its customers, and allows them to upload their own photos and videos of them drinking Vitamin Water. They also show previews of upcoming adverts on their website, exclusively for the “tribe” they’re trying to develop.

Using YouTube and viral marketing is such a simple way to get your brand noticed, yet many marketing departments are still stuck in old mindsets about control and protection of their property. I do a lot of presentations, and am constantly looking for multimedia to support my humorous and fast paced style. I often write to companies asking for permission to show their adverts in my presentations. If the companies even bother to reply, they often deny my request. This makes no sense to me whatsoever – I am offering to provide a free channel of communication, with a targeted message that I will reinforce, to an attentive audience. Surely they should even be paying me to show their adverts. I certainly shouldn’t have to beg to show it. This demonstrates over and over again the lack of understanding of this new world of social media.

A whole new way to develop trust – a new way to succeed

Social networking technologies are simply that: technologies. Technically that means that they are “enablers” (there isn’t a universally accepted definition of “technology” by the way, but most agree that it defines something that enables or provides a solution to a problem). What I mean by this is that they can be used to create community and to destroy community or relationships. The choice is ours.

If a boss chooses to use text messages to inform staff they’ve been fired, can you blame the technology, or is it just a horrid boss? If someone twitters constantly, telling the world what they’re having for breakfast and where they are all the time, is that a problem with the technology, or just an egotist who finally found a stage? Relationship without investment has a negative aspect to it. But it also has significant positive potential, and I believe it is this that will dominate our usage and acceptance of social media in the next decade.

The examples given above are only the starting points for how social media will invade and pervade our lives, shaping everything from how we communicate to how we relate, from how we learn to who we trust, and how we make decisions. No industry, no company, no function or department will be left untouched or unchanged by these new trends. But to get the most out of them, we need to grow up and get beyond the hype. The companies that do so will gain a formidable competitive advantage in the decade that lies ahead. The reason I am so confident about this is that these are not just technology trends – this is not just a fad, fuelled by the geeks and propeller heads of the world. Significant social changes and shifts in our expectations and values are now finding expression in technologies that are enabling us to engage with each other and with the world in very different ways. These are long-term trends that will shape the world for decades to come. Now is the time to act on these shifts and take your organisation into the future.

© 2010, Graeme Codrington, TomorrowToday

Dr Graeme Codrington is a business strategist, keynote presenter and thought leader on the new world of work. His thought-provoking keynote presentations and workshops get teams inspired to immediate action and long-term business improvement. Contact him at graeme@tomorrowtoday.uk.com

I am guessing this article could be added to every other day. So, what would you add to my list? I am going to add other examples as I find them – see comments below.

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Commitment to breakfast means different things to the chicken and the pig. Well unless that is, you’re inclined to favour KFC for breakfast!

Nowhere has the shock to perspective that the global recession emitted been more keenly felt than in the banking / financial sector. The collapse in asset prices, a surge in distressed debt and a looming threat of deflation have all threatened systemic financial meltdowns.  At the start of 2010, for the first time in 40 years there are a billion hungry people on our planet. That said, towards the end of 2009 there was widespread evidence of healthy recovery which, following the tumultuous events of the last three months of 2008, seemed unlikely. The world’s economies, big and small, are taking stock and whilst the recovery is not evenly distributed and counting one’s blessings is a selective exercise, we do need to understand some of the deeper social shifts that have happened as a result of the past 18 months.

It has been a troubled and confusing time to the ‘man on the street’ – a term that for many has gone from mere analogy to the frighteningly literal. What once was is no more and a ‘new normal’ is emerging. The rules of the game have changed and this impacts on all the players. There are three things that we need to note as we take stock of the situation. It is not about ‘finding our way back’ and rebuilding but more about understanding what has changed and the new opportunities provided by such changes.

Firstly, is to recognize the impact that the recession has had on both the psyche and the consumer behavior of the younger generation. The Great depression of the early 1930’s had a significant impact on the children of this time as they watched anxious parents deal with the loss of jobs, homes and self-esteem. The impact can be measured in different ways but it certainly produced a generation who didn’t trust banks to look after their hard-earned savings and it produced a ‘cash is king’ generation who only bought it provided they had the money to pay for it. Children of the current economic meltdown will have had their consumer confidence similarly dented. Already consumer treads in unlikely places (Japan) and in commodities (vehicles and motor-bikes) are in decline. Hindsight could reveal a significant shift in consumerism amongst the ‘hidden’ generation in the context of the recent financial turmoil. As in the past, an event of this magnitude will sow the seeds for significant social change and only time will reveal the full extent of this attitudinal and behavioral shift.

Secondly, is the realization of the adaptive ability to ‘live without’ that has been forced on many households. As assets have had to be sold, holidays forfeited, simpler and more cost-effective forms of entertainment explored and budget fat cut, unforeseen benefits have emerged. Freedom from clutter and renewed family time and ties have reinvigorated many a home. A sharpened clarity as to ‘what is important’ and ‘what really matters’ have birthed opportunity, innovation and led to personal and collective renewal. This has been true for life in the suburbs as well as for life at Head Office. But herein lies a sharp warning for corporate behavior: When deep survival measures have needed to be adopted on the domestic front, it is hard to stomach continued extravagance at senior corporate levels.

Which leads me to my final point: Leadership has to change accordingly. Leadership takes many forms and wears many difference faces. It is needed at home, in the office, within communities, societies, nation states and globally. It can be constrained by borders yet can also transcend borders; it can be observed, engaged and evaluated. Its practice and look will always be contentious and be both supported and vilified – often in equal measure. Leaders need to pay close attention to the context in which they lead and then lead with an understanding that authentic leadership is always conferred and not claimed. They have a responsibility and now more than ever, leaders need to be aware of that responsibility. They need to move in rhythm with the tune being played at this time and gauge with sensitivity and accuracy any subtle changes that occur.

No one said it would be easy. The piggy bank might be gone but breakfast still needs to be served. The tough times of the past 18 months that has threatened the very core of our global economy look like receding and maybe, just maybe, we’ll be able to get back to the breakfast table, better for the lessons learnt.

I guess you just don’t want to be the pig called on to be the breakfast!

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Shifts in societal change over the decades have radically changed the way we do business. Some creep up on us while others happen like a tsunami. Is your business in symbiosis with its ever changing environment?  In order to attract and retain your target market, and indeed survive and thrive in current times, businesses need to be in touch and in tune with changing landscapes. This is both in terms of internal customers (talent) and external customers (target market). South Africa is no exception and the landscape has changed!

Around the world, it has become clear that the children born in the last two decades have been born into a very different world.  The momentous, world changing events of 1989 reverberated from Tiananman Square to Tehran, from Tallin to Johannesburg, and from Berlin to the birth of the world wide web in CERN, Switzerland.  The world was changed, in so many ways, a tech boom was about to start, and would then bust, and boom again.  These global events form the backdrop to local forces in different countries around the world.  South Africa is one of the developing success stories of the past two decades, and provides a great case study for understanding the new global generation of young people, known globally as Generation Y.

My colleague Graeme Codrington is quoted in his book, Mind the Gap, as saying “There is a generation (Gen-X’ers) of white South Africans who are old enough to have been counted as part of the old regime, but not old enough to have actively participated in it”.  Anyone who has any interest in South Africa will know that since 1994 (and probably a little before that behind the scenes) the political landscape has changed. While over the past 16 years the New South Africa has been preoccupied with political change, many businesses have been slow to realise that along with it come huge societal change and therefore changes in consumer demographics and behavioural trends and indeed changes in the make up and management of organisational talent.

South African Gen Y’s

There is a new generation of South Africans born into a new world order and indeed a new South Africa.  This often called “born free” generation of mostly black South Africans have grown up in a different world, and in particular a country that is very different to what their parents knew. Many of these kids are the first black generation of South African kids to have benefited from political change, sometimes also referred to as model “C” kids because they have been able to attend traditional white model “C” schools in previously exclusive white suburbs.  The oldest of these Gen-Y’s are already grown up and many have already, or are just about to enter the world of work, and it is certainly a New World of Work.  For South African businesses it is important to realise that these future employees, customers, entrepreneurs and leaders are different and they bring a different set of values into play. For South African business leaders, this pool of generation “next” is specifically different in at least their demographics and the fact that there is legislative intervention on governments’ part to ensure that they are not forever more excluded from the main stream economy or confined to being blue collar workers only.

However, the question is: given that they come from different race, ethnic, religious and cultural back grounds to what traditional white South African businesses leadership are used to, and the fact that this generation is largely the offspring of the emerging black middle class (the main economic benefactors of  political transformation), how different are they actually, and different to whom?

I guess the answer to that question can be dependant on the framework or lens you use to view the world around you (i.e. your world view).  Our world view is based on our values and our values are based on our experiences of the world we grew up in. Therefore, as human beings, we are slaves to a circular reference. Understanding this paradigm for the middle class black Gen Y in South Africa has to do with both South African specific as well as global influences that would have shaped their value system while growing up.

Local Insights

Foshizi a South African black consumer insight agency recently conducted a study into urban black youth trends and insights. Some of the highlights of the study show that there is a level of dissimilarity in terms of association with local music personalities and brand recognition that can vary significantly from region to region. However, there are national similarities, such as music (including international music) playing a big part in the lives of this generation. In particular how brands mentioned in the lyrics of international music may influence brand recognition and top of mind awareness.  Technology also seems to be a unifying influence in that these kids grew up in the era of i-pods and i-phones and at a very young age were exposed to the internet.  Even with those who have not been able to access any of this technology personally, they get to hear about it, and they aspire to access it and therefore will identify with certain aspirational brands.

International trends with local impact

A recent American study conducted by DMW, a direct response marketing agency, reveals a number of very interesting insights including that 38% of Millennials (Gen-Y) in America identify themselves as “non-white”, suggesting a integration of culture driven values and viewpoints that may significantly redefine what it means to be American.  With more and more racial integration taking place in our own back yard and as more and more, black South Africans enter the mainstream economy, moving into the suburbs, attend model “C” and even private schools, gain access to global media, a melting pot of culturally integrated values and viewpoints is emerging amongst the South African youth. Increasingly Black and White South African Gen-Y’s have more in common with one another because of global influences (despite local differences) and less and less in common with their older siblings and parents and grand parents. There is an increasing trend toward a global “one world culture” and characteristics that transcend traditional divides.   One of the tenets of generational theory is that in an increasingly globally interconnected world, global influences have local impact. This is evident in the Foshizi research into urban black trends in as much as music being a large part of their lives, influencing brand awareness and preferences. It is not just current pop music that has transcended international, racial, cultural, and other divides impacting South African youngsters in so many ways but also film and television, the internet, and technology platforms and other forms of media. Gen Y’s have been shaped by their own times and experiences.

So who are these Millennials a.k.a Generation Y?

• There is no definitive agreement on birth years but for South African purposes I would suggest a “best gauge” as those born between approximately 1983 and 2003.
• Mostly black in South Africa. According to Statistics South Africa mid-year population estimates June 2009, approximately 14,5 million people are between the ages of 15 and 29 yrs (based on my best extrapolation of the data available given the fact that it does not account for exactly the same cohort parameters suggested above). Upon further analysis approximately 94% of South African Gen-Y’s in this age grouping are non-white (83% black African, 8% coloured, 3% India/Asian, and 6% white).
• They are Children of Baby Boomers and younger siblings of Gen –X’ers.
• They represent the largest generation currently in South Africa

While there is no escaping the fact that there are local differences based on situational context both from country to country and with in our own boarders between townships and suburbs, it is increasingly difficult for this generation not to have been impacted by globalisation and international influences.  Some of the common characteristics of Gen-Y’s around the world include that they are:

• Techno-Savvy and Connected 24/7
• Self- Confident, Optimistic, Hopeful
• Independent
• Determined, Goal driven, Success driven (an achieving generation with strong goals and aspirations)
• Lifestyle- centred
• Diverse but Inclusive
• Global, Civic, and community-minded
• Entrepreneurial

They reflect some of the same values of their Boomer parents and Gen X siblings but have put a spin on them that reflect their own unique experiences. They have watched the world go through booms and busts, grown up amidst armed conflict around the world, global terrorism, but also in a very different South Africa.  The older group of South African Gen-Y’s would have been fairly young and probably not able to remember much of the political transition, the younger group of Gen Y don’t understand what it was like under institutionalised apartheid.

They are just beginning to make their mark in South Africa and the word “entitled” is often used to describe this group.

For marketers, South African Gen Y’s represent a multi-faceted challenge that defies easy categorization.  Consumer driven marketing integration is a reality and SA Gen Y’s (many of whom maintain their connections with their town ship roots despite having moved to the suburbs) are more likely to be attracted to corporate cause-related initiatives.  Therefore, cause marketing will be an important part of the marketing mix, establishing a “shared values” connection that transcends product and is community uplifting and socially responsible (particularly given our passed political history) is of paramount importance.

Many of them dream of living large, but these dreams are balanced with reality, they know they need the tools to make this dream a reality. Their Boomer parents and Silent grandparents have sacrificed much and have struggled to give them the confidence to be optimistic about their future in New South Africa.  They are the future of our consumer market, the future leaders, captains of industry, and heroes, but take note they are different and have their own unique experiences that inform the way they see the world around them.  They will accomplish much but they will do so in ways that are increasingly different to the ways of passed generations but not that dissimilar to their counterpart across different cultures and races and countries as globalisation intensifies.

Understanding Gen Y means you can connect better with then, and connecting with them is important because the future of business (your business) is largely dependant on this next wave of consumers and employees. Marketers and business leaders need to be asking themselves: who is going to be my customer or employee in the next 5 – 10 years”. Leading on from this, you need to answer “what action needs to be taken that will help you understand this future customer or employee and what they value?”

Collin Smith is an associate consultant for TommorrowToday and has a strong back ground in sales and marketing management. He has also spent a number of years consulting to organisation across South Africa on transformation. He holds a BBA degree in marketing as well as an MBA (with distinction) in Strategic General Management. Collin can be contacted on 082 463 2890 or collin@tomorrowtoday.co.za

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For some companies, customers are like onions, full of layers and potential but difficult to identify through watering eyes. For other companies – those with a deep and intimate understanding of their customers – they are like parfait, rich, rewarding and fattening (in a good way) to the bottom line. Discover how Bill Clinton, Shrek and Donkey plus the fishmongers at Seattle Pike Place Fish Market can help you increase revenue and become a more customer centric company. By connecting with people’s value systems you can transform your customers from onions into parfait, and according to Donkey – an authority on the subject – everyone loves parfait!

Through our research, we’ve identified a method of developing marketing campaigns and customer experiences that connect with people’s driving value systems. The results have been exceptional. For one client we increased total company revenues by 300%, for another we increased sales of key product line by over 70%; and for a leading bank we doubled response rates for a direct mail campaign targeting a saturated market. In this article, Dean van Leeuwen, co-founder of TomorrowToday UK, explores how generational and values-focused marketing can assist your business in building stronger relationships that boost sales and retention.

FROM SHREK, the movie (Dreamworks Animation, 2001):

SHREK: For your information, there’s a lot more to ogres than people think.

DONKEY: Example?

SHREK: Example? Okay, um, ogres are like onions. (holds out an onion)

DONKEY: (sniffs the onion) They stink?

SHREK: Yes – - No!

DONKEY: They make you cry?

SHREK: No!

DONKEY: You leave them in the sun, they get all brown, start sproutin’ little white hairs.

SHREK: No! Layers! Onions have layers. Ogres have layers! Onions have layers. You get it? We both have layers. (he heaves a sigh and then walks off)

DONKEY: (trailing after Shrek) Oh, you both have layers. Oh. {Sniffs} You know, not everybody likes onions. Cake! Everybody loves cakes! Cakes have layers.

SHREK: I don’t care… what everyone likes. Ogres are not like cakes.

DONKEY: You know what else everybody likes? Parfaits. Have you ever met a person, you say, “Let’s get some parfait,” they say, “Hell no, I don’t like no parfait”? Parfaits are delicious.

SHREK: No! You dense, irritating, miniature beast of burden! Ogres are like onions! End of story. Bye-bye. See ya later.

DONKEY: Parfaits may be the most delicious thing on the whole damn planet.

SHREK: You know, I think I preferred your humming.

DONKEY: Do you have a tissue or something? I’m making a mess. Just the word parfait make me start slobbering.

This is one of my favourite movie scenes and Donkey always makes me laugh. It also gets me thinking: customers are like Shrek – they have layers! It’s this complex and wonderful diversity of human nature that makes segmentation and customer insights such an important yet difficult task.
Wouldn’t it be great if there was a method of unravelling the layers to gain deeper, more intimate customer relationships – a way of understanding your customers’ driving compulsions? We believe there is, and call it values-focused marketing. The solution is simpler than you imagine, it won’t cost tens of thousands of pounds to implement, nor will it require expensive customer relationship management IT upgrades.

THE VALUE IN CONNECTING WITH VALUES

Back in 1986 the owner of Pike Place Fish Market in Seattle, John Yokoyama, decided to become world famous. Not for selling fish, mind you, but for giving people a unique customer experience. He accomplished this without spending a penny on advertising, but by giving each person visiting the market an experience of having been served and appreciated, whether they bought fish or not.

Employees at the Pike Place Fish Market live and breathe a simple four-point philosophy focused on connecting with customers: It’s your attitude (to enjoy or not to enjoy your job); make their (the customer’s) day; be there (be present – give the customer your full attention); and -last but not least – have fun. Using this simple approach they have built a multi-million dollar business. So successful have the fishmongers at Pike Place Fish Market become that they are now regularly asked by FTSE 100 executives to give advice on running businesses.

The fish market has become an institution, and worthy of a visit should you go to Seattle. As the market passes its century mark (the first stalls opened in 1907) it has become a popular destination for both locals and tourists. The Market is at its best in the morning when vendors are setting up, and the place is fresh and full of energy with low flying fish everywhere.

What the owners of The Pike Place Fish market have been geniuses at achieving is taking a very smelly product (let’s be honest here) and focusing not on the product but rather on connecting with people’s core values and building relationships.

People want to be noticed, made to feel special, be appreciated, and people want to have fun. It is the ability to connect at a deep personal-values level, similar to a level on which we connect with friends, that has made this fish market such a huge commercial success.

TREATING PEOPLE MORE LIKE “FRIENDS” THAN CUSTOMERS

We often ask our clients to consider the relationship they have with their customers by answering a simple question: Would your customers regard you as a friend? Most companies answer ‘no’ and here lies, we believe, the root cause behind why so many companies struggle to build lasting customer relationships. Years of customer neglect and indifference have made customers cynical and jaded and yet the new world of work demands that organisations build stronger, closer relationships with their customers. People seek relationships. They want a place to be heard, a place to be appreciated and a place to connect. New social technologies now allow companies to build personal relationships with customers akin to the corner café or local village butcher. Facebook and twitter offer excellent examples of how people have used technology to drive our most primal human need – social interactions. Customers want to connect with companies, they are actively seeking relationships with those companies genuinely interested in forging mutually beneficial relationships. Think about Wikipedia, Amazon, ebay and Google Wave. Connecting on a personal level can place you ahead of the competition in winning the hearts and minds of your customers. Ignoring this new trend means being left behind and becoming irrelevant to customers.

The crux of values-focused marketing is to connect with people on a more personal values level. At the heart of a values-focused company is the promise of a mutually beneficial relationship.

Michael Argyle and Monika Henderson at Oxford University, conducted research on friendships and have identified a number of universal rules, which they published in the Journal of Social and Personal Relationships  The rules included: Friends must provide support, respect privacy, preserve confidences and be tolerant of other friendships. These are all rules that companies could adhere to. It can therefore be argued that companies can form friendships with customers. A lot though would have to change. How many companies tolerate or even encourage their customer “friends” to use competing brands?

A relationship is a two way street involving committed communication in both directions, the sharing of dreams, aspirations and even tolerating mistakes in a non-judgemental and emotionally secure environment. This is not something companies have been good at doing. They haven’t even had a mechanism to attempt to engage in this way. But now the internet and new social media innovations make it possible for companies to enter into meaningful two-way dialogues with their customers.

We believe that companies, who focus of deep meaningful relationships, by connecting with people’s values will be the champions of the future.

VALUES ARE DEEPLY ENTRENCHED

Business is about people, at least it should be, and so there is a possibility of a friendship of sorts – a connection of values between a company and their customers. When we make friends we build relationships with people who share our values, our outlook, our interests – people who demonstrate that they are on a similar wavelength to us and most importantly are interested in us in a mutually beneficial way. Values-focused companies therefore need to be connecting their company values with the values that matter most to the people who work for them and those who buy from them.

Value systems are our roadmap in life, our driving compulsion and our worldview of what we believe is right or wrong, weird or normal, good or bad. Psychologists and sociologists agree that by the age of ten our value system is largely in place. This is a scary concept for parents with young children because it means that you have ten years in which to influence their values. The teen years are about testing the value system, and parents with teenagers know this sends you around the bend. But by the age of twenty our values are largely entrenched, imbedded in our conscious and subconscious minds.

Importantly, values influence our behaviour and attitudes throughout our lives. Being able to identify peoples’ values and connecting with them therefore offers massive benefits to companies. A tool that we have been using over the past ten years to assist companies in identifying people’s value system is Generational Theory.

Generational theory is a well researched and documented model of how people from the same generation display similar value systems – worldviews or outlooks on life.  Our value systems are shaped and formed during our formative years, by world events as well as the prevailing “mood in society” towards important things like money, work, marriage and family. Importantly, because our driving values are embedded at a young age, they do not change much over time. This is one of the reasons why we will never really become like our parents as we age. It is also one of the key benefits behind using generational theory in business – you can predict behaviour and attitudes.

IGNORE THE POP PSYCHOLOGISTS

The theory of generations has proven to be extremely popular in the mainstream media and with pop psychologists who have picked up on labels like Baby Boomers, Generation X and Gen Y as convenient ‘sound bites.’ Of course, common sense tells us that we live in a diverse society – a broad label could never accurately describe an entire generation. Thus, the more these labels are hyped, the more suspicious we become of how generational labels can be practically applied in business. This suspicion is well founded and ultimately has resulted in the generalisation of generations. In a business context it would be wasteful to use generations in a generalised manner.

To make a valuable impact to your business and to be incorporated with a values-focused marketing framework, generational theory needs rigorous application and in-depth understanding and insights.

A generation is defined as “the average interval of time between the birth of parents and the birth of their offspring.” This makes a generation approximately 20–25 years in time span. While in the past this may have served sociologists well, for marketers, using these parameters would be ineffectual. Unlike the definition sociologists use, we define a generation as a group of people who:

• Grew up during the same economic, educational and technological times
• Were shaped by the same social markers and events.
• Now share the same life stage
• Share a common worldview / set of values

Using this definition, companies can identify key events (globally and locally) that were shaping and forming the mood in society during the formative years of the customers they are targeting.

MAKE GENERATIONS LOCAL

The most important aspect in using generations as an instrument to becoming a values-focused company, is to make generations “local.”  This may seem obvious and yet we come across countless examples of companies applying generational frameworks in the UK using the more widely known American framework and dates. Doing this makes the application of generations irrelevant. As with any business and marketing tool, generations can only deliver value when supported by rigorous application and in-depth understanding of your local customer base.

When the media and most generational theorist use Generations they invariably use data and research coming out of the United States – Baby Boomers in the US are defined as people born between 1943 and 1960. Consider Bill Clinton, born in 1946, the first Baby Boomer US president. He is a quintessential Baby Boomer – ambitious, driven, successful and larger than life. Now compare him with Gordon Brown, younger by just four and a half years.  So is Gordon Brown also a Baby Boomer? Not really, our research shows that Gordon Brown displays values more closely aligned to the generation before the Boomers, the “Silent Generation”. If we were to use the American framework of generations this would not make sense. However, using TomorrowToday’s Euro-sensitised approach to generations, the reasons for these differences becomes clear.

Immediately after World War 2, economic prosperity and great optimism became the prevailing social mood shaping personal values in the United States. In Europe and the UK the sense of euphoria following victory in Europe was quickly replaced by the reality of rebuilding a war-ravaged continent. Rationing remained and it wasn’t until 1952 that the benefits from the Marshal Plan, which pumped over $13 billion of economic aid into European countries was felt. Our research shows that in the UK and Europe, only people born between 1953 – 1963 display what is considered typical Baby Boomer values.

The difference between Gordon Brown and Bill Clinton can be further explained when we include the concept of cuspers in the mix. A cusper is someone born during the changeover period between one generation and the next. Social values and attitudes do not change immediately. Sometimes the change can be dramatic, but at other times social values change more slowly. In addition to this, some countries lead the social change and others lag behind. Our research shows that Gordon Brown is a Baby Boomer cusper. In the UK the transition from Silent Generation to Baby Boomers took longer than it did in the States because, due to historical events, the prevailing mood in society took longer to change.

The UK Baby Boomer cusper generation lasted longer than it did in the US and their values were shaped and formed by different events to their US counterparts. As a result of local events, the UK has a different type of Baby Boomer. Using the traditional US generational dates for both the UK and Europe makes absolutely no sense to companies working in Europe – or elsewhere around the world. Over the past ten years TomorrowToday has worked in over forty countries localising generations. To add further to our considerable insights we are conducting research with GFK NOP, the third largest market research company in the world, to make generations more Eurocentric.

CONNECTING THE DOTS – APPLYING VALUES-FOCUSED MARKETING TO YOUR BUSINESS

1.    Map out your “company DNA”: Undertake a values mapping exercise to identify the values your customers experience when interacting with your brand – through your marketing and more importantly the entire customer experience. You need to go further than just listing your company’s stated corporate and brand values. It’s important to focus on the DNA of “how things are done” in your business, from the customers’ perspective. List what the values currently are, and not what you would like them to be. Once your “living values” have been identified you can then overlay them with the values of your target customers to identify natural connections and disconnections. In practice we have found that involving people responsible for sales and service delivery results in a more realistic reflection of the actual values of a company. These values can be tested against customer experiences and perceptions, but you don’t always need to commission new customer research. Re-examining existing research and focusing on the language people are using will reveal new insights.

2.    Which generation is your company?: The next step is to ask yourself this question: “If our company was a person, based on the values we live, what would generation would our company be: A Baby Boomer? A Generation X? A Gen Y? A Silent Generation or even a cusper company? (You can also do this exercise with your competitors). Each company has a personality and set of values that has a greater attraction to one generation or another. For example, although Richard Branson founder of Virgin is a Baby Boomer, Virgin itself is not a Baby Boomer company. Virgin displays a list of values that can be described as being fun, informal, innovative and fresh – all values that appeal more to Generation X. It is therefore not surprising that Generation Xers have a natural affinity with Virgin.

3.    Stretch your values to appeal to other generations: Few companies target just one generation. Although you can choose to do so. Abercombie and Fitch provides a great example of a company that connects strongly with Gen Y values, at the exclusion of older generations. On the other hand Virgin stretches it’s brand and does not only appeal to Generation Xers. By cleverly positioning Richard Branson as a successful, ambitious and driven individual, Virgin has been able to appeal to the values of Baby Boomers. For Generation Xers, Richard Branson’s entrepreneurial and maverick nature are values that appeal to them. There is often a fine line to walk when appealing to different generations. This is because what turns on one generation often turns the other off.

4.    Develop the right values message and deliver through appropriate channels: Motor manufacturers like Mercedes are amongst the best in developing value propositions and marketing campaigns that appeal to multiple and differing values at the same time. The clever use of creative material, media placements and understanding of value connections can ensure that you are using the right values to target the right generation. The key here is to identify which values appeal to which generation, how best to make the values connection and then choose the most appropriate communication channel.

5.    Design marketing material to appeal to customer values: By tweaking the visuals, plus the tone and style of voice used in your marketing communications, you can appeal to the different value systems. The incremental cost of additional communication pieces is worth the investment when you consider that we’ve been able to double response and conversion rates by using the values-focused language and imagery. Demonstrating to your target customers that you “speak their language”, connect with their values and have a similar worldview are key to developing lasting and rewarding relationships.

6.    Tweak product features: Without designing a new product, you can tweak or highlight existing product features to appeal to the values of people from different generations. One of our banking clients had a product feature that allowed customers to use a joint income in the application even if they weren’t married. This feature allowed the bank to tailor the product around the client’s personal situation. The ability to be “flexible” and “customise” products has massive appeal to Generation X. By highlighting this feature and tapping into these Generation X personal value sales doubled.

7.    Tailor your customer experience and train delivery staff: A key advantage of using values-focused marketing is that it is age based. Therefore customers can be easily identified on your database as well as during the service or sales delivery. We’ve trained staff in retail outlets and call centres to use values language that builds stronger affinities and connections with their customers. Creating call scripts and training retail staff how to “speak” and interact with people from different generations using values language goes a long way to improving the customer experience. For one clients who operates a large debt collection call centre we adapt the script to call a Generation Xer by their first name, to ask a Baby Boomer which they would prefer – Sir, Mr/Mrs or first name (always give Baby Boomers the control to make a choice), and to always call a person from the Silent Generation by their surname. Along with other changes and training call centre operators to use value language we increased recollections by nearly 35% resulting in millions of pounds of to this business units bottom line. It is amazing how far tweaking simple customer experiences against generational values can go in forging stronger customer relationships.

FINAL THOUGHTS

Customers have changed, it’s not just the recession, there has been a values shift in societies attitudes towards business, finance and consumerism. Values-focused marketing using generational theory is not a panacea, a silver bullet. Nor does it re-invent the wheel. Rather it offers a philosophy for conducting business around developing deeper connections with the values of the people who matter most to your business – customers, internally and externally.

Our research undertaken in TomorrowToday’s laboratory is revealing that values-focused businesses are the way of the future. If you want your business and brand to be part of a new breed of talented companies and not to end up on the rust pile of corporate dinosaurs then your business needs to be built around connecting with people’s values.

The new world of work demands that companies focus their organisation around social and personal values and not just corporate values. Corporate values are the old model traditionally involving trust, integrity, honesty and innovation. These values are now only the base level. Companies need to be going deeper, connecting with more far-reaching personal values. People seek relationships with companies; they want a place to be heard, a place to be appreciated and a place to connect. New social technologies are allowing us to build relationships with customers previously not possible. Connecting on a personal values level can place you ahead of the competition in winning the hearts and minds of your customers. The bottom line is if you don’t align with society and you get out of step with value changes, then you’re going to destroy shareholder value.

ABOUT THE AUTHOR

Dean is an intellectual adventurer and scholar of the new world of work. He has an insatiable appetite for discovering how businesses can become more successful and increasingly contribute to society. His real gift is an ability to take complex information and present ideas in a way that makes them practical. Dean acts as a translator between the scholarly world and the business world and is a sought after speaker and consultant. He is a co-founder of TomorrowToday’s International business, a company that shows businesses that there is a better way to work in the new world of work.

Dean is available to speak on this and other topics at conferences, team meetings and company away days.

You can contact Dean directly on:  +44 7525 160 964 or dean@tomorrowtoday.uk.com
You can also see Dean presenting on youtube: http://www.youtube.com/user/deanvanleeuwen

Other resources and links:
www.tomorrowtoday.uk.com
www.deanvanleeuwen.com

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Strategy formation has been elevated to the realm of the MBA. Curriculum is developed, courses are taught and only the chosen few get to play in this elite playground. Here the air is thin and we have come to accept that only those accustomed to flying at high altitude are entitled to be the ones to formulate the strategy. That is just the way it is and so our strategy descends from above, from the gods on high, and our gratitude is mixed with awe as we get to implement what has been commanded.

However, the widespread problem is that some 90% of strategy fails to get implemented within our organizations and so we are forced to ask, ‘why is this the case’?

There may be a host of complex explanations as to why this is the case but here are three simple questions that need to be asked and engaged if strategy is to be successfully implemented.
Firstly, there is the ‘head’ question: Do you know what our strategy is? It is often inconceivable to those soaring in the high places, that the strategy with which they have become so familiar through hours of endless debate and discussion, is not understood by those below. But often the simple reality is, it isn’t! For strategy to be effectively implemented, there has to be a collective commitment to the why, what and how of the strategy. All too often the ‘need to know’ leadership mindset that guards the information emanating from on high gets in the way of the necessary translation of knowing the strategy. Many leaders who are ensnared in this mindset have failed to understand the grasp the new reality of what it means to lead in a techno-info age, an age in which information is valuable is so far as it is shared not hoarded; and age in which there is convergence when it comes to accessing and retrieving information.

Secondly, there is the ‘heart’ question: Can you feel our strategy? In other words any effective strategy has to engage the emotions, the heart, of those tasked with its implementation. Without heart engagement you have mere compliance. Passion is a matter of the heart, and feeling positive about the strategy, is a vital component in living the strategy. When this is present the impact is felt not only by those inside our business, but it extends to all those within the full reach of our business. And herein lies the secret of authentic customer service. Passion can be drummed up in sporadic doses by why of slickly oiled motivational exercises and interventions, but this type of passion is short-lived. It usually takes the form of the ‘motivational speaker’ at the annual conference and seldom amounts to anything more than good entertainment at the time. Authentic passion emanates from achieving the collective buy-in and sense of ownership towards the attainment of a desired goal. Within organizations our operational expertise and good-sense, so important to the formation of strategy, is matched by a poor understanding of the ‘people-issues’ that are vital to the successful execution of any strategy.

Thirdly, there is the ‘hands’ question: What are you doing to implement our strategy? When there is an understanding (head) of what the strategy is; a commitment (heart) to the strategy, only then can there be an intelligent, measurable, coordinated and practical ‘doing’ of the strategy. Strategy depends on everyone doing his or her part in achieving the successful execution of the strategy.

A positive response to these three simple questions creates the context for another vital characteristic of organizations that desire to be successfully in this brave new world of work, namely, the ability to respond and adapt to the unexpected. The ability to adapt quickly to the unexpected requires a level of ownership to permeate throughout the organization. Such ownership provides the momentum for individual or group initiative to be exercised.

You want your staff to practice such initiative, the kind of initiative that is beyond ‘being trained’? Well then, a good starting point would be to spend some time asking your people, (and by ‘your people’ I do not mean only those familiar with your office) these three questions. And who knows, you may just be surprised by what you learn about your organization!

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It will probably be useful to you to know some of my credentials right at the start. My company, TomorrowToday is one of the world’s leading generational consultancies. An important part of our suite of services to clients is an understanding of the generation gap. Our approach is based on multiple sources of research and practical application, including access to the originators of generational theory, Neil Howe and William Strauss, who work out of the USA. We have also done our own extensive research, and have access to country-specific data for South Africa, New Zealand, Mauritius, England, Russia, Hungary, Estonia, Iran, Chile, Australia, China, Japan, the USA and an increasing number of other countries. Our application to different countries is constantly expanding as our team of experts is invited to present and consult around the world – in over 20 countries every year. We have presented in over 50 different countries, covering all the continents.

We lecture at some of the world’s top business schools, including the London Business School, the Gordon Institute of Business Science, WITS Business School, The Asia-Pacific Leadership Programme and Duke CE, and have interacted with students from almost every country in the world. Almost without exception they have found our approach helpful, and expressed how well it fitted their experience in their own country and culture.

There is general global acceptance of the tenets of generational theory (for a detailed introduction, see a white paper I wrote on the issue at: http://tr.im/gensintro). Unfortunately, there are many proponents of generational theory, with hundreds of books and blogs being churned out. And many of these self proclaimed “experts” have jumped on the Web 2.0 bandwagon and have blamed everything on “generation y” (see the Twitter #geny hashtag if you want to know what I mean). A lot of this is nothing much more than pop psychology and gives those of us who have worked hard to develop generational theory a real headache.

But my concern in this paper is not so much the bad application of generational theory. Rather, I want to address some specific questions I have been asked by international delegates at our workshops. One of the most frequently asked questions about generational theory is whether it applies to non-Western cultures, especially to people living in developing countries. In Africa, for example, there are some people who question the theory’s applicability to black cultures. Many question its applicability in China, the Middle East and Eastern Europe.

There are a number of responses to these concerns.

1. The theory of generations is a sociological and anthropological model. As such, it deals in generalisations, not specifics. It is in the same style as, “Men are from Mars and Women are from Venus”, or Maslow’s “Hierarchy of Needs” – overgeneralisations that are nevertheless filled with truth, and provide a helpful starting point for discussions and understanding.

As with all such models, it has a bell curve distribution of applicability. There are people who do not fit this (or any other) such model of general human behaviour. So, we should not expect the theory to be perfectly predictive in every situation. It provides a high level overlay that can assist us to predict general behaviour patterns, but not individual reactions in specific situations.

A helpful analogy may be that of a forest. Each tree in a forest is unique, with its own colour, height, growth rate and health. To know how a specific tree will grow, you need to analyse that specific tree. However, you can take a group of trees together in a certain part of the forest and make general comments about them. They will receive the same rainfall, grow in the same richness of soil, and receive similar amounts of sunshine. This is similar to psychological models. Then, you can drive 100 miles away from the forest to a mountain vantage point and look back over the sea of green. You will notice certain areas of darker and lighter green, of higher and smaller trees and of dense and sparsely grouped regions in the forest. You can make maps of the forest, and identify areas of interest, and then go back down into the forest. Guided by your high level analysis, your detailed analysis of specific areas will be much more fruitful. This is what generational theory can help you to do – to know where to start looking for defining characteristics within a small group of people, such as a team, office, home or church.

2. We are happy to concede that the model is less applicable in rural environments and in very poor areas of the world. Where people have limited access to media and global influence and/or where people are living with daily struggles for mere survival, most sociological models will fall short. People at the lower ends of Maslow’s hierarchy of needs will not be focusing on self-actualisation issues where generational theory will be most applicable. Therefore, you should probably expect generational theory to be mostly applicable in “middle class”› communities. By this, I do not mean “American suburbia” – almost every country in the world has its own form of middle class. It is in these middle classes, however they are constituted, that generational theory will find its best expression.

There are a few researchers doing work on “at risk” communities, and their work is likely to be more helpful in rural areas and areas of vast unemployment. However, most research into “at risk” people show that they fit very few sociological models except those that are specifically focused on “at risk” issues.

Having said that, however, the pervasive influence of digital and communication technologies is bringing an homogenisation of cultures to the world. Contrary to popular opinion, it is not just so-called “Western” culture that is being exported to the developing world (although this is a dominant and continuing mega-trend). The developing world has an increasing impact on the developed nations. India refused foreign aid in the 2004 tsunami disaster, and was itself a donor in the region. Indian technology gurus are set to be the rising stars in the next decade or so. Hyundai’s Getz was recently voted the most reliable car in the UK, and Toyota is leading the way in bringing hybrid cars to the USA. LG and other Asian brands are pushing for global marketspace – and getting it – with a combination of innovative technology, design and marketing savvy.

The poor nations of the world are now connected. While their banking and economic systems may need more time to fully integrate, global communications have opened up considerably in the past 10 years. In fact, developing nations have been able to leapfrog developed nations, by putting in the latest technology, and not inheriting any legacy systems (such as the USA’s creaking electricity infrastructure and its out of date analog, “tri band” cellphone networks). Many African countries have many more mobile phone users than fixed line users, and are far more advanced in mobile banking solutions. This is a trend that will continue. It is the younger generations that benefit most, and are affected and influenced most by this rapid leap from pre-technology to post-digital world.

As this impacts their connection with the world, it will also highlight a generation gap between themselves and their more traditional parents. In many of the world’s poorest areas, I expect to see evidence of a generation gap emerging. It may not be on the same time scale as other parts of the world, but it is happenign nevertheless, and what we know about managing different generations will be useful in these regions.

3. In 2001, TomorrowToday did some detailed research with Ogilvy & Mather, Johannesburg (an advertising agency, linked in with the world’s largest WPP group). The research was sponsored by Tholoana Qhobela, a senior executive, and conducted by Kathryn Robinson, O&M’s top researcher. Using data from South African sociomonitor studies stretching back over 20 years (these studies test certain value statement sets over time to plot changes in values), we identified certain key indicator questions that could be used to validate the generational theory. Kathryn analysed the data according to age (groupings of ten years) and race (the four general categories recognised by most South African research). At the same time, TomorrowToday made predictions about what the answers to certain questions were likely to be, according to the age (generation) of respondents. The predictions were tested against the actual data, and a remarkably high correlation was discovered.

In fact, the data indicated that, especially amongst the younger generations, two young people of different racial backgrounds were more likely to be like each other on value issues than either of them was likely to be like their own parents.

This research was developed into a report that won a prize at the SA Market Research Association annual convention, and a Merit Award for research from the global WPP group. One of the reports developed from the research was related to advertising literacy, and is available on request.

Similar studies have been conducted around the world. My own Masters research looked at generational theory in South Africa, using the original research methodology. My thesis applied the results to local churches, but the general research is applicable across many different aspects of life and society. Howe and Strauss host a website that encourages global research based on their theory and generates discussion from different countries and cultures. Follow these discussions at http://www.fourthturning.com

You may also be interested in a study done by Kelly, the staffing solutions company based in South Africa. In November 2003, they sent out a press release entitled, “Manage the age group, not the race group ,” in which they argue that the younger your employees are the more important age/generations is. In fact, it becomes more important than race as a predictor of behaviour.

At present, TomorrowToday is engaged with GFK, one of the world’s largest market research companies, to study generational values in the United Kingdom. The results of this research will be available in mid 2010. While not looking at race as an issue, it has tried to take class issues into account, and should provide us with a model of understanding how generational theory links in with other stratification models. Our early research results show strong correlations and verify the generational model as a useful and practical tool for market segmentation.

4. Most countries tend to view their history as being unique. I grew up in South Africa, for example, where the history of apartheid played out in so many horrible ways. South Africans think of their story as unique in the world, and dislocated from global trends. This is not so. In the early 1970s, students protesting against the government caused mayhem on school campuses. The government sent troops onto these campuses, and some students were shot dead. The date was 4 May, 1970. The place was Kent State University, United States of America. A few years later, South Africa’s Baby Boomers did something similar, with similar results, starting in Soweto on June 16, 1976.

From the beginning of the 1970s to the end of the 1980s, the world was in chaos. Everywhere. And then a major tipping point. In 1988 Gorbachev came to power in Russia and announced perestroika and in 1989, he banned the communist party. In South Africa, de Klerk came to power and announced the ending of apartheid, the release of Mandela (he was eventually released on 11 Feb 1990) and unbanned the communist party. In Romania, the dictator Nicolae Ceaucescu was overthrown and Eastern Europe opened up. In Germany, students punched the air with the global clenched fist “power salute” as the danced on the Berlin Wall and smashed it to pieces. In China, students did the same on Tiananmen Square, as tanks rolled over them. And the very next day, Iran saw riots as the Ayatollah was buried. And America invaded Panama in one of their early “pre-emptive strikes”. There was a “Velvet Revolution” in Prague, and a singing one in Estonia. All this in 1989 – a tipping point in recent global history.

A few moments of thought, and a cursory knowledge of your own country’s history may assist you to align the generic generational theories with your own country’s generational history. Certainly in recent decades, global trends have exerted an influence on all countries, including the world’s developing countries. The younger a person is, the more likely that generational characteristics will fit, regardless of their culture or country.

Having said that, however, older generations also display many similar characteristics across different countries, consistent with the predictions of generational theory. In black cultures in Africa, for instance, the older generations are very traditional and conservative. They expect to be respected simply because of their age and social position, and prefer hierarchical structures of control. These, and other characteristics, are consistent with the Silent generation around the world.

5. It is also important to understand that different countries have experienced similar influences, but at slightly different times. In particular, the United States has led most global trends in recent decades, and therefore the effects of those trends would be seen first in the generations in the USA.

So, for example, in the USA, the Boomers are considered to be those people born from 1943-1962. The 1943 year is often cited as it represents the cut off year for the Vietnam Draft. Millennials are considered to be those born 1983-2000. The 1983 year is selected as anyone born in 1983 or later graduates High School in the new millennium. Xers are simply the Generation between the Boomers and Millennials, and their start year of 1963 simply identified as being the mid point between 1943 and 1983.

In South Africa, its simpler. South Africans can simply look at the decades, with Boomers being those born 1950-1970, Xers from 1970-1990, and Millennials from 1990 to present. The Millennials are linked to the ending of apartheid and Mandela’s release. The oldest Xers would possibly remember June 16, 1976, and the Boomers are defined from the start date of the National Party’s assent to power and implementing of separate development policies in 1949. There is no doubt that Mandela and his cohort have GI generation characteristics. Neither is there any doubt that Cyril Ramaphosa and his cohort are Boomers. It was their generation that initiated the 1976 student riots, and their generation that is now really cashing in and catching up with the world’s Boomers in unprecedented wealth creation. The current teenagers and university students display very clear Xer characteristics. However, it might be argued that the white Afrikaans Xers have only just recently entered the generational arena, and are a few years “behind”› the cycle. It could similarly be argued that many young black people in the 1960s were disaffected and cynical, and displayed Generation X characteristics earlier than their white counterparts.

In Iran, however, it seems that the Boomer period only started in 1953 after the failed CIA coup, and the settlement of a government and ruling power in Iran. The 1979 Iranian revolution saw an end to this era, and the beginning of a brief “Gen X” period, which ended in the death of the Ayatollah in 1989.

Typically, we would assert that the Baby Boom generation started in most countries at around the time of the ending of the Second World War. It would be tough to argue that this was not a culture and societal defining event experienced around the world in similar ways. We would also assert strongly that 1989 should be seen as an era-defining turning point. We see Generation Y or the Millennial generation as those born after 1989. Somewhere between 1945 and 1989 there needs to be a dividing line between Boomers and Generation X. In some countries there are clear events that give us a date to hook this change to. In Portugal it’s the Carnation Revolution of 25 April 1974. In Australia, I’d argue it’s Gough Whitlam’s government of 1972-1975. In America, it is probably 1968, the year of assassinations, Vietnam souring and preparing for the moon landing. France might also choose 1968, with Paris riots and joining the nuclear club.

But somewhere in the late 1960s or early 1970s almost every country will find an era defining moment. That might make the Boomer cohort small, with more Gen Xers, or the other way around. But the theory still works. The theory is not watertight, nor predictive at every level. It provides a general framework that must still be wisely applied in different countries and cultures.

6. Finally, we have presented the generational theory to people from every layer of society in over 50 countries. In some countries, like South Africa, Uganda, England and Iran, we have been able to present in rural areas to lower class audiences (I mean that in the technical sense, not as a value judgement). We have presented it on every continent, and in these venues, have been exposed to people from almost every country in the world. On anecdotal evidence from these participants, we have total confidence that the generational theory, and our particular approach to it, is useful and applicable across multiple cultures and countries, in developed and developing worlds.

Read more about generational theory in our book, “mind the gap! “, by Graeme Codrington and Sue Grant-Marshall, published by Penguin in July 2004.

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By Darren Davies, Founder of Integrity Blue Consulting

The global economic downturn has been more than just a recession. It has signaled an era of unprecedented change, and a time of turbulence for organizations, organizational leadership and organizational communication. Robinson and Harvey (2008) observed that the, “acceleration of globalization has created a chaotic state of change as businesses struggle to adapt new paradigms of leadership, in which established tried and tested approaches may no longer be effective.” Critical to navigating through the largely uncharted territory of this new world at work, is the role of communication, and the importance of understanding communication concepts and developments between leaders and followers within this new world.

A basic communication model would define communication as, “a process by which information and understanding are transferred between a sender and a receiver” (Richard Daft, The Leadership Experience, 2008, p. 260). Fundamental to the communication process is the understanding that a message is encoded and sent via a channel (medium or method), to a receiver, who in turn decodes the message, and subsequently encodes a return message via feedback. And so the communication process begins, and continues. Burnland’s (Towards a meaning centered philosophy on communication, 1962, p. 197 – 211) transactional model of communication assumes that messages are being sent and received simultaneously by senders and receivers, and hence the ongoing continuous nature of the process of communication. This basic transactional communication model remains true within our new world; however the information, methods and manners within which these messages are being sent and received, has radically changed. Furthermore, that rate at which information is being communicated, as well as the volume of information being communicated is challenging our traditional understanding of organizational communication, and the role leadership fulfills within the communication process.

Communication = personality + complexity x process – permanency
In considering the components of the leader follower relationship within this new world at work, the following guidelines are recommended as we seek to navigate through these turbulent waters.

Firstly, communication involves the entire person – ego, self image, and personality. “Communication is more than just a set of behaviours; it is the primary, defining characteristics of a human being. Our view of self, others, the world and work is shaped, defined, and maintained, through communication. It follows to observe that as technology increasingly shapes and defines the world we live in, it must also inform our communication styles and methods and become an intricate component of our new world of work. In this regard, where traditionally face to face dialogue would be deemed as the richest channel for communication, our new world, with its new generations is challenging us to consider the information highway with its multiple applications and utilities as a viable alternative. This remains largely unexplored by many organizations as the world of Twitter, Facebook and YouTube remain unchartered for many baby boomers.

Secondly, communication is complex. The communication process will always be open to what Hackman and Johnson (Leadership, A communication perspective, 2009) have identified as, “the negotiation of shared interpretations and understandings”. Freedom, responsibility and dialogue will inevitably pave the way for more effective communication methods in the midst of the current context of communication complexity. Communication continues to be a multifaceted and multidimensional journey requiring openness, honesty, reflection and discernment.

Thirdly, communication is a process. As leaders and followers seek to communicate in this ‘new world at work’, we would do well to remember that our context is a global one, which is submerged in a chaotic state of change. Our context requires a dynamic communication process of engagement. As organizations embrace these changes, our communication methods, and strategies must at least attempt to evolve with our new emerging world. In this regards, traditional communication models and practices are up for grab, and dialogue, discussion, information sharing, open communication, listening, question asking, discernment, the leader as communication champion and the Web 2.0 world of the internet, twitter, blogging, YouTube, face book and email  are destined to become our new communication foundation stones and buzz words, if they are not already.

Lastly, it is impossible to ‘un-communicate.’ Senders and receivers of the messages that inform our organizational existence would do well to remember that our communication messages leave a permanent mark. We can always apologize for our inappropriate communication, we can always change inappropriate communication styles and methods, but we cannot erase the message or the consequences in the moment. Add to this reality the facts that, as technology advances, organizations are leaving a footprint in cyberspace that can be near impossible to erase. In this sense, we can never un-communicate.

Leadership Communication = Human Communication
What then is the role of leadership with regards to communicating within a new world at work? In his book “Leadership for the twenty-first century”, Joseph Rost found that there were 221 published definitions of leadership between 1900 – 1990. Within this maze of leadership definitions how does it become possible to define the role of leadership within the communication process? Our starting point must be to create a common definition for leadership. Although the following definition is by no means exhaustive, it attempts to provide a framework against which we can define the communication process for leaders of organizations. In his research Rost identified four definitive leadership themes, namely:

•    Leadership is about who you are. This perspective defines leadership according to commonly held leadership attributes or leadership character traits.
•   Leadership is about how you act. This perspective defines leadership according to the manner in which leaders influence people, behaviour, culture and change.

•    Leadership is about what you do. This perspective defines leadership according to what the organization accomplishes under the leader’s influence.

•    Leadership is about how you work with others. This perspective defines leadership according to the leader’s ability to collaborate.

Based upon the above leadership definition framework, the following communication based definition of leadership is suggested:”Leadership is human communication, which modifies the attitudes and behaviours of others in order to meet shared group goals and needs”. Within the realms of communication and a new world of work, a leader is therefore grounded in the belief and conviction that communication is essential in creating buy in and commitment from followers towards accomplishing the vision and goals of the organization [that is, it is purpose directed]. In this sense a leader becomes a communication guardian. A communication guardian creates an open communication climate, by actively listening, discerning messages, facilitating strategic conversations, adapting to new communication trends and movements that ultimately move the organization towards its stated goals and purpose. Within a new world at work, open communication means sharing “all types of information throughout the organization, especially across functional and hierarchical boundaries” (Daft, 2008, p. 264) by means of a multi –dimensional communication strategy, which includes sharing through rich communication channels, using narrative, as well as allowing technological advancements to inform our communication strategy:

•    Rich communication strategies utilises communication channels that allow for the maximum amounts of message transfer and feedback from senders and receivers during the communication process. Traditionally the richest communication channel has been face to face dialogue. In the new world of work that we find ourselves emerging into, this too is up for negotiation.

•    Narrative makes use of storytelling and metaphors within the communication process. Narrative communication enables leaders to connect on both an intellectual, as well as on an emotional level, in ways in which other forms of communication cannot.

•    Technological Advancement refers to the use of new communication methods available to us via the internet, the information highway and technology. In this regard leaders must look at creative ways in which email, twitter, social utilities and blogs can become communication rich channels.

Communication Evaluation = openness + questioning + listening + discernment + dialogue + discussion
As leaders begin the journey of engaging with communication in a new world at work, openness, questioning, listening and discernment, and dialogue are critical land marks on the journey. An open communication climate is critical for leadership communication, and is characterised by both trust and a willingness to communicate relevant important information across boundaries, hierarchies, traditional communication flow channels and methods.

Peter Drucker once said that, the leader of the past was a person who knew how to tell. The leader of the future will be a person who knows how to ask. Great leaders are prepared to engage with their followers by active questioning, which promotes both follower involvement and organizational learning.

Listening is the ability of leaders to receive encoded messages from their followers, and to interpret the messages intended meaning in a dignified and constructive manner. Discernment is defined as the listening in which a leader detects unarticulated messages hidden below the surface of the spoken interaction.

Dialogue is the process of both transferring and listening to messages in the pursuit or exploration of common ground in the hope of creating a shared worldview and purpose.

In evaluation leadership communication effectiveness within a new world at work, the above communication components provide a framework against which leaders and followers can evaluate and inform current communication styles, strategies and methods.

Leadership Communication + a Global Village
We are living in a global village. In this global village, the world has become a smaller place. The free flow of information across cyberspace has radically redefined the village we now live in. Cultures, languages, values and generations are continually colliding to present us with “terra incognita” – unknown territory.

The very organizations that we inhabit have become our new world, which need to be explored, chartered, pioneered and discovered. Within this new world, traditional leadership communication theories are up for grabs. Organizational leaders have to adapt their communication styles to a world that is now multi-lingual, multi-cultural, multi-generational and multi-dimensional. Within this brave new world, the only constant is change, and rapid change at that. Our new world communication styles must become easily assessable to different cultures, languages and generation, whilst still maintaining the integrity of the messages we speak.

Our traditional communication platforms are being consumed by a wave of technology that both hinders and helps the communication process. This brave new world requires a generation of leaders that are prepared to learn and to listen, whilst breaking down institutional communication models that no longer serve the interest of the organizations that they lead. It is a journey that will require courage and bravery as we embark on a post recession journey towards discovering new insights into how our new world at work will communicate, wants to communicate and longs to communicate. The challenge before us, in the words of Captain J.T. Kirk of the Star ship Enterprise is relatively clear, “to boldly go where no man has gone before.”

© 2010, Darren Davies, Intergity Blue Consulting
Darren Davies is a friend and strategic thinking ally of TomorowToday. He is the founder of Integrity Blue Consulting, and currently describes his role as Director of Playground Activities. He is an organizational development specialist, playing in the fields of leadership, strategy, development and implementation

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The title of this post comes from a reply to a tweet I once posted:

Does anyone have a better word for ‘talent’? Does business really think it’s a big issue? Is there some other ‘thing’ we should be noticing?

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TomorrowToday’s blog has been up and running since September 2004. We have over 1750 posts on our blog, filed under 35 different categories. We’ve not done this before, but here are TomorrowToday’s most read blog posts as of 31 December 2009:

10.) Time Magazine – the future of work
9.) How’s this for the latest craze
8.) Tell me and I will forget show me and I may remember involve me and I will understand
7.) Navigating This Differently Connected World – exploring the impact of social software on business today
6.) ‘Weeping’ by Josh Groban, errr actually Bright Blue
5.) The Talent Reboot
4.) Good to Great to Gone
3.) Back to the Future – Rethinking Strategy
2.) Detailed Introduction to Generational Theory
1.) ‘After Shock’ – the five trends disrupting business in the next 5 years

So there they are. If there was a writing award in TomorrowToday it would certainly go to Graeme Codrington (based in the UK for now, and traveller of the world) for the most written and the most read. Correlation between the two? Me thinks so.

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THE WORD “TALENT” HAS GIVEN BUSINESS A BAD NAME!

The 15th September 2008 is a day that shall remain etched in the annals of corporate history. It’s the day that Lehman Brothers went bankrupt lurching the world economy into the biggest financial crisis since the 1930’s. On that day and ensuing months it became clear a number of very talented individuals had brought the world to the brink of financial disaster. It’s a day that talent gave business a bad name. But there is more to the new talent challenge than just the financial crisis. Over the past decade consultants have been convincing companies that there is a “war for talent”. In this war, you have been told that talent needs to be given what it wants and that companies need to go to extraordinary lengths to provide talent with all the flexibility and freedom it desires. Nowhere has the war for talent been more ferociously fought than in the corridors of the financial monoliths. Banks, investment houses and insurance companies have hired and rewarded the very best. In return the brightest of the brightest have devised very clever and innovative financial instruments that brought the world to the brink of collapse. The reasons for the financial crisis are complex, needless to say. But what if the crisis happened not in spite of talent but because of it? What if companies have been using the wrong strategies and tactics to fight the war for talent?

This article argues that talent is crucial for business success, but that the current focus and direction being taken is detrimental to businesses and society. A paradigm shifts is required. We argue that the new talent focus needs to be built on creating talented companies, not creating talented individuals.

THE TALENT BLITZKRIEG IS OVER

The current approach to talent management began in 1997 when America’s largest and most prestigious management consultancy Mckinsey declared that there was a “War for Talent”. This has become a war cry that spurred on an entire industry of consultants and HR professionals, all focused on convincing businesses that they need to be bending over backwards for the stars of their industry.

What the War for Talent amounts to is an argument for indulging employees. As Mckinsey consultants Michaels, Handfield-Jones, and Axelrod wrote in their book titled The War for Talent: “You need to do everything you can to keep them engaged and satisfied—even delighted. Find out what they would most like to be doing, and shape their career and responsibilities in that direction. Solve any issues that might be pushing them out the door, such as a boss that frustrates them or travel demands that burden them.”

Leading companies keen to capitalise on human talent took note. They sought out best practice, created new positions like “Head of Talent” and gave HR a greater role at Board level to signal the intent and importance that executives are placing on fighting this war.  One of the companies that had taken to the trenches early on pioneering talent management was General Electric. They singled out and segregated their stars, rewarding them disproportionately, and pushing them into ever more senior positions. A senior executive is quoted as saying. “Bet on the natural athletes, the ones with the strongest intrinsic skills and don’t be afraid to promote stars without specifically relevant experience, seemingly over their heads.” Others were quick to follow GE’s example and began to implement their own policies of the 20/70/10 principle where the top 20% of employees are excessively rewarded and the bottom 10% “managed out” of the business while the remaining 70% got token bonuses.

A burgeoning sector focusing on the woes of talent erupted. Consultants and HR professionals jumped onto the bandwagon, shouting from the rooftops that talent needs special treatment. Much of what was being said by consultants made sense. People do represent a sustainable competitive advantage, but recently we’ve been noticing alarming results. These results suggest that the war for talent is being lost and instead of generating value talent management is eroding it. Bernie Madoff, clearly a very talented crook, defrauded investors of with almost $65 billion. Lehman Brothers, RBS, HBoS, Bank of America, General Motors, Enron and countless other companies overflowing with talent have eroded over Thirteen trillion dollars in wealth and millions of jobs have been destroyed. There are now numerous signs that talent management has got it wrong and forgotten the principals behind what makes talent successful in the first place – the company, its systems, its values, it’s culture and the people who support talent in their roles.

IT HASN’T BEEN ALL SMOKE AND MIRRORS

A lot of what Mckinsey and a number of other consultants, including ourselves, have been saying made a lot of sense at the time. The talent environment had indeed shifted and by the late 1990’s changing demographics, the increasing role of knowledge workers, globalization (and with it increased competition) and the personal values of a younger generation of workers all combined to create a potential talent time bomb, one which if executives did not confront could very well blow up in their face.

There are some compelling arguments for focusing on talented individuals and it essentially boils down to this simple but hard-hitting statement – You sell the same products and services, to the same customers, at similar prices. Deliver through the same channels, advertise in the same media, using the same techniques and you swap staff every few years. So where is your competitive advantage? Competitive advantage is now less and less about WHAT you sell, and more and more about WHO you are! And who you are is defined by the people who work for you, specifically your talent.

From this perspective the logic behind aggressively pursuing talent, offering bonuses for individual performance made a lot of sense.

SHOOTING STARS, THAT BURNT OUT!

Pursuing and rewarding talent aggressively is something that Enron did particularly well. Which is not surprising when you consider that Jeffrey Skilling, former CEO of Enron, was one of youngest partners in the history of Mckinsey.  The management of Enron, adhered exactly to what McKinsey said that companies should do to succeed in the modern world of work. Enron hired the very best and the very brightest, and rewarded the top performers handsomely. Talent was promoted without regard for seniority or experience. Enron’s former chairman Kenneth Lay, was quoted saying “The only thing that differentiates Enron from our competitors is our people, our talent” Talent at Enron were the smartest available and Enron’s policy was to pay talent more than they themselves thought they were worth.

One story was that of Louise Kitchen. Louise was a twenty-nine year old, came up with the idea that Enron needed an online gas trading business. She began working in her spare time on the project, and soon had two hundred and fifty people throughout Enron helping her. After six months, Skilling was finally informed and he would later say “I was never asked for any capital or for any people. They had already purchased the servers. They had already started ripping apart the building. They had started legal reviews in twenty-two countries by the time I heard about it.” It was, Skilling believed “exactly the kind of behavior that will continue to drive this company forward.” This should’ve been talent case study material, an example of talent being empowered and released to fulfill it’s potential but sadly it isn’t. By the time Enron was bankrupt, EnronOnline was trading over $6bn worth of commodities every day. Shortly before hundreds of Enron employees were laid off, about 500 of the energy giant’s executives were awarded hefty bonuses. One former executive told CNN the bonuses were awarded to Enron’s inner circle and to people who worked at setting up the questionable financial partnerships that led to the company’s demise. Louise Kitchen, was one of these 500 executives taking home a reported $2m.

Kitchen demonstrated the behaviour many companies would hope to see from their talent. But there are key learning’s here, the main one is that talent often believes it’s own myth and runs away with itself. There is a strong argument for checks and balances when it comes to empowering talent. As Malcom Gladwell points out in an article he wrote for The New Yorker: “Kitchen’s qualification for running EnronOnline…was not that she was good at it. It was that she wanted to do it, and Enron was a place where stars did whatever they wanted.”

This raises the question then, in highflyer talent environment is how do you evaluate performance in a system where no one is in a job long enough to determine actual results? The financial crisis also highlighted this weakness in the current talent management model. Talent in financial services has been paid huge bonuses for short term performance and not long term results.

TALENT NEEDS TO GET OFF ITS PEDESTAL

Sir Fred Goodwin the former Chairman of RBS, is the son of an electrician and was the first of his family to go to university studying law at Glasgow University. He joined accountants Touche Ross, and qualified as a chartered accountant in 1983 and within 5 years became a partner. At the age of 32 he headed the worldwide liquidation of Bank of Credit and Commerce International after its collapse in July 1991 and was in charge of 1,000 people with teams from London to Abu Dhabi and the Cayman Islands that eventually returned over half the money from one of the most complicated, high-profile financial frauds ever. His move into banking came after National Australia Bank invited him to become deputy chief executive of Clydesdale in 1995 rising to chief executive in 1996. He joined Royal Bank of Scotland in 1998 as deputy CEO. RBS made waves in 2000 with its £23.6bn takeover of NatWest, a bank three times its size. The Sunday Times wrote that “The NatWest deal was the making of Goodwin,” with Goodwin promoted to CEO in January 2001. From 2000 until 2008 he presided over RBS’s rapid rise to global prominence as the world’s largest company (by assets – £1.9 trillion), and fifth-largest bank by stock market value and its even more rapid fall as RBS was forced into effective nationalisation in 2008. On October 11, 2008, Goodwin officially announced his resignation as Chief Executive and an early retirement, effective from January 31, 2009 – a month before RBS announced that its 2008 loss totaled £24.1bn, the largest annual loss in UK corporate history. Following the February 2009 disclosure of his approximately £700,000 per year pension award from RBS he was the subject of widespread public, political and media criticism, including acquisitions of lying by Alistair Darling and Gordon Brown.

But why this fall from grace for such an obviously talented banker? Carol Dweck, a psychologist at Stanford and author of the book Mindset: The new psychology of success, may have the answer. She gave a class of students aged 10-12 a test filled with challenging problems. One group was then praised for its effort and the other group was praised for its intelligence and being the best. Those praised for their intelligence then showed signs of being reluctant to tackle difficult tasks, and their performance on subsequent tests dropped. The children then had to write to students not on the study, telling them about their experience. The results were astonishing: forty per cent of the students who had been convinced that they were the best and most talented adjusted their grade upward and lied about how they had scored on the test.

Like the students in Carol Dweck study, Sir Fred isn’t a naturally deceptive person, he certainly isn’t lacking in intelligent or self-confident. Sir Fred simply did what people do when they are immersed in an environment that celebrates them solely for their innate “talent.” They begin to define themselves by that description, and when times get tough and that self-image is threatened they have difficulty with the consequences. They will not stand up to investors and the public and admit that they were wrong. They’d sooner lie.

SHIFT TO TALENTED COMPANIES

Perhaps the problem is less in the concept of talent and more around how we perceive what talent is and how to treat our star players. Consider a football team in the English Premiership. Clearly all players are talented and at the top of their game. Yet football has engendered a culture of revering the individual star players more than the team. There are a few exceptions to this but on the whole the media and teams promote their star individual players ahead of the team and even the club. Individual players are paid enormous salaries for their talent, brought in ahead of home-grown talent and paraded for the media and fan base. The result is a war, one where the stars pit teams against each other during the transfer season waiting for the highest bidder to offer them the next best deal. Loyalty is offered not to the team but to the club with the biggest pay cheque. It’s a culture that does not foster loyalty or one where the teams or clubs best interest is at heart and this is the road that many corporations are also heading down.

Consider English rugby. Here the culture is very different and individual players come second to the team. English rugby teams have their star players of course but they focus more on creating talented teams. Johnny Wilkinson is a huge talent but the team is not built solely around this star player. In rugby it doesn’t matter if you have the best kicker in the world if the rest of the team is missing tackles and letting try scorers through. In rugby it’s the talented teams that wins, not talented individuals.

The difference in the talent management styles between rugby and football is that football focuses on talented individual players, where as rugby focuses on creating a talented team. It may be one of the reasons why football players are paid so much, and it may also be one of the other reasons why English rugby team has played in the last two world cup finals and won one of them. The question for your talent management program is do you want talented individuals or a talented company?

CREATING A GALAXY RATHER THAN JUST A STAR

Many companies have adopt the football approach to talent management. Like Enron, they seek out the individuals and reward them handsomely often at the expense of the team, resulting in resentment and reduced motivation and moral of the other “players”. It has also been easier for businesses to focus on measuring and rewarding individual talent rather than talented teams and in this way talent management has followed the path of least resistance. Rewarding teams is far more complex (even though there are excellent examples such as Ricardo Semler innovative management practices at Semco). The reality is that a company is only as good as the whole sum of its individual parts. Companies need to focus not on talented individuals but on becoming a talented company. A talented company differs in that it takes the collective energy of its entire workforce to nurture a supportive culture that is focused on innovation, performance and delivery.  The focus of senior leaders, HR professionals and talent themselves needs to shift from focusing on managing talent to managing the talented company.

TALENTED TRIBES WIN THE WAR

Today most companies are unnatural and uninspiring environments to work in. Whilst the way in which we work has changed dramatically over the past one hundred years, the structures of work, including the office itself have remained stubbornly old fashioned. But this is starting to change. What we like to call “new world companies”, the likes of Google, Zappos and Apple have created environments that in many instances don’t even look like offices.

What new world companies are geniuses at creating and capatalising on are what Seth Godin and David Logan call tribes. Tribes are ancient social structures organised largely on the basis of kinship. Tribes, it had thought, had largely disappeared but with the advent of the Internet, social networks and mobile technologies, research in social studies is showing that tribes are making a comeback. Perhaps this is not surprising. Tribes offer a kinship or belonging that modern day society has eradicated.

A tribe is a group of people between 20-150 who work together and share a common culture/sense of purpose. Extensive studies undertaken by David Logan has indentified that there are five different stages that tribes can pass through. Each tribe is recognised by its distinctive behaviour and language that the tribe use to communicate:

Stage 1 – This is the lowest level tribe and mantra here is that “life sucks”. Members of this tribe believe that life is inherently hopeless, unfair and needs to be met with aggression and anger. Fortunately most professionals skip stage one.
Stage 2 – The theme here is “my life sucks” – this tribe believes that they are not valued and that they can’t succeed.  They blame the boss, the system, their colleagues for holding them back. This is a dangerous tribe in any business and if they gain critical mass can have a negative influence on the culture of your organisation.
Stage 3 tribes have a culture of “I’m great” and the unspoken part is “and you are not” 48% of workplace tribes function at this level. People here believe that they are doing all the work and that the business is relies completely on their own existence. This tribe creates clicks and information is power it is jealously guarded. Stage three tribes build management silos and members they jealously guard entry into the tribe. Talent management programs that are exclusive and elitist have a danger of forming stage three tribes.
In a Stage 4 tribe members are saying “we’re great” – this tribe unites around common values and goals. They unite to outdo the competition and they are on a quest. Leaders here connect members with conflicting views and empower them to find solutions information flows freely through the network because of a belief in a common outcome. The tribe is adaptive, creative and a magnate for talent and industry leading innovation
Stage 5 tribes are characterised by members believing that “life is great” enjoyed by only 2% of workplace cultures – stage 4 tribes enter stage 5 when a unique market opportunity or innovation allows them to embark on a history making project. Breaking new ground – can’t gauge progress against a competitor. Their only compass is their noble cause.

BUILDING A TALENTED COMPANY

Henry Mintzberg points out in his article: Rebuilding Companies as Communities in the Harvard Business Review, the importance of companies remaking themselves into places of engagement, where people are committed to one another and their enterprise. He continues saying that “Decades of short-term management…have inflated the importance of CEOs and reduced others” and the end result: “mindless, reckless behavior that has brought the global economy to its knees”

To rebuild companies as communities they need to focus on creating tribes that are saying “we’re great” or “life is great” because once you achieve this you gain the collective energy of all your employees working towards a common vision each passionately committed to achieving your goals.

Every company is made up of tribes, Different tribes perform at different levels, some demand and deliver excellence and deliver incredible innovations other tribes simply band together to do the minimum to not to get fired. Most importantly though effective tribes always have more power than any leader. Companies need to harness the power of tribes and build a sense of community and common beliefs within their organisations.

Most talent management programs inadvertently create stage 3 tribes – the tribe of I’m great because I’m in the talent tribe, and you’re not great because you are not in the talent team. This narcissistic behaviour alienates the others and stage two tribes, the life sucks tribe, becoming stronger and larger. At Enron, if you weren’t talent you were a nobody. This led to a destructive them vs us culture in which turf wars were fought, information got tied up and creativity suffered.

To create a stage 4 or even stage 5 tribes in your orgainsation you need to get people to move up stages. You move individuals one at a time up into the next tribal stage by encouraging them to start using the language of the tribe in the next stage up. Change stage by showing people how their work makes an impact help them feel valued. This is an essential process in building a talented company.

THE SOUL OF A COMPANY

Tony Hseih at Zappos the CEO of online shoe seller Zappos.com is clearly a talented person who understands the value of creating talented tribes. Prior to joining Zappos, Hsieh co-founded and sold LinkExchange to Microsoft for $265M in 1998. Hsieh graduated from Harvard University. In 2008 Zappos achieve the $1billion sales revenue milestone and on July 22, 2009 Amazon.com announced the acquisition of Zappos.com in a deal valued nearly $900 million. So impressed have Amazon been with Zappos’s performance and unique culture that they have decided not to swallow up the brand and Zappos will remain as an independent subsidiary. Hseih’s talent speaks for itself, he has created two very successful multimillion dollar businesses. What is more impressive though is how Hseih has built Zappos. Firstly he set a very clear vision – for customers to say “That was the best customer service I have ever had.” Hseih then did two things to engender a tribal culture. Firstly, he asked all of the tribal members to convene and agree what values were required to deliver this vision. The Zappos tribes consulted each other and came back with a list of 10 core values which have become the DNA of Zappos and how the company lives. Here are the values, and you will notice that they are not like traditional corporate values which typically are trust, integrity, honesty but rather are more human, more personal things like Create Fun and A Little Weirdness; and Build a Positive Team and Family Spirit.
Zappos’s ten core values include:
1.    Deliver WOW Through Service
2.    Embrace and Drive Change
3.    Create Fun and A Little Weirdness
4.    Be Adventurous, Creative, and Open-Minded
5.    Pursue Growth and Learning
6.    Build Open and Honest Relationships With Communication
7.    Build a Positive Team and Family Spirit
8.    Do More With Less
9.    Be Passionate and Determined
10.    Be Humble

The second piece of tribal genius that Hseih implemented was a tribal initiation in the form of a 4 week long Customer Loyalty Training course. All employees that are hired for their corporate office, regardless of position, are required to go on the course, which includes at least 2 weeks of talking on the phone with customers in the call center. After a week of training, the new employees are bribed with $2,000 plus their full months salary to leave the company immediately, no strings attached. This is to ensure people are there for the love of the job and not the money.
Hseih has set a salary for himself and the “monkeys” as the senior executive team is called at a paltry $36,000 a year. Of course with his personal investment in the company and the money he made out of LinkExchange, he is not hurting for money, but it sends a very symbolic message to the employees at Zappos

The results speak for themselves, $1 billion dollars of sales within eight years, a new wealthy investor in the form of Amazon and client testimonials that are so full of praise that it becomes embarrassing.

THE NEW TALENT WAR STARTS NOW

We have become a society that is obsessed with stars resulting in a sense of entitlement and elitism. From the sports fields to the hallowed corporate halls something has gone wrong. As Hamlet said “something is rotten in the state of Denmark” something too is rotten in corporations around the world. Talent has become selfish and arrogant, it has been found lying, cheating and now wanting. Today the talent challenge is not about finding, retaining and engaging individual talent. A new talent focus is required, one that encourages a creative and innovative culture based on collaboration and teamwork.

The key to building the Talented Company is the belief that having the right systems, procedures, values and supportive culture that make people smart, and not the other way around. Talent management needs to focus on making the star system before it can make the star players. A number of companies are getting this right. These talented companies create a culture where people’s passions and energies can be engaged, optimized and directed in the right direction. Talented companies do not stand and fall on the back of a few talented individuals but rather benefit from the collective sum of tribes of talent imbedded within the culture of their business. Talent cannot reach it’s fullest potential if it doesn’t operate in a talented environment.

RESOURCES
1.    Are smart people overrated?  Malcolm Gladwell – the New Yorker 22 July 2002
2.    Rebuilding Companies as Communities; Henry Mintzberg; HBR Sep 2009
3.    Talent is a four letter word; Barrie Bramley; TomorrowToday
4.    Making Talent a Strategic Priority, McKinsey Quarterly No1 2008
5.    Talent Innovation Imperatives; Strategy + Business; Sept 09
6.    War for Talent II, Fast Company; 19 Dec 2007
7.    Creating People Advantage; HR Challenges worldwide through 2015; BCG Sep 08

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Updated in March 2010 (now with an added Executive summary in the PDF format)

Download a copy of this article in PDF format – right click here. The contents of this article can be presented as a keynote or a workshop for your team. Contact our UK or South African offices to find out how.

As the world slowly emerges out of recession over the next few years, it will become increasingly clear that this was more than just an economic downturn. Disruptive forces are significantly reshaping the world of work. Some of these changes have been brewing for a decade or more – and now this recession has exacerbated their influence and speeded up their effects. Companies that have survived the downturn need to shift their focus to surviving the upturn. We are not ever going to “get back to normal” – a new normal is emerging for everyone, everywhere.

Understanding the forces that are driving this disruptive change will give an organisation the insights needed to adjust their systems, structures and methods and gain a significant competitive advantage in the next 3 to 5 years. It will also set them up for longer term success in the next few decades. It is therefore essential to provide not just senior leaders, but all staff throughout your company, with a framework of thinking about this “new normal”. You want them to work together to take advantage of the opportunities that will emerge.

There are at least five key drivers of disruptive change that every organisation in every industry and sector needs to track. These are the T.I.D.E.S. of change. (It’s a corny acronym, I know, but hopefully it will help with both remembering the framework, as well as making it easy to use on a regular basis in team meetings and informal conversations throughout your organisation). Here then are the key drivers of disruptive change in the next decade, and some questions to ask yourself and your teams as you plan to respond to them:

1. Technology

Over the past 20 years, the power of computing technology has increased by over a million times. Although such spectacular growth is bound to slow down at some stage, that slowdown is not expected to happen yet. The next few years are likely to see some astounding advancements in technology, as computers head towards what is sometimes called the “singularity” (this is the moment when computers become intelligent enough to learn and think for themselves). This is the stuff of apocryphal movies, of course, but the real-world promise of the next few years is that computers will be able to do anything we can imagine – and more.

The most awe inspiring advances will undoubtedly be in the medical field, including the ability to understand sequenced DNA codes, develop personalised medicines, manipulate genes to cure diseases and enhance physical attributes, continue to extend life expectancies and increase the quality of life for all people around the world. It is not out of the question that a host of awful diseases will go the same way as smallpox in the next few years, or that we will at least find cures for cancers, AIDS, Alzheimers, Parkinsons and more.

If you’re not in the medical or neuroscience fields, probably the most significant technological changes in the next few years will come from information and communication technologies. Typically labelled “Web 2.0” or “social media”, companies everywhere will need to deal with new methods of communicating and new demands from both customers and staff. The promise of the virtual office, the virtual team and seamless data integration will soon be realised. Or, to be more honest, the technology will no longer be a limiting factor.

When I started work in the early 1990s at KPMG in Johannesburg, they had just imported a hundred or so Macintosh Classic “luggable” computers. As a South Africa company, I believe that they had needed express approval from the US government for such an import – largely because they had about as much computing power in those few machines as the whole American government had at the time. As a young articled clerk who had grown up with Ataris and Commodores and had my own IBM “clone” XT, AT and 386 computers at home, I was allocated one of these awesome machines at work. I used to come in early and leave the office late, just to spend more time on the computer. And, if that were not enough, the office also had colour photocopiers, fax machines, access to the Internet and other technology one could only dream of.

That was then, when corporates led technology trends and owned the technology space. But these days, most people have much better computers at home, and are incredibly frustrated with the equipment and technology they have to use in the office: old computers, out of date software, limited bandwidth and restrictive IT policies that make no sense to them. Most young people would prefer to bring technology to the office than take some home with them. They’d like to load apps onto their office computers and phones, and use Google docs, cloud computing and social networks – but many workplaces won’t allow it.

This signals a huge shift in attitudes towards technology and how people are using technology in their everyday lives. From online shopping to mobile phone based GPS, technology is now integrating into every part of our lives. And our workplaces feel the furthest behind.

This is not the place to deal with this issue in detail, but let me just say that IT departments seem to lost the plot a bit. I recently heard of a company that does not allow their staff to use Skype because of “security concerns”. And, no, it wasn’t the CIA – it was a small group of hotels in the West Midlands of England. I don’t want to be naïve, but what were they worried about? The loss of productivity – and motivation – in their staff (and customers) far, far outweighs any perceived security concerns.

But before we get lost in the detail, let me suggest four key forces that lie behind the developments in information and communication technology that we are currently experiencing.

a. User generated content

In December 2006, TIME magazine put a mirror on their front cover and proclaimed “You” as the TIME Person of the Year. This was in recognition of a stunning new trend of self-publishing online, probably most famously represented by Wikipedia.org (the online encyclopaedia). Literally thousands of new blogs (web logs) were being created every day (that rate has continued unabated), with everyone from the Presidents of countries to your next door neighbour’s kid getting into it. Of course, this has created a cacophony of data of which we cannot possibly keep track. But that, too, has changed – young people no longer try to keep track of all the information that floods their lives every day. They are consuming information very differently, just as they are producing it in more abundance than any generation ever before.

Wikis, blogs, social media, crowdsourcing and more – each of these relies on the fact that people will contribute, self-regulate and manage content, and that this is the new model for knowledge development. This approach is in its infancy, of course. Just as when the printing press was invented (and again when cheap paperbacks were first published), the establishment is worried that a new way of publishing information – easier and cheaper than ever before – will lead to anarchy and rubbish being published. That may be true at certain levels. But we’re already learning the filtering skills needed to ensure we wade through the rubbish and capture and keep the gems.

One of the most important immediate applications of this sub-trend is that companies must evaluate their online presence. Most corporate websites are little more than online brochures. This is not acceptable to a generation of people used to generating their own content and being able to interact freely with everyone else’s information. People want to be able to engage with you and contribute to a conversation – via your website. It’s relationship without investment and engagement without commitment. At minimum, your corporate blog should enable comments on every page, but there is so much more that can be done if you embrace the brave new world of technological communication.

b. Social Media

A related trend is the stunning emergence of “social media” over the last few years. Starting with MySpace, overtaken by Facebook and now overrun by Twitter (with a myriad other sites fighting for space, too, like LinkedIn and Ning), social media refers to the growing network of inter-connected profile pages. On each of these sites, people can connect with each other, share information and interact in many different ways. Some are for business networking, others for more social interactions and entertainment. But in all cases, the trend is the same – people trust people and want to connect and engage with other people.

Social media is not just teenage toys. It is the way of the future. It might not be Twitter or Facebook forever – we still need to learn exactly what works, why it does, and how we should use it – but the trend of direct person-to-person interaction is here to stay, and companies need to understand and harness it, both internally and externally. For more on this trend, so a separate article at http://tr.im/socialmedia2

Augmented Reality

AR refers to the ability to overlay data onto the real world. The simplest examples are now available on iPhones and other smart phones. Because the phone knows your actual location using GPS (and even the direction you’re facing as most new smartphones include compasses), you are able to take a live video of the skyline of the city you’re in (I use this app in London, but know it’s available for New York, Paris and Tokyo at least), and overlay the image on your screen with notations showing me the closest Tube stations. There are other apps that tell you where the closest pub, post office, parking garage and even public toilet (for desperate parents of toddlers) are. And more augmented reality applications are being released every week.

The world’s smallest data projectors are now hand held, and can be worn around your neck. This allows us to combine the video camera that looks at what you can see, and the data projector that can project information onto what you’re looking at. Pick up a book in the bookshop and the system searches Amazon.com for the reviews and beams the rating onto the cover as you watch it. Pick up your airline ticket as you make your way to the airport, and the system access live flight information and beams the gate number and departure time onto the ticket as you watch it (see this system demonstrated at this TED video: http://tr.im/ted6sense).

The impact of this trend is going to be enormous for the way people interact with the real world. The implications could be profound, but the immediate issue is that people are learning to expect to be able to find any piece of information they need immediately and visually represented on their smartphones. Your ability to match your data with the real world is essential. Your ability to deliver it in visually stunning ways is becoming increasingly important (Daniel Pink wrote about this in 2005 in “A Whole New Mind” when he suggested that “the MFA is the new MBA”. The MFA is a Masters of Fine Arts and is the sought after degree of designers). This is going to mean hiring people with very different skill sets from the typical product development, communications and marketing teams we currently have.

d. Convergence, mobility and “the cloud”

It should be fairly obvious from what I have said so far about technology trends, that people will be increasingly accessing the Internet from smaller and smaller devices that are more and more mobile. This is not just smartphones, but small tablet computers, handheld devices, laptops and other similar devices that will flood the market in the next decade. Added to this is the move towards “cloud computing” where all our data is stored remotely and can be accessible from any device anywhere on any platform.

Convergence is the computer term for the ability to access any data, using multiple services over any network on a single device that is getting smaller, easier, more powerful and cheaper to operate. You’ll soon not find it novel to watch TV on your mobile phone or pause and rewind live radio in your car. You’ll be able to link up any device in your home or office to an IP address and remotely monitor and control it from any Internet connection anywhere in the world. Every piece of information you could possibly want will be instantly – and beautifully – represented for you in any format you require (if you want to see an example of this last point, check out http://www.gapminder.org). The ability to put serious computing processing power into small devices has unlimited applications.

One of the applications I am most looking forward to in the next few years will be translations linked to voice recognition. Travelling internationally as I do, and working with people from different countries, it’s going to be wonderful to have access to an application that allows me to speak a sentence into my phone and then have it translated and played back in any language. It can then do the reverse, as it records what the other person says and plays it back to me in English. The only reason we don’t have this yet is simply processing power – and that is being solved as we speak. This is the promise of convergence.

Increasingly, customers are demanding the ability to research and purchase your products and services from their mobile devices. This is not just about ecommerce and home delivery of groceries, it’s about accessing whatever you’re selling in fundamentally new ways. This applies to everything from luxury goods to legal advice, from insurance to medical diagnoses. It’s more than just having a website – it’s about changing the way you connect with people.

This is equally true for your staff and geographically sprawling teams, as they will become accustomed to virtual meetings, Skype video calls, Google Wave conversations and social media interactions – all on their mobile devices (in other words, out of range of your IT department’s policies!). These will be for personal use initially, and then rapidly integrated into their workplaces. But it’s already happening – even if you don’t know about it yet. These combined trends are going to radically reshape how we work.

At the end of each of the discussions of the five disruptive trends shaping the new world of work, I will ask the same three questions of you: what technology changes are likely to disrupt your industry in the next 3 to 5 years? Who is helping you to ask the right questions about this issue? And where are you going to find the answers? These are great questions to discuss with your team, and regularly come back to in the next 3 to 5 years as we navigate turbulent times. And, as a good starting point, invite the youngest and the craziest person (that “irritating person who should been fired already”) in your office out to lunch next week, and ask them these questions about technology. Listen until they finish talking.

2. Institutional Change

The ongoing economic crisis has done much to change the futures and perceptions of many industries. Almost every industry is in the midst of a period of disruptive change where the old rules for success don’t seem to hold true. This is because many industries are currently experiencing deep structural changes. This includes changes to the nature of relationships, the means of producing profit, how companies are structured internally, their risk profiles, where and how capital can be accessed, the basis for success – and failure, and the structure of the industry itself. Mergers and acquisitions will start again soon, and we’ll see surprising winners and losers emerging as they always do after a recession. Some industries are not yet affected radically, but it’s unlikely that any single industry will emerge out of this recession unchanged.

By “institutional change” I mean that the very rules of an industry are changing. Most industries have these “rules” – the unwritten ground rules for success. It is inherited wisdom that everyone in the industry accepts as gospel. It’s hardly ever questioned. As we emerge out of this recession I am suggesting two things: (1) that the rules have changed – not all of them, but enough of them to make your industry feel like an unfamiliar place, and (2) that competitors will question the rules and make changes that would have been unheard of just a few years ago. It would be better for you to be ahead of this curve, rather than behind it.

There are many different types of institutional change that could affect your industry. It could be the changing demands of your customers or consumers. This has happened to postal services around the world, driven by technology and changing social values. Yet, the unions of postal workers and their management alike don’t seem to understand how deep the changes go. The newspaper industry has been trying to deal with this for years, and the paper industry is still in denial about it. Any industry that has B2B customers or end-user consumers that are shifting towards Internet use as their primary means of connection will face similar institutional change in the next few years. This will also drive even more disintermediation. Not only agents, like estate agents or brokers will be affected, but the music industry is experiencing trauma around this issue, too. They don’t know who owns the music, who can distribute it, and how to control the technology that allows us to share our music. How should they manage the pricing and distribution of their music? One of the best business books of 2009, “Free: The Future of a Radical Price” (by Chris Anderson), suggested that much of what we pay for today will be free in the future – with radical new pricing models.

Changes in what people value and how much they’re prepared to spend have obviously affected almost every industry during the economic downturn. Some industries will soon discover, however, that these changes in value might have been sparked by the downturn, but they are permanent changes. Airlines and the meetings, conferences and exhibitions industry are concerned that people will not quickly go back to having as many face to face business meetings as before. Car manufacturers know that there is a trend away from gas guzzlers towards economical and hybrid cars.

Some industries have seen significant structural change, including who owns whom and how many players there are. Motor vehicle manufacturers are a good example of this, as are banks. Just because you’ve survived the worst of the downturn doesn’t mean you’ll survive the upturn. M&A activity is about to mushroom, and no-one will be safe in the next few years.

Banking – both retail and investment – is also a great example of an industry that is about to experience massive regulatory change. I doubt anyone can predict precisely what regulations will be imposed on investment and banking in the next few years, but we are all sure they won’t be left alone. I am sure, for example, that bankers won’t have their bonuses capped by legislation, but the fact that this issue is currently constant front-page news is a sign that the rules have changed – and a sign that bankers haven’t yet worked that fact out. Pharmaceuticals have had to deal with constant regulatory change for many years, and face an even more daunting future as medicine moves towards personalised solutions and genetic experimentation. And, of course, with America heading towards a new healthcare system, significant change in who makes the industry’s buying decisions is also heading their way.

The world’s militaries have not yet understood that the very rules for success have changed. How do armies win wars these days? It’s no longer the country with the most combatants or best weapons that win the war. It has been over 20 years since an American fighter pilot shot down an enemy combatant in a dogfight, for example. Winning a war these days is a lot more about “winning the peace”, but very few armies have made this adjustment. This will require new skills, different personnel, different structures and chains of command, updated mandates and alternative leadership styles. The same is true in other industries as well.

I could go on and on, picking examples from almost every industry around the world. That’s why this is probably the most difficult disruptive trend to write about generically: every industry is going to be affected differently by institutional change. But every industry is going to experience some form of institutional change as we emerge out of the recession. If you want to be a future focused leader, you need to accept that some of the rules, structures and systems of your industry and your company must change. And if you make these changes before the rest of your industry, you can gain a significant competitive advantage.

There is a problem that faces you now, though, and threatens to be debilitating. It is your inability to see what is right in front of your eyes. It’s easy to see the institutional changes taking place – or about to take place – in other industries. It can be more difficult to see it happening in the industry that has been your career and in which you are heavily invested. It is your instinct to protect yourself and your industry from change. But right now it is more important to identify the changes that will reshape your world. Kenichi Ohmae wrote in his 2005 book, “The Next Global Stage”:

“Over the last two decades, the world has changed substantially. The economic, political, social, corporate, and personal rules that now apply bear scant relation to those applicable two decades ago. Different times require a different script.” (my emphasis).

Institutional change requires new thinking about your industry. This can be tough, but there are some helpful resources you can start with immediately. One of the tried and tested models is Michael Porter’s “Five Forces” analysis (http://en.wikipedia.org/wiki/Porter_five_forces_analysis), which looks at a competitive rivalry analysis, threats of new entrants or substitutes, and the power of suppliers and customers. One thing to remember in this approach, though, is that your competitors are actually your most important allies – just like you, they are invested in your industry and will protect themselves (and you) against change. But, maybe right now, you don’t need such “allies”. Another approach would be to look at the “rules of the game” in your industry. The person I think outlines this approach best is the retired head of forecasting at Anglo American, Clem Sunter, in his book, “The Mind of a Fox” (see online resources at http://www.mindofafox.com – especially see the section on “The Conversation Model” and steps to defining the game).

So, what institutional changes are likely to disrupt your industry in the next 3 to 5 years – what will be the new rules and the new structures for success? Who is helping you to ask the right questions about this issue? And where are you going to find the answers?

3. Demography

The third of the five TIDES of change is demographics. There are many trends we could consider as we look at the study of changing populations, but the most important ones that will impact business in the next 3 to 5 years are: an ageing population (and changes in retirement), rising life expectancy, plummeting fertility rates, the potential for generational conflict, migration and diversity.

One of the most iconic of all population representations is the population pyramid (see country details at http://tr.im/popgraph). In almost every country in the world, these pyramids are changing dramatically. The impact of modern medicine is resulting in longer lives – not just being older for longer, but people are living better, healthier and more productive lives for longer. Because our expectations of how long we’ll live have changed, we’re also increasingly choosing healthier options, spending more on healthcare, marrying later, having children later and divorcing more. Paradoxically, we’re also saving less, as we expect to work longer and not retire in our mid 60s.

Population pyramids are also being affected by falling fertility rates. Not only are women having children later in life, they’re also having less children. The global average has fallen from about 5 children per woman/family in 1950 to about 2.5 in 2009, and an estimate of less than 2 by 2050. 2.1 children per woman/family is the “replacement” rate. Anything below this number means that populations are in decline. This is happening in many developed nations already. But this is a huge trend in the developing world, too.

In Britain, it took 130 years – from 1800 to 1930 – for fertility to drop from a rate of 5 children per mother to 2. This happened in South Korea in just 20 years, from 1965 to 1985. In Iran, fertility has dropped from 7 in 1984 to just 1.9 in 2006 (and 1.7 in Tehran). This is about as fast as social change can possibly happen. Africa is a notable exception to this plummeting of birth rates, but the trend is nevertheless there. Unfortunately, in Africa, AIDS is likely to have a similar population reducing effect.

The combined effect of all of these trends is to turn population pyramids into population coffins. Their shape is coffin shaped, and the impact of the change in demographics could be deadly. There will not be enough young tax payers to pay for the benefits countries want to provide for older people. Older people will not be able to retire – but nor will they want to. They’re much more likely to “re-tyre”. There will be less young people, but because of the laws of supply and demand, they’ll feel more powerful and be more influential.

Generational differences are a potential area of conflict. For example, political parties will probably form on the basis of age issues (a pensioner’s party has already been voted into the government in Israel). Global migration will become both more essential and more difficult, and will lead to political battles between nations. Similar divides will likely emerge in workplaces. If senior leaders don’t leave into retirement, if middle managers don’t accept promotions which require them to uproot their families, and if younger people enter the workplace with fundamentally different expectations of what a career looks like and deeply held desires for work-life balance, then the world of work will truly be changed beyond recognition. “Generations” could well become a diversity issue in the same category as religion, gender, disability and race.

Global migration patterns are also exacerbating diversity issues. We now live in a world where more people live in cities than in rural areas, as migration continues to urban centres. Global migration is also happening between rich and poor regions of the world. At the same time, many corporates are beginning to realise that the first billion consumers (the world’s rich and middle class) have largely been reached and saturated with their products. Now, they are eyeing the next 2 billion consumers in rapidly emerging developing nations (such as Brazil, India, China, Mexico, the Philippines, Nigeria and South Africa – between them, these seven countries account for just under half the world’s population, and almost 90% of the newly emerging middle class). Books like “The Fortune at the Bottom of the Pyramid” and “How to Make Globalization Work” are pointing the way to a new future for these people – and with these people as customers, too.

A key part of management’s role in the years ahead will be to manage conflict between competing worldviews and demographics, and to find ways to unlock the wealth of global diversity in both staff and customer pools.

What demographic changes are likely to disrupt your industry in the next 3 to 5 years? Who is helping you to ask the right questions about this issue? And where are you going to find the answers?

4. Environment and Sustainability

You can’t walk past a newsstand these days without a host of magazine covers shouting something “green” at you. And you can’t talk about the future without including this topic.

As I write this, the world is gearing up for the “Cop15” UN sponsored conference on climate change in Copenhagen (December 2009). Debate is still raging (in the media, anyway) about whether climate change is man-made or not (and a few people are still arguing about whether there is climate change at all). This is not the place for a detailed discussion on this issue, except to say that the way the media has framed this issue is completely unhelpful.

It seems clear to anyone who has been alive for more than 20 years that the weather they remember as kids has changed dramatically. The reports from the world’s glaciers, rainforests, savannas, natural springs, waterways and oceans all indicate that we are in trouble. This may be part of a long-term cycle that has been in place many millions of years, but it also seems equally clear that billions of human beings using up natural resources and churning out non-biodegradable waste is, at very least, exacerbating the issue. Personally, I am sceptical of the climate change sceptics, and very interested that many of them get funding from companies that have every incentive to distort the truth. They appear to me to be a bit like the “experts” who denied that cigarettes caused cancer for so many years. (For more information on how to get your team to save energy and improve your business by being more sustainable, see some of the resources I have made available online: http://tr.im/greentraining).

But, regardless of what you – or I – think about these issues, the governments of the world seem to have made up their minds, and are instituting policies and programmes to deal with carbon emissions and energy usage. And this is the key to the disruptive changes we should expect in the very near future. They might not get firm international agreements by the end of this decade, but the carbon trading programmes and energy policies of individual countries and regions are significant in themselves. Energy will cost more, and therefore so will transportation. Input costs will rise, and money will be made – and lost – in the carbon trading schemes.

But it’s more than just global warming we need to be worried about. As James Martin points out in his excellent book, “The Meaning of the 21st Century”, there are at least 16 major issues facing the world in the next few decades – each one of which could ruin the planet and change life on earth forever. These include pollution, extreme poverty, pandemics, runaway computer intelligence, dwindling water and food supplies, increasing violence and weapons of mass destruction, and more. In the next few decades, there is no doubt that government programmes will continue to extend to even more issues.

Business reasons to take sustainability seriously

You need to take these issues seriously, for many reasons. And they’re not just reasons that Greenpeace activists are interested in – they are business reasons, too. By dealing with the environment and sustainability issues, you can save money, reduce your risk profile, proactively deal with compliance issues, gain media exposure and obtain a competitive advantage in your industry. Increasingly, ethical consumers are demanding that your products and services meet certain standards in this regard. And they are becoming increasingly educated on what questions to ask, and where to look for the answers to their questions. Today’s consumers are not just looking for a good product at a fair price. They are looking beyond the product or service to the ethics of the company that supplies it. There is growing interest, for example, in labour practices, diversity quotas, environmental policies, social responsibility, and even CEO salaries are under scrutiny.

So-called “triple bottom line reporting”, in which companies present not just financial results, but also social and environmental results and impact too, is one way in which corporates are trying to respond. And they need to respond because customers are voicing their concerns, in everything from boycotting stores to suing corporations. Companies like Ford, Gap, Nike, Primark, Walmart and KfC have all experienced the wrath of ethical consumers in recent years, and have been forced to respond quickly to protect their reputations and their very existence as companies.

This growing emphasis on ethical consumption is a trend that cannot be ignored. It is not going to go away. Possibly even more important is the impact this issue could have on your staff. Think about it: if I won’t buy from you, do you think I would work for you? An increasing number of graduate recruits are stating that the environmental policies and ethical image of potential employers is “very important” in their decision making process. In the “war for talent” that companies of all sizes have to fight, environmental issues can be a deciding factor.

This has been confirmed in the UK by both the Association of Graduate Recruiters (AGR) and the Chartered Institute for Personnel and Development (CIPD). In the US, a survey of over 4,000 people carried out by recruitment job site MonsterTRAK found that 80% of young professionals are interested in securing a job that has a positive impact on the environment. And over 90% claimed they would prefer to work for an environmentally friendly employer. In the UK, a survey of 5,000 job hunters showed that 43% would not work for a firm which had no ethical or environmental policies, even if they were offered £10,000 a year more than to work for a business with a sense of corporate social responsibility. This was confirmed in a global survey of graduates by PriceWaterhouseCoopers, “Millennials at Work”, which found that 88% of young staff wanted an employer whose CSR values matched their own. 58% of employees specifically indicated that they wanted their employer’s policy on climate change to match their own.

This is not only a recruitment issue. Employees are much more likely to be engaged in a company that makes a positive contribution to the environment. The media coverage and goodwill generated will also serve to motivate staff and engender a sense of pride in their work and association with an environmentally progressive organisation. Read more about nice reasons to take sustainability issues seriously at http://tr.im/ycls

So, what environmental and sustainability changes are likely to disrupt your industry in the next 3 to 5 years? Who is helping you to ask the right questions about this issue? And where are you going to find the answers?

5. Societal Values

The final TIDES of change is shifting social values. If the previous four trends are changing the world as I have suggested, then it should not be surprising that people’s values, their dreams and aspirations, their expectations of what a good life looks like, their desires for their lives, work, families and careers are all changing, too. This trend is the most difficult to pinpoint – and respond to. But it is most definitely happening, and will ensure that the other trends I have spoken about are not just passing fads. We are living through an era of radical change that will end up with us on a new trajectory in human history. This has happened many times in history, most notably during the Renaissance, the Reformation and the early Industrial era. It is now happening again.

At one level, “shifting societal values” is not a fifth trend – it is rather the summary of the other four trends. Let me use one industry to illustrate this.

I can remember as a child spending many happy weekend afternoons listening to my parent’s collection of vinyl records. The soft hiss and intermittent scratch as the needle bumped along the record groove were the background noise to the music of the 60s, 70s and 80s. Then came cassettes and the Sony Walkman, with teenage years of compilation albums and stretched tapes (and mangled tape as the batteries in my boombox died and the machine ate the music and destroyed my favourite album). Compact Discs were warmly welcomed, with their huge leap in quality and durability. And then came MP3s, the iPod and the digital age. Now it’s possible to have our entire CD and LP collection on a small memory stick that can fit into the palm of our hands. But the real revolution is that you can plug that memory stick into your friend’s computer and download thousands of songs – but you get to keep them as well. It costs nothing.

The music industry has responded to this by trying to turn us into criminals. Hollywood has a similar problem. Every time I spend good money to go and watch a movie, numerous infomercials tell me how many criminal acts I could commit if I even think of taking my mobile phone out of my pocket and recording an image off of the screen. As someone who makes money selling intellectual capital, and earns royalties on book sales, I am not in favour of the wholesale theft of music or movies. But I am equally incredulous that the geniuses behind the entertainment world have not yet worked out how to find a middle ground. I don’t want to have to buy a whole album if I only like one song. I want to be able to share songs with my friends, introducing them to new music, so that they can enjoy what I like (and probably go out and buy the album for themselves), and spend serious money to join me at the band’s live concert. I’d also like to be able to make a copy of the CD (or DVD) so that if the original gets damaged, I still have the music I bought. And, why won’t they send me a free MP3 of all the albums I already have purchased on LP, then again on cassette and again on CD over the last three decades?

Of course, one company did see the change coming, and were able to do something about it. That company was not part of the music industry, but now, just three years after embarking on a music strategy, it is the largest music retailer in the world. That company is Apple. Through their iTunes store and a clever technology licensing solution, they’ve taken the music industry by storm. And they’ve changed the habits of millions of people around the world. Add to that the iPhone app industry they’re spawned in the last two years since opening the iPhone platform to independent application developers, and Apple computers would have been a good share to buy a few years ago. I’d still but them now, since the music industry – as well as the phone manufacturers and mobile telecoms providers – are still scrambling to catch up.

Our attitudes towards music, downloading, and sharing have all changed in recent years. This has been enabled by technology and is driving institutional change that will reshape the music industry forever. The entertainment industry may be an extreme example, but almost every industry in the world will face similar changes in the next decade. We ignore shifts in societal values at our peril.

Changes in expectation are also impacting your workplace. Recent research is showing that some of the ways in which we have tried to motivate and manage people are no longer working. This is because people have changed, and the world in which we work has changed. Many management techniques are based on assumptions about people’s values that were true for an industrial, manual labour oriented workplace. We no longer live and work in that world.

This is not the place to go into detail, but a few examples will illustrate this point. Pay for performance motivation techniques have been proven to be ineffective in any environment except manual labour. This is the amazing outcome of detailed international research that will be released in 2010 in a book by Daniel Pink, “The Surprising Science of Motivation”. (See a video of him talking about the research at: http://tr.im/pinkrewards). People might want bonuses and cash rewards, but giving it to them will either be demotivating or will encourage destructive behaviour. When I have presented this research to audiences, I invariably am greeted with sceptical looks. It sounds incorrect – until you examine the evidence. For example, the banking world is probably most renowned for their culture of extraordinary bonus payments. That worked well for them in the last few years, didn’t it? Some argue that sales people would not work unless they were paid for their performance. Pink’s research is not talking about commission, but rather about bonuses, but even with sales people, I wonder how many of your sales people are adequately incentivised to complete all their post sales admin, their follow up customer care and their client retention responsibilities? A bonus culture tends to reward the “hunt”, rather than the relationship, and that can result in long-term detrimental activity for your brand. Pink’s research is pretty convincing – if you’re prepared to accept that we live in times of remarkable change, as the structures of our institutions shift.

Another example relates to virtual, temporary teams. I recently met with a young insurance sales superstar. He outperformed the rest of his sales team by almost double on a regular basis. Of course his boss asked him to share his secrets with the rest of the team (he refused, by the way, since the bonuses were calculated on a relative basis in terms of performance in relation to the average in the team, so he had no incentive to help others). His secret was simple: he employed his own assistant. This was a person who was not known to his company, nor paid by them. He paid this person out of his own pocket, and managed them virtually. This type of assistance is now generally available – either ad hoc or permanently – through sites like http://www.elance.com and similar services. Our expectations of what a team looks and feels like is changing, and this shifting value will impact how our companies are structured.

A final example is managerless teams. Research repeatedly shows that teams that have to operate without a manager for an extended period seem to improve their performance. This might happen when a manager has extended sick leave, is relocated to another office, or is just not replaced due to headcount restrictions. Whatever the cause, the result is most often that the team finds a way to work more efficiently and effectively without the manager. So why do we have managers at all? Gary Hamel’s “The Future of Management” or Henry Mintzberg’s, “Managing” are good books to read on the topic of how management needs to change in the next decade.

What changes in societal values are likely to disrupt your industry in the next 3 to 5 years? Who is helping you to ask the right questions about this issue? And where are you going to find the answers?

How You Should Respond: Surviving a Tidal Wave of Change

Our instinct when faced with almost overwhelming change is to protect ourselves from it. But such protection quickly becomes restriction, and is not the antidote at this time. It is already clear that industries that are resisting change are in trouble. But we should also resist simply changing everything for the sake of change. One of Peter Drucker’s favourite sayings was: “The greatest danger in times of turbulence is not the turbulence, it is to act with yesterday’s logic.” That provides the start of a solution.

The key to surviving a tidal wave is really to know in advance that the wave is coming. If you’re caught by surprise by a tidal wave, there is basically nothing you can do. As the world watched in horror on Boxing Day 2004, a quarter of a million people on the shores of the Indian Ocean were overwhelmed by one of the worst natural disasters in history. A massive earthquake off the coast of Indonesia displaced a large section of the ocean, and a 500km/h, 15m high tsunami brought destruction to Indonesia, Thailand, Sri Lanka, India and even Kenya. The earthquake was felt by many in Indonesia, and that was a small warning for them to run to higher ground. In other parts of the world that day, a lucky few saw the ominous signs of an impending tidal wave. A 13-year girl in Thailand had just studied tsunamis at school and knew that when a tidal wave was on its way, it sucks the water away from the beach in dramatic fashion. She saw that happening on the holiday beach her family were at, and warned her parents and friends to run to higher ground. They all survived.

It is possible to reach the “higher ground” in your industry, if, and only if, you see the warning signs of the TIDES of change now and respond soon. Earthquakes have been taking place – shifts have happened beneath our feet. And now a wave thunders towards us. As with a large tsunami, it isn’t only the front end of the wave that is dangerous – it is the weight of the water behind the leading edge that just keeps coming at you, unrelenting in its intensity. In some of the trends I have outlined above, the leading edge has hit already. The danger now is to think it was just a single wave – a fad, a passing fashion, a mere craze. In reality, these TIDES of change will be with us for at least a decade, and when they recede – if they ever do – they will leave the landscape changed forever.

So, how should you respond?

Firstly, you need to understand these trends and know how they will impact your industry. This means taking some time out for reflection, and discussion with representatives from your entire value chain, and experts from outside your industry as well. You need to use this framework to encourage interactions that produce insights for your industry and your company.

Secondly, you need to accept that you will not gain an absolutely clear picture of the future. You cannot wait for absolute clarity before proceeding. In fact, I’d suggest that uncertainty is the new normal. Back in 1972, Alvin Toffler wrote possibly the best future-focussed predictions book ever written, “Future Shock” in which he suggested that the 21st century would be characterised by constant change. So far, he has been proved correct. One implication of this is that we need to learn to lead and work in a culture of uncertainty. This is something new for us, and our mindsets need to adjust to this new world of work. It means we sometimes need to take a few tentative steps into the dark before we know whether we’re heading in the right direction. It also, more importantly, means that the type of conversations I have suggested above need to be a regularly recurring item in you and your team’s diaries. Schedule these conversations now, and make sure they’re labelled “important” and don’t get crowded out by the “urgent”.

Thirdly, be bold and be brave in your choices. Most companies find themselves in difficult times, facing a tough year ahead. Now is the time for innovation. Let’s be honest – what is the downside of failure right now? No-one will blame you for trying an failing. You’ll be seen as a tragic consequence of the worst downturn in living memory. But what if you succeed? You’ll be hailed a visionary and a fearless hero. I am being a bit facetious, but I do really believe that now is a great time for clever, but bold, strategies that redefine the boundaries of what can and can’t be done in your industry.

Fourthly, arm yourself with the skills and knowledge needed to survive and thrive in a constantly changing new world of work. We’re at the tail end of the information economy, and a new era of connection, emotion, relationship and collaboration is just starting. You need to develop the skills and mindsets that will help you succeed in this new era.

Fifthly, build a haven of stability within your organisation by focusing on your strengths and becoming passionate about your distinctive culture. Families survive crisis times by pulling together and regaining a sense of “us versus the world”. These can be invigorating times, if you build a shared sense of community within your organisation, and help your teams to give their best and be their best. The next few years will bring opportunities we have not seen before, and your team could be hugely motivated by their ability to identify and respond to these opportunities.

Finally, don’t imitate others. Right now, our biggest competitors are ourselves. If we wait for everyone else to work out which way to go, we will end up being last. Now is the time for innovation and bold leadership. We have a chance to write history rather than just become history. I, for one, am looking forward to the ride. Armed with an understanding of the forces shaping the world of work, I hope you are too.

© 2009, Graeme Codrington, TomorrowToday

Dr Graeme Codrington is a business strategist, keynote presenter and thought leader on the future of work, and attracting, retaining and engaging talented staff and clients, across the generations. His inspiring keynote presentations and workshops get teams inspired to immediate action and long-term business improvement. Contact him at graeme@tomorrowtoday.uk.com.

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How do you speak in a new way about strategy when an old language dominates the topic? This is a major obstacle standing in the way of thinking about strategy in a new way for a new world.

Jamie Dimon, CEO of J.P. Morgan Chase was quoted in Fortune (January 26, 2009) as saying, “I am shocked at the number of people who are still worrying about their strategic plan for 2009. We cancelled all that stuff – all of it”. That this is precisely the problem with strategic planning – due to the investment, in every sense, to the plan, we are reluctant to jettison it when required to do so.  The response to situations that cry out for the abandonment of ‘the plan’ is to tweak, adjust and double our efforts. Invariably this merely results in digger our hole deeper and faster than ever. The global economic meltdown demanded a rethink of how we go about securing a competitive advantage, how we measure ourselves, what it is we need to be doing and why. Overnight the old rules of the game simply imploded and many were left clinging the ‘plan’, formulated in the context of the ‘old rules’ but now rendered as helpful as a toothpick in a gun fight.

The problem is, we have forgotten how to think. Reliance on our ability to plan, and specifically on Porter’s conventional wisdom as to how best to go about the formulation of that plan, has produced ‘lazy thinking’ habits within executive teams and amongst leaders.  We have been so used to marching to a known tune, that when the tune changes, or the music stops altogether, we simply keep on marching in-step.  The signs have been there for some time we merely ignored them: Inquisitiveness, questioning, learning, experimenting, reflecting, embracing diversity and paradox and conversations have all been neglected or worst still, intentionally sacrificed on the alter of expediency, efficiency, standard practice, tradition, conventional wisdom and known methodology.

An over-dependence on the ‘Porter’ way to strategic planning has dulled the senses and when things changed, leaders and organisations were poorly equipped to respond.  “When the tide of growth goes out, you see who has been swimming naked” said Warren Buffett, and he is right.  The problem with the way in which we have gone about strategic planning is that the plan is formulated by a few (at the top) and then given to the many to implement. Few large corporations have meaningful ways to engage the hearts and minds of all and whilst there are possibly technical and logistic challenges to pursuing this path, the main obstacle is one of mindset. Lacking conviction when considering the effort involved coupled with questioning whether any significant insights would emerge present formidable roadblocks to this direction being pursued. If it is true that less that 10% of strategic plans formulated get implemented, then serious questions have to be asked concerning the mindset and practice underpinning conventional wisdom in this important area of business. I suspect we know something is wrong but, for a variety of reasons, we fail to address the issue.

Someone who provides some real insight into this strategic challenge is William Duggan, a professor at Columbia University in the United States. Duggan’s ten-year engagement with this dilemma resulted in his book, Strategic Intuition in which he contrasts strategic planning with strategic thinking.  In part Duggan provides a history lesson as to why it is we have build the models of strategic planning in the way we have but he also points to the way forward.

And the ‘way forward’?  It is to go back in time and reclaim Carl von Clausewitz’s understanding of strategy as articulated in his book, On War, published in 1832. Had we adopted von Clausewitz’s approach to strategy we might not be in this predicament today but that of course is a moot point. The reality is we adopted Baron Antoine Jomini’s model articulated in his book, Summary of the Art of War, published in 1838. Jomini’s model provided a simple three-point plan: (1) Work out where you are – point A;  (2) Work out where it is you are going – point B; (3) Work out how you will get from A to B. Current strategic planning methodology is founded on Jomini’s approach to strategy which is reliant on thorough planning based on detailed information. It makes sense, provides a sense of security and certainty… and is after all, a plan. We like to have plans! In a world where tomorrow resembled today, planning made sense but this is no longer the case, or at least not to the same extent that it once was the situation.

What is needed today is the ability to think strategically. Furthermore, it is not just a select few within the organisation that get to do the ‘thinking’, but rather the challenge is to get everybody thinking strategically. When all understand what is the overarching purpose and their role in achieving that purpose, coupled with an ability to take appropriate action (or what we might term ‘a sense of empowerment’) we have the necessary organisational DNA to undertake strategic thinking. It is not impossible but this approach to strategy will require a complete rethink as to what leadership within the organisation looks like. Exploring this terrain is not for the timid but to thrive in turbulent times organisations are going to require dynamic strategy that is adaptable. Implementing that strategy will require everyone’s buy-in and so things will need to shift.

I don’t plan to explain von Clausewitz’s points as to what we need to do in order to think strategically. These will be the subjects of further exploration in subsequent ezine articles. If you simply have to know now, then get hold of Duggan’s excellent book, Strategic Intuition and continue the journey! Hopefully this brief thought piece will engage your thinking and we will get to continue the conversation as to what it means to think strategically and how to do it – at both an individual as well as a corporate level.

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The emergence of online social networks (Facebook, Twitter, blogs, etc) has profoundly impacted the way we communicate, associate and organise ourselves. It has left industries and companies grasping frantically for a response and a strategy that will allow them to seamlessly combine the world they know with a world that is fundamentally unfamiliar. Businesses need to explore the emerging shifts, changes and trends of this new world and create an approach that can be adopted in order to construct a meaningful and appropriate way forward to survive and thrive in this differently connected world.

The idea of social networking and communicating is not new. We have communicated through grunts and smoke signals, hand gestures and printing presses. We’ve been networking since we first spotted each other. It’s the mechanisms we use, the rules of engagement and value placed on our engagement that has changed with time. We all know the phrase “it’s not what you know, but who you know that matters”. It’s not a new concept or idea, its origin can probably be traced back to when we first realised we needed something from each other.

The emergence of these distinct and unique social networks is influenced by and influences the different generations of workers. Generational Theory can be a useful general filter to lay over social networking and these new forms of communication. This as generational theory focuses on the value systems or worldviews of individuals. And certainly as we look at the very different worlds the various generations have grown up in, both their value systems and worldviews differ when it comes to social interaction.

In a South African context, and for ease of use, the different generations can be categorised by age, as follows: GI Generation (80-100) / Silent Generation (60-80) / Baby Boomers (40-60) / Generation X (20-40) / Millenials or Generation Y (0-20). Of course there is often debate around these dates. It is important to understand that generational theory primarily means talking about value systems and not merely a date of birth, and that this theory is a general theory. Most theories relating to people are general, like gender, culture, religion.

The different generations all have very different communication styles and needs. In the workplace and when social networking; they can completely misunderstand each other’s communication style. For instance Baby Boomers don’t understand why Generation X-ers don’t simply walk into their office, sit down on a chair and sort the out any issues face to face. Why do they have to send a short and snotty email that’s devoid of emotion and ultimately the human face that Boomers are after? For X-ers it’s almost the exact opposite. Why do their Boomer managers insist on lengthy and unnecessary meetings? Why can’t they just drop a few short lines into an e-mail, and deal with it in a few short minutes?

Communication is all about getting information out cheaply and as fast as possible with and with each new communication style, these developments have taken place. Communication has changed from the first books, to broadsheets, from newspapers to magazines, from magazines to radio, television to websites, from websites to blogs, from phones call to smses, from Facebook to Twitter. Each new form of communication enhances the speed of the message transfer and reduces the expense of the communication. The messages change in format and the depth of the messages is condensed. Rather than one in-depth messages there are many more communications that are less verbose than the original Gutenberg book. Now with the advent of status updates and Twitter, a message is reduced to 140 characters or mere symbols.

This change in approach can be applied from a generational perspective to how people engage socially as well. Sometime ago if you found yourself in a small hotel in small town you may find the dining room jam packed with eager looking people, all wearing name tags, and milling around, shaking hands from time to time, and talking to each other. A convention of sorts. Upon further inspection you may realise that what had walked into was, in fact, a variant of Facebook, for people in their 50’s and born in the 50’s.

What has changed since these social networking functions and personal communications? Have we moved forward in vast leaps and bounds or have we drifted so far away from the core of ‘social’ networking? Hotel lobby-style networking is physical; you shake hands, touch and look one another in the eye. The etiquette is different, do you need to ask people to “be your friend?” or is it merely an exchange of a business card? Will you recognise each other again without the reference of a profile picture? The interaction is thick with inter-personal relationship. How would you ‘delete’ an unwanted contact? Trying to understand a differently connected world can be vastly confusing and intimidating – what has changed and where does one start to begin socialising?

In today’s context, specifically amongst young people the word ‘know’ has been redefined. The Silent Generation would never have ‘known’ thousands of people. Those they knew would have been on a smaller more intimate basis. Communities were smaller and communication over large distance was limited. Today’s young people can literally ‘know’ thousands of people. Ashton Kutcher, for example, has over 2 000 000 people following his thoughts, ideas and experiences via Twitter. Of course this extends to other platforms like Facebook as well where 20-somethings have over 300 friends.

The techno-heroes of today listened to their parents talking about these early social networking platforms and their complaints regarding communication tools, and took the best of what they had and improved on it. Now we could make contacts all over the world. At the touch of a button. People we barely knew could become our ‘friends’. People we had little in common with would become a part of our community and we a part of theirs. These new platforms have allowed all those who choose to embrace them to have instant connection without obligation. Friendship without investment. And an international network from the privacy of your own home. We don’t have to engage in lengthy conversations to get to know them. We could do it by staying in touch with their 140 character bursts of data. And very importantly there’d be no obligation or pressure to respond, or even take any notice.

We get the latest news even after the television network has ‘switched off’ for the day. Now we even receive the breaking news at the same time as the television stations hear of it, on our cellphones. We get up-to-the–minute newsfeeds from friends across the globe as we simultaneously receive world news, all while waiting for our coffee at the local take-away.

But if you are feeling intimidated by your hundreds of online friends; and if you’re looking for a social network with real human connection; with intimacy and voice to voice communication; where people engage in small groups and talk and listen in one conversation; or you just want to experience how the 50’s and over do their networking, send me a mail, ‘cos I know a small hotel in a small town where they meet.

For further information contact barrie@tomorrowtoday.co.za or visit www.tomorrowtoday.co.za

Background:
Barrie Bramley is a founding partner of TomorrowToday a dynamic organisation that helps companies identify the mega trends that will impact the people connected to their business. As a self-confessed social media adventurer, Barrie explores the emerging shifts, changes and trends of the socially-connected new world. He coaches organisations by means of a framework approach that can be adopted in order to construct a meaningful and appropriate way forward to survive and thrive in this differently connected world.

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Jim Collins got it wrong. Not totally wrong, but wrong enough that we need to be careful (as always) about who we listen to when designing companies for future success. Too often, leaders take a shortcut and blindly apply models they find somewhere else, without doing the work to adapt it to their culture and context.

Jim Collins is, of course, the international superstar guru author of “Built to Last” (buy at Kalahari.net or Amazon.co.uk), “Good to Great” (buy at Kalahari.net or Amazon.co.uk) and most recently, “How the Mighty Fall” (buy at Kalahari.net or Amazon.co.uk). His first two books are the two best selling business books of all time. His latest is bound to follow suit.

I have to declare that I am not the wildest fan of Mr Collins. I have read too many reports from the research teams that have worked with/for him, and are very disgruntled at how he has used their work without giving them any credit. I also received my copy of “How the Mighty Fall” yesterday, and was amazed to turn to the back cover of the book and see a single quotation, made by none other than… Jim Collins. I’m still to read the book, but I wonder if “hubris” and “arrogance” are possible ingredients in how the mighty fall? (Certainly “humilty” was a key element of his “Level 5 Leadership” principle). I’ll say more on this at the end of this (long) post… (But, then again, maybe I’m just jealous).

That personal comment aside, though, the question nevertheless remains: Are the models Jim Collins presents worth following? This is especially important since two of his “Good to Great” companies have recently gone bankrupt, and on average the whole lot have performed WORSE than the general stock exchange index over the past year or so of the recession. Are the principles in Collins’ books eternal? Or do they belong to an era that no longer exists?

Jim Collins and his research staff are truly dedicated and talented professionals who have completed volumes of quality research on what it takes to build enduring and successful enterprises. That being said, the key to understanding, validating, and appropriately applying any form of research is to understand the context in which it was developed, as well as the business logic that was used to frame it. Let’s quickly review what he’s said.

A long line of books that went seeking the elusive X-factors

Nothing much is said these days about “Built to Last” – the principles in that book were soon replaced by the Good to Great set. But both books have the same problem. They choose old, established companies in old, established (mainly industrial era) industries. The reason for doing this is to avoid picking up young upstarts who might just be lucky (e.g. Amazon, Google or Virgin?). They looked for companies that had gone through multiple business models and multiple product streams, looking for the principles of what made them enduring and what made them better than their competitors. The measurement, however, was purely stock price – nothing else.

As with any studies of this kind, history can be cruel. Tom Peters collaborated with Robert Waterman to publish “In Search of Excellence” in 1982. They used the McKinsey “7s” model and also developed the following eight themes in the 43 of the Fortune 500 companies they surveyed:

1. A bias for action, active decision making – ‘getting on with it’.
2. Close to the customer – learning from the people served by the business.
3. Autonomy and entrepreneurship – fostering innovation and nurturing ‘champions’.
4. Productivity through people – treating rank and file employees as a source of quality.
5. Hands-on, value-driven – management philosophy that guides everyday practice – management showing its commitment.
6. Stick to the knitting – stay with the business that you know.
7. Simple form, lean staff – some of the best companies have minimal HQ staff.
8. Simultaneous loose-tight properties – autonomy in shop-floor activities plus centralised values.

Peters has since said he would the following to this list now in the 21st century:

1. Capabilities concerning ideas
2. Liberation
3. Speed

As early as 1984, however, it became clear that not all the companies profiled were “excellent”. Business Week even ran an article titled: “Oops. Who’s excellent now?” (November 5, 1984). Companies like Atari, DEC, NCR and others soon were no longer. Some people even joked about a “curse” of being included in Peters and Waterman’s book.

Built to Last

It was 10 years later, in 1994, that Collins and Porras published “Built to Last” (it was enheralded to start, and built serious momentum towards the end of the 1990s). What made the research different to Peters and Waterman (who have since indicated that they imposed various presuppositions on their data) is that it compared and contrasted 18 visionary companies with a control set of rivals. For instance, Boeing was compared and contrasted with Douglas Aircraft, Marriott was compared and contrasted with Howard Johnson’s, and Merck was compared and contrasted with Pfizer. The findings are based on what the “visionary companies” did that was different from their close competitors who had also achieved a high level of success. But, from 1926 through 1990 the comparison companies outperformed the general stock market by 2 times whereas the visionary companies outperformed the market by 15 times.

In 2007, Fast Company did a review of the 18 companies profiled in Built to Last (read it here). They said:

Ten years on, almost half of the visionary companies on the list have slipped dramatically in performance and reputation, and their vision currently seems more blurred than clairvoyant. Consider the fates of Motorola, Ford, Sony, Walt Disney, Boeing, Nordstrom, and Merck. Each has struggled in recent years, and all have faced serious questions about their leadership and strategy. Odds are, none of them today would meet BTL’s criteria for visionary companies, which required that they be the premier player in their industry and be widely admired by people in the know….
…
But let’s give credit where credit is due. For all of the companies that have fallen on relatively tough times, most, if not all of Collins and Porras’s picks do actually seem, well, built to last. Today (in 2007), every one of the 18 companies cited is still in business, still a household name, still producing lightbulbs or computers or cigarettes or services or experiences.
…
Taken as a whole, the basketful of companies had a total shareholder return of 206% between August 1994 and August 2004, compared with 132% for the S&P over the same period. [The 18 comparison companies that still exist only returned 32% on average in the same period].

But, having said that, the BTL companies are not doing well now, after this last recession. And, even before it, they were struggling. Fast Company again:

Still, the fact remains that at least 7 of BTL’s original 18 companies have stumbled (8 if you’re cynical about HP) — scarcely better than the results you’d get by flipping a coin. And that raises the infernal question that dogs the critical analysis of any business book: Have companies struggled because they ignored the principles in the book or because they followed them? “Gurus always grimace when one of the exemplary companies goes from good to great to goofus,” says Darrell Rigby, a partner at Bain & Co. and an expert on management trends. “Was that because management stopped applying the principles? Or because business conditions changed?”

It’s important to remember the context in which BTL was written – the heady early days of the tech revolution, when anything seemed possible:

BTL offered a message of hope and good feeling in an era when horizons seemed limitless: If you could unite your company around a system of core values that everyone actually believed in and goals that were wildly ambitious, you could have great success. “There are three critical success factors [with a business book]: One, tell people what they want to hear and give them hope. Two, make it a Rorschach test [inkblot test where its impossible to give a "wrong" answer], and three, keep it so simple that it really doesn’t examine the truth of the world in enough depth so people get a false sense of clarity.” BTL possesses all three.

Part of the problem

I think this last quote gets to the heart of it. In the heady days of the early to mid 1990s, you’d have had to be a fairly incompetent business to actually fail. Having big visions (Big Hairy Audacious Goals, as BTL put it) was clever. Add to that some generally good advice about decent management, and hit the start button. It all worked. So, well done to Collins and Porras for stating the obvious, backing it up with thud value “research” to “prove” their points, and then promote the hell out of it. No harm done. Until the circumstances change, that is. Here’s Fast Company again:

In the end, though, there’s this one big rub about management books — even the best- selling ones and even the ones with plenty of data attached. The world they seek to describe is so complex, so tumultuous, often so random as to defy predictability and even rationality. “If Collins is to be faulted,” says James O’Toole, research professor at the Center for Effective Organizations at USC’s Marshall School of Business, “it is that he ignores Aristotle’s advice not to try to scientifically measure those things that don’t lend themselves to quantification.” And all the jumble and chaos mean, says Bain’s Rigby, that for every management theory, there is an equal and opposite theory that makes just as much sense. “Stick to your knitting, or don’t put all your eggs in one basket,” he says. “Better to be safe than sorry, but nothing ventured, nothing gained.” Perhaps BTL readers would do well to follow the title of chapter seven: Try a Lot of Stuff and Keep What Works. Now there’s some business advice worth taking.

But BTL was soon forgotten in the roaring success of the follow up book.

Good to Great

Published in 2001, “Good to Great” catapulted to the top of best seller lists, and became the theme of almost every corporate conference for the next few years. It’s now still a catch phrase for many companies and departments (at least, when your leader doesn’t know what else to say… “Let’s go from good to great, people!”). The book focuses on eleven companies that were just okay, and then transformed themselves into greatness — where greatness is defined as a sustained period over which the stock dramatically outperformed the market and its competitors.

The key principles are:

• Level 5 Leadership: Leaders who are humble, but driven to do what’s best for the company.
• First Who, Then Where: Get the right people on the bus, then figure out where to go. Finding the right people and trying them out in different positions.
• Confront the Brutal Facts: The Stockdale paradox – Confront the brutal truth of the situation, yet at the same time, never give up hope.
• Hedgehog Concept: Three overlapping circles: What makes you money? What could you be best in the world at? and What lights your fire?
• Culture of Discipline: Rinsing the cottage cheese.
• Technology Accelerators: Using technology to accelerate growth, within the three circles of the hedgehog concept.
• The Flywheel: The additive effect of many small initiatives; they act on each other like compound interest.

Now, I can bet that even those people are passionate about going from good to great could not, off the top of their heads, list those principles. Nor, I am guessing could many actually explain them. And even if they could spout what Collins said, I am prepared to stake my reputation on the fact that they could not adequately explain precisely what the principle would look like in their company. Take the most famous of them all: Level 5 Leadership. How do you identify one? How do you train someone to be one? What on earth does “Level 5″ mean anyway?

When interviewed recently, Collins was asked whether Jack Welch was a Level 5 leader? He completely ducked the question, eventually answering, “Well, only Jack really knows whether he was or not”. What good is that to the CEO selection committee at your company?

Also little noticed by those who quote the book as scripture is that the chapters are in fact in a specific order. Although all the elements of “Good to Great” work together, there is a specific order about how the companies implemented the principles. As Collins repeatedly points out, none of the 11 companies had a single transformation moment. They developed into great companies slowly, over time. But, first they had the right leaders. Then, they got the right people. Then, they were realistic about where they were, and started to focus and become discplined. They then applied technologies – or took advantage of fortuitous technological breakthroughs – and then it all started going right. (I’d add that most of them were probably lucky, too – but more of this in a moment). How many companies who have tried to go from “good to great” have followed this process, in order? Very few, I’d guess.

Analysing Good to Great

The person who has done the best recent analysis of the 11 GTG companies is Jeff Hankins, who’s February 2009 analysis showed that these companies have (collectively) underperformed the S&P 500 index on the NYSE over the period of the recession. Read his analysis here. There is a PDF to download, or see this diagram produced by Hankins:

One of the 11, Gillette Co., isn’t in the picture because the firm was sold to Procter & Gamble in 2005 for $57 billion. P&G shareholders have seen a 23% decline in value during the past year. Of the remaining 10, two companies have gone from good to great to disaster: Circuit City Stores and Fannie Mae. Both are bankrupt – Fannie Mae only saved by government bail out because it was too big and important to be allowed to fail. Wells Fargo is down 56% (although, to be fair, it has performed better than Citigroup, Bank of America and many other competing financial institutions).

The others sit in the mid table, with Abbott and Kroger fairing the best (2.5% down and 18% down respectively). Over the past year, Collins’ “great companies” have declined by 43.12% compared with 41.55% for the S&P 500.

That’s not great, really, is it?

Wharton summed it up for me in this summary of Good to Great (which they were not that impressed with):

Collins asks an interesting question. Unhappily, the methodology he used to formulate an answer is questionable and the answer is almost disappointing in its simplicity: Great companies become great by staying focused: focused on their products, their customers and their businesses. They aspire to higher levels of excellence, are never content to become complacent and are passionate about their products. They have leadership that is not ego-driven, and have organizational cultures that embrace constant change. That’s the book.

Should we read these books?

I will also say that there is still value in reading the book. There are some good ideas – like the “stop doing” list. But there is a danger to treat the principles as incontrovertible truth. And there is possible damage that will be done to apply the principles with no regard to the markedly changed business context we now face as we emerge from this worst-in-a-lifetime recession.

First of all, the good-to-great principles are true in the same way a horoscope is true. They are basically generic and thus we all apply them from our own viewpoint to make them true. The principles Collins proposes aren’t bad ones, but they are ambiguous and open to interpretation. This obviously decreases their usefulness – since you can’t really know whether you’re applying the principles as envisaged by the research into real good to great companies. For instance, Collins says GTG companies practice “First Who, Then What”. This basically means they hire good people. How does this help your recruiters? After reading the chapter, you really don’t have a better idea of how to do it, do you? And how many companies were deliberately hiring bad people in the first place? So, this is no help at all in taking you from good to great.

Level 5 leadership is equally vague. The only trait people seem to agree on is that level 5 leaders have humility. But beyond that, how is this principle helpful? And, assuming Collins is right, how many truly humble leaders do you really know?

Hankins, in his analysis, adds a further concern:

A Lack of Disconfirming Research

I’ve read all the notes in the book about how the research was done, and I think Collins and his team made a huge mistake. The good-to-great qualities, once determined, were never used to search for counterexamples. What I mean is that Collins and his team never said “are there any companies that have all of our good-to-great qualities that weren’t good-to-great?”.

Humans have a confirmation bias. We look for things that validate our preconceptions. But when you reach a conclusion you have to say “what would it take to prove this conclusion false?” And I understand why they didn’t. Because these principles are vague and it would be hard to debate whether or not an unsuccessful company was doing these good-to-great things. You could always say a company is in the process and will soon be great. Or you could say so and so isn’t a *real* level5 leader. I tried to find some examples, but I kept coming back to the same questions. How can you definitely say whether or not a company is following the good-to-great principles? You can’t.

Another author who has had serious issues with Collins (and other “gurus”) is Phil Rosenzweig. In his 2008 book, The Halo Effect (see a review and summary here, and buy it at Kalahari.net or Amazon.co.uk), Rosenzweig expresses concern about the research methodologies Collins used:

What They Don’t Know

Collins also doesn’t know what he doesn’t know. In other words, maybe there were causes that he and his research team were not aware of. Perhaps executives at the good-to-great companies better understood the economics of their industry. Or maybe they were more financially saavy and understood how money flowed through the company and where their profit really came from. It is common for companies not to really understand these things fully. But Collins would have no way of uncovering that, and even if he did, who would write a book that encourages would-be business leaders to study up on the economics of their industry and better analyze cash flow statements? It wouldn’t sell very well because that stuff is boring and hard.

Lucky

I am even more concerned that these companies, their leaders – and possibly Collins himself – are simply lucky. The right products, together with the right business culture, in the right markets, bumped up by the right technology, and just the right time – and you get a success. Given the number of companies out there, statistically this is bound to happen. But, when the business context changes, you’ll find out whether it was design or luck.

At this stage, one could argue that both BTL and GTG companies could be considered lucky, rather than strategic.

I am not saying that they’re leaving things to chance. Nor am I saying these companies don’t have good strategies or good leaders. But I just am worried that the “principles” Collins thinks he sees are not the only – or even the most important – factors in their past success. I am even more concerned that the clients I work with don’t fall into the trap of trying to apply these principles in an environment – internal and external – that does not require them.

In a blog post, “Rethinking Good To Great“, Mike Hyatt said this in September 2008:

The problem with “Good To Great” is that the reader is left with the false impression that the principles contained in the book can be universally transferred to their individual situation without regard for context. The reader is led to believe that if they apply the principles contained in the book to their business that the results will mirror those of the companies examined in the book, and that their business will in turn make the leap from good to great and enjoy sustaining good fortune. This is simply not true. You see all research, even good research, must be evaluated contextually. There are very few universal truths in business that can be applied in a vacuum.

If you’re the CEO of a well branded, well capitalised large multinational with a long history, then the context of GTG companies might match yours. If you’re operating in a fast growing, globalised world with no credit constraints, irrationally exuberant customers and legislators, a war for talent, and are based in the USA, then maybe the operating environment of the GTG companies matches yours. If you’re not really impacted by changing technologies, decreasing resources in a warming world, or shifts in demographics, societal values and global institutions, then you might get value in learning lessons from the GTG companies. Otherwise, you’ll need to make adjustments for your own environment and operating context. Hopefully, you get my point!

And I have one further concern. What is greatness anyway? Collins uses stock price over an extended time period as his sole criterion. Tom Peters disagrees with this as the sole measurement:

Companies that Jim calls great have performed well. I wouldn’t deny that for a minute but they haven’t led anybody anywhere. I don’t give a damn whether Microsoft is around 50 years from now. Microsoft set the agenda in the world’s most important industry at a critical period of time, and that to me is leadership, not the fact that you are able to stay alive until your beard is 200 feet long.

So, what do we do about all this?

If you’ve made it to this point, you might now ask, “so what?” What point am I trying to make.

I suppose, to be honest, it’s a simple point that could have been made right at th start, and saved you a few minutes of reading. The point is this: there is nothing easy about leading a company. There are no simple, “one size fits all solutions”. Your task as a leader is first to understand your business context. Then, to understand your business culture. Context and culture are two things I find leaders are not very good at thinking about or articulating. But they are the basis of building great companies. You cannot import these things – you need to define and describe them. They exist already, and they can be changed.

This, for me, is the true task of leadership, and the best starting point for greatness.

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I regularly write articles for magazines and journals. Some of these really strike a chord, and just “work”. Here is a recent article that has been getting a lot of comment, and has been helpful to business leaders trying to cope with the economic downturn. See the original article at The Entrepreneur magazine SA, or download a PDF copy of it here.

Seeing the world through your customer’s eyes – your key to growing your business
By Dr Graeme Codrington
Entrepreneur Magazine, July 2009

In turbulent times such as these, only those companies that can prove they have real value to offer will survive. Yet, in tough times, most companies tend to focus more on their internal systems and processes than on what their customers are looking for. Seeing the world through your customer’s eyes is essential for success, especially during a downturn.

As simple and obvious as it sounds, many companies forget this basic truth. Entrepreneurs are particularly prone to shifting their attention from customers to internal systems as they grow bigger and become more established. A searching question, and some simple activities can get your company correctly focused again.

What your customers really want

The key to seeing the world through your customer’s eyes is to ask, “What do our customers do with what they buy from us?”

It might seem simple, but this question’s implications can be profound for your business. Take a moment to think about it before reading further. It’s not, “what do your customers want from you?” It’s not, “what do your customers ask you for?” It’s a question about the ultimate value your customers are looking for in your product or service. The answers might surprise you, and could change your business.

The classic case study of this is Caterpillar. As makers of large earth moving equipment, the answer to this question is obvious. Very few of their customers actually want earth moving equipment. What they want is the earth moved. Caterpillar has been able to adjust their value proposition to take advantage of this understanding of their client’s ultimate need. They offer service contracts to dig holes, move earth and whatever else their client really needs. Guaranteeing the delivery of an end product means you can sell at higher margins, and become more indispensible to your clients.

Sometimes understanding what your customers do with what they buy from you can lead you to develop an entirely new range of products or services. For example, if a company that manufactures power drills does this exercise, they will realize that almost none of their customers actually want a power tool. What they really want is a hole. It probably isn’t feasible to sell the service of drilling holes on demand (although local hardware stores might successfully offer this service), but it is possible to think about what the best technology is to make holes these days. And that happens to be a laser. Of course, that would take a significant shift for a company used to employing engineers who build better drills. Maybe they don’t want to make this shift in focus. But if they did, they could dominate their marketplace for years.

This question might also provide some amazing insights into how you package and promote your products and services, even if it doesn’t change what you sell. When Parker Pen asked themselves this question, they made a fascinating discovery. “What do customers do with the Parker Pens they buy?” It might seem obvious that they write with their pens, and it is difficult to imagine how a company can offer the service of writing for people. But actually, when they asked their customers, they were amazed to discover that the vast majority of Parker Pens are actually given away as gifts (if you own a Parker Pen, did you buy it for yourself or were you given it as a gift?). Next time you’re in a store, have a look at how Parker Pens are packaged and marketed. They are almost all pre-packaged as gifts. And they’re still best sellers.

So, what do your customers do with what they buy from you?

A Task for the Boss

This exercise can be done in your company boardroom as a brainstorm exercise, and that’s probably a good place to start. But you also need to get out and actually speak to your customers. In fact, more than that, you need to understand your customer’s businesses, so that you can work out how you can add the most value to what they do.

This might all sound obvious, but it is amazing how few businesses actually do focus on their customers in this way, especially during tough times. How much time do you and your company’s senior leaders actually spend with clients? Jack Welch, the legendary CEO of General Electric, one of the world’s largest companies, spent nearly half of his time with his customers. He literally walked around their premises and met the people who not only bought but also used the products they bought from his company. His primary focus as leader of his company was on his company’s customers. Understanding them should not be outsourced to the marketing department. It is the boss’s job.

In difficult times such as we now find ourselves in, the danger is that companies will focus mainly on their internal systems and processes, and that senior leaders will get sucked into programmes and projects. Even worse, many companies will strip costs by reducing staff, thereby reducing their capacity to service their customers. They might cut corners on the quality or consistency of their products and services, trying to cut input costs. Many will reduce the incentives they pay to their people, negatively impacting staff morale and service delivery. These strategies may appear essential for short-term survival, but they most often lead to long-term damage to the company. And they can drive customers away.

The CEO and senior leaders need to keep the focus on customers, and ensure that their staff are both incentivized and inspired to provide the type of service that will keep customers coming back again and again. This is a job that is best done from the top down.

A Task for Different People

Having said that, it is also an issue that should involve everyone at all levels of the organisation. You need to ensure that the entire company is focused on the customer. Get as many people as possible involved in thinking about the question we posed above. And make sure the answers reflect diverse views.

There’s a lot of talk about diversity these days, but many entrepreneurs focus simply on filling quotas to show their diversity credentials. The real value diversity brings, though, is having multiple worldviews dealing with your company’s issues.

Diversity is not just about outward appearances. It’s actually quite easy to create a team of people of different genders, skin colours or ages. The danger is that you inadvertently encourage them to all think the same. This is one of the most common problems I encounter when working with senior leadership teams. Very quickly, a company’s employees learn “how things are done around here”. Even the way they dress seems to conform to unwritten rules. Be careful of this type of group think.

Most company’s customers represent much greater diversity than their staff do. Make sure you include as many diverse worldviews as you can when trying to work out how to add real value to your customers. Especially consider different cultures, genders, generations, religions, lifestages, economic circumstance and ages. Also include different levels of experience within your company, making sure you have the “been there, done that” experience interacting with “brand new eyes” – your longest serving staff member and your newest employee should definitely be involved in helping you see the world through your customer’s eyes.

Brainstorming with a difference

To unlock the diverse insights of your team, you might need to use slightly different brainstorming techniques. Why not try reverse brainstorming? Change the wording of the issue you’re brainstorming from how to solve it to how to cause it. For example, when looking at a customer satisfaction problem, ask “How can we cause customers to be dissatisfied?” This might sound simple, but it often unlocks some amazing insights. It works because many people find it easier to be judgmental or analytic, particularly as these methods are widely taught within our education systems. The act of reversing the position also provides a new perspective and helps with thinking differently about a problem.

You should also try open brainstorming. The problem with brainstorming solutions is that we allocate an hour on a particular day and hope that our best ideas will somehow emerge at that specific moment in time. As your team focus on seeing the world through your customer’s eyes, you should have a brainstorming session that is not focused on any particular outcome or issue. Simply ask people to brainstorm about what they should be brainstorming about. Don’t worry if they all sit around staring at you for a few minutes trying to work out what to say. Trust the process, and wait for the good ideas to start flowing. The outcome of an open brainstorming session is to list ideas that should be unpacked, discussed and brainstormed in the future.

In fact, once you have a whole lot of good issues to deal with, you should also put up ideas boards in prominent locations in your office. Put an idea, a question or an issue on a piece of paper and stick it up on a wall. Have a few of these near each other, with pens handy. Encourage people to think about the issues over the period of a week or so, and to write up any ideas they have. Encourage – and incentivise – people to spend some time each day reading what has been written by others, and adding further thoughts and ideas. This works because we cannot script when a flash of insight will happen, and we need to give some people more time than others to come up with creative ideas.

No doubt, you have many other techniques available to generate ideas and ensure your whole team is involved. However you do it, you need to ensure that your whole team is focused on trying to understand the value you add to your customers. And don’t be scared to adjust and adapt what you do in order to respond to turbulent times and changing customers. This is key to remaining successful over a long period of time.

Dr Graeme Codrington is a business strategist, author, keynote presenter and thought leader on the new world of work. He has homes in Johannesburg and London, and presents to over 100,000 around the world every year. Contact him at graeme@tomorrowtoday.biz

Source: Written for Entrepreneur SA magazine, July 2009 – download PDF copy here

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Whether or not you’re convinced by science and media reports on global warming, there is no doubt that our planet is under pressure at the moment. Things must change, and the governments of the world – not to mention increasingly vocal activists – have started to put pressure on companies and individuals to reduce energy usage and become more environmentally friendly and sustainable. Yet many businesses continue to ignore these issues, relegating it to a low priority task team, or simply paying lip service to it as a PR exercise. This is short sighted and potentially damaging. And it doesn’t make business sense, either.

There are significant advantages for the companies that take energy efficiency and business sustainability seriously. You don’t have to be a do-gooder to develop processes and systems to improve the environmental performance of your business. There is a strong business case for doing so.

Here are nine reasons why you should take these issues seriously, and see business improvement as a result. Doing well by doing good is possible. And desirable!

1. You are wasting money

Energy, water, materials and resources all cost money. Most companies use more of these resources than they actually need to. Our problem is that most of your staff have grown up in a world where energy, water and other resources (supplied by “utility” companies) have not been managed as a habit or lifestyle. We grew up just expecting lights to burn and water to run, and not really counting the cost of this. That has changed, of course. Our children are very aware of the cost of the use of these resources – not just the monetary cost, but also the cost to the planet. But that generation is not yet working for you in significant numbers.

It’s no surprise then that we use unnecessary energy and resources. The good news is that most companies can easily and quickly reduce this usage. And this will result in immediate savings, reduction of costs and therefore increased profit. Savings from reducing waste (whether that is wasted materials, resources, water or energy) go straight to your bottom line. If your profit margin is 25%, every £1 saved in this way is equivalent to £4 worth of new sales. During the recession, when every penny counts, this must be worth considering. And unlike reducing staff, reductions in waste costs improve rather than detract from your ability to deliver value to your customers.

There are four simple steps to reducing your costs. You must start by measuring your usage. You can improve what you can measure. You must then empower your people to make adjustments to systems and behaviour. Thirdly, you might need to make some physical changes and upgrades to your facilities. This need not scare you – there are ways to do this whereby a return on investment within a few months is guaranteed. Finally, you need to report on what you have done, communicating to all stakeholders.

Of course, there is some complexity in each of these steps. But the principle is simple, the execution can be easy, and the results are immediate. Stop wasting money, and start reducing your resource usage now.

2. Your energy, water and waste management costs are rising

Energy costs have more than doubled in the past two years. Waste management costs continue to rise as landfill tax escalates and the type of materials that can be landfilled is increasingly restricted. Water resources are becoming more and more scarce, especially in densely populated regions of the world, leading to rising costs. These costs will not be reduced in the years ahead. In fact, they will increase in price exponentially, as both the underlying costs increase due to shortage of supply and government imposes further taxes on their usage. Doing nothing on environment performance means going backwards rather than standing still.

3. Your compliance costs are rising and you could end up in court

The UK is one of the first major economies to pass a Climate Change Act. The Act was promulgated by Parliament in December 2008, and is now being followed by a raft of policies and programmes to ensure it is implemented and adhered to. The same will happen in economies around the world. President Obama has promised to do something similar within his first term, and Prime Minister Rudd has been doing so in Australia since he came to power. There are literally hundreds of pieces of environmental legislation being drafted around the world. Most companies have not begun to fully understand the implications of this trend for their businesses over the next decade.

In addition to legislation, regulators such as the US Environment Agency are increasingly taking a risk-based approach to enforcement. If, for example, your company routinely stores hazardous materials, or you are regarded as having poor environmental practices, you will be targeted for inspections and audits. This will be time consuming, disrupt your activities, and could end up in fines, court action and even closure of your business.

Your response over the next few years could be to continually shift in an incremental fashion, to keep just ahead of the law. But this is an expensive hobby. Eradicating problems completely is much cheaper in the long run and will keep you miles ahead of the lawmakers. Maybe more importantly, it will also potentially keep you miles ahead of your competitors, and allow you the luxury of calling for greater regulation in your industry, thus putting more pressure on your competition.

4. You can reduce your risk (and increase access to capital)

When this recession is over, a new landscape of credit and risk management will have emerged. We are not going to go back to how things were. Probably the greatest change will be access to funding and credit. Simply put, your access to capital is dependent on your future prospects and your risk profile. The lower the risk, the more funds you’ll have access to and the cheaper your credit will be. It really does work like that.

Increasingly, before the recession, savvy investors were using environmental records as a proxy for good management and hidden value. After the recession, they will increasingly analyse your environmental record for signs of risk. Given the legislation in the pipeline, and the public’s demand for ethical behaviour and environmental excellence, your record on environmental issues will be hugely significant to potential investors and creditors. Now is the time to develop your reputation in this area.

In addition to access to cheaper capital, lower risks also mean cheaper insurance. Since climate related insurance claims have increased exponentially over the past decade, the ability to demonstrate that your business is future-proofing itself against these types of risks will have a significant effect on premiums payable.

5. Your customers or clients demand it

If you sell to the public, certain markets are going solidly “green”. A new generation of ethically aware consumers is demanding that your products and services meet certain standards in this regard. And they are becoming increasingly educated on what questions to ask, and where to look for the answers to their questions. The proportion of white goods rated “A” for energy efficiency has risen from none to 76% in the ten years to 2006. The same trend is evident in many sectors and products lines.

If you sell to other businesses, then your environmental performance becomes their environmental performance. Increasingly larger organisations are demanding information on suppliers’ performance and Local Authorities, the NHS and other public sector bodies are turning to “green procurement” to meet Government targets. In February 2009, for example, the UK’s National Health Service issued a policy document entitled, “Reducing Carbon, Improving Healthcare”. This document highlighted the role of suppliers in the NHS’s carbon footprint, and mandated NHS facilities to put significant pressure on its suppliers to reduce energy use over the next 5 years. The NHS employs 1.3 million people (5% of the UK workforce) and is the largest employer in Europe. The pressure on suppliers will be significant, and your ability to compete for NHS work may be hampered or helped by your environmental record.

6. Your competitors are doing it

Given what we’ve said so far, this point should be fairly obvious. The issue of environmental policies is more and more going to be a competitive advantage opportunity. You don’t want to be the last company in your industry to understand this. And, in a world where every competitive advantage is temporary anyway, it would be a pity for you to miss such an obvious and easy opportunity to take a lead in your industry right now.

Some sectors are already slugging it out in this space. Retailers in the UK, for example, are fighting each other to become carbon neutral and demonstrate energy usage reductions. It might be argued that a lot of what they are doing has more to do with public perception and green image than reality. That will ultimately trip some of them up, but for now none of the big retail chains can afford to ignore this issue.

But it isn’t all about image. If your competitors have a better environmental performance than you, they will also have lower operating costs, higher profit margins and opportunities to be more competitive on pricing strategy. They will be more robust and able to adapt to future legislation, lower risk, avoid environmental taxation and respond more effectively to ethical consumer demand, with much better PR and marketing opportunities. It’s also been proven that companies with good environmental policies have better motivated employees and are able to attract the best new recruits. When you put it that way, you’d be mad not to do this.

7. Your staff want you to do it

An increasing number of graduate recruits are stating that the environmental policies and ethical image of potential employers is “very important” in their decision making process. In the “war for talent” that companies of all sizes have to fight, environmental issues can be a deciding factor.

This has been confirmed in the UK by both the Association of Graduate Recruiters (AGR) and the Chartered Institute for Personnel and Development (CIPD). In the US, a survey of over 4,000 people carried out by recruitment job site MonsterTRAK found that 80% of young professionals are interested in securing a job that has a positive impact on the environment. And over 90% claimed they would prefer to work for an environmentally friendly employer. In the UK, a survey of 5,000 job hunters showed that 43% would not work for a firm which had no ethical or environmental policies, even if they were offered £10,000 a year more than to work for a business with a sense of corporate social responsibility. This was confirmed in a global survey of graduates by PriceWaterhouseCoopers, “Millennials at Work”, which found that 88% of young staff wanted an employer whose CSR values matched their own. 58% of employees specifically indicated that they wanted their employer’s policy on climate change to match their own.

This is not only a recruitment issue. Employees are much more likely to be engaged in a company that makes a positive contribution to the environment. The media coverage and goodwill generated will also serve to motivate staff and engender a sense of pride in their work and association with an environmentally progressive organisation.

8. They’re watching you – activists will not leave you alone

In 2007, Apple Computers was one of the world’s most admired companies, with a remarkable image and stylish products. That was until Greenpeace put them at the bottom of an environmental league table of electronics companies and set up a parody of Apple’s website to detail their environmental infractions. Apple’s CEO, Steve Jobs, at first dismissed the campaign, but this only instigated a stronger backlash. It then became clear that Apple’s image could be very quickly tarnished, and the company did a swift u-turn. Jobs personally launched and oversaw a radical programme to improve environmental performance. This was publicised on the company’s home page for a month. It cost a lot, disrupted plans and was reactionary. But Apple will feel the benefits for years to come.

The message is clear. You can wait until you are forced to become green, or you can choose to do so at your own pace and on your terms. But, ultimately, you will have to go green. And if the activists do get hold of you, they can destroy years of brand building in an instant.

The higher profile your business, the more likely you will be targeted by activists. These groups need high profile campaigns, like Apple, Gap, Primark, Nike and others, to make the mainstream media take notice. If you are a smaller business, but you do business with a high profile client, then pressure groups will hold them responsible for your environmental sins. This is a very easy way to lose a major customer.

The positive side of this issue is that the media is very hungry for “green” stories at the moment. By embarking on energy saving strategies and becoming environmentally progressive, you will make it a lot easier to get PR and media coverage. And some of that exposure cannot be bought with money.

9. Just because you can

Of course, ethical consumption is more than just a new consumer fad. It is not just this season’s “in-thing”. The reason that people are becoming ethical consumers is because they understand, even if only instinctively, that we are over utilizing – in many cases, even abusing – the planet’s resources. We know that this cannot be sustained, and we know that we have to do something about it. We can no longer claim ignorance about issues like global warming, devastation of natural environments, abuse of workers and the like. And once we acknowledge that these are indeed issues, then we must respond.

There are good business reasons to do something now. There are compelling moral reasons, too. The issue of environmental performance should be on every business leader’s agenda, and should be a non negotiable line item in every strategy session your company runs over the next decade. You don’t have to abandon everything else and focus solely on this issue, and you don’t have to go overboard and overspend on items and programmes that have little or no return on investment. With some clever thinking and simple planning, you can make money and enhance your business dramatically. The business case is clear, when you take the time to investigate it.

Dr Graeme Codrington is a presenter, author and future trends analyst at TomorrowToday, a global strategy consultancy. From his base in London, he assists companies around the world to anticipate and respond to macro people trends. He is the author of three best selling books, visiting professor at four top business schools, including GIBS and the London Business School, and has won numerous awards for his keynote presentations. He can be contacted at graeme@tomorrowtoday.uk.com.

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For those in leadership it is a question that provides the yardstick of measurement, recognition and reputation. With so much at stake, it is the question that demands the answer, “why of course, you are”- be that true or not.

The real problem is not the question but rather the expectation surrounding the answer.  Perhaps it is the blatant denial or angry response to the answer – the one at least that fails to deliver the expected – that is in need of attention. And so, the mirror, weary of abuse and fearful of being shattered, has learnt to simply reply, “why of course, you are” every time the question is asked.Honest feedback is hard to hear and often harder to give. Yet it is the lifeblood that fuels both personal development and organizational growth. Why then do so many keep asking the question yet refuse to hear any answer until they get the one that they want to hear? It happens all the time and so ‘the voice of the mirror’ learns to play by the rules and follow the script, until all authenticity and meaning is stripped away and the dance can continue undisturbed.

As a Leader, when last did you solicit and receive feedback that wasn’t what you wanted to hear or that you hadn’t anticipated? As a leadership team, when last did you invite feedback that might call into question your practice and effectiveness? Getting honest feedback is hard and don’t believe the delusion that the absence of feedback is an indication that all is well. It normally means that you are out of touch with those around you. David Novak, CEO of Yum Brands once said, “If you see people looking around in meetings, waiting for you to speak, that’s a telltale sign they aren’t being open. I want leaders who can push back. We have training programmes to encourage employees to discuss the undiscussable, even if others don’t want to hear it” (Fortune, April 20, 2009, p16)

It is the Leader’s responsibility to create the appropriate climate for honest feedback. It is the Leader who ‘gives permission’ for those in the near vicinity to say what it is they really think and feel without fear of reprisal. Others watch and note the Leader’s response and then regulate their own responses accordingly when it is their turn to be ‘the mirror’.  If you don’t get feedback, if a silence greets your every invitation to share thoughts and ideas, or if the responses always seem to mirror your select ideas and thoughts…then, as a Leader, you have a problem. You have a mirror that has learnt to tell you what it is you want to hear and you are to blame, not the mirror. Leaders need to create a ‘safe place’ in which authentic feedback can be freely shared.
The use of social media can be one way to create such a safe place especially for a younger generation for whom this media represents a natural way of communication.

Astute leaders will constantly be asking themselves three questions when it comes to feedback?

1.    How do I know whether I am hearing the truth?
2.    What can I do to encourage open and honest dialogue?
3.    What do I do with the feedback I get?

There are no easy answers to these important questions and much will be determined by the prevailing organizational culture that the leader has established.  One thing the leader can do is to talk to as many employees as possible and listen to what they have to say. Intel have what they call ‘skip level meetings’ where managers meet with employees two levels down. Campbell Soup CEO, Doug Constant, regularly has lunch with groups of 12 employees at a time from across the company and asks for their opinions and perspectives on what is happening within the company.

Creating forums for everyone within the business to be able to share what it is they experience and see when it comes to the business will be necessary for not only attracting ‘Talent’ in the future, but for ensuring that you put the inherent diversity within your business to work. Leaders will need to show that they value differing opinions and know how to mediate their way through such cross-currents.

Quantum Mechanics teaches that information both informs as well as forms us. Information is the lifeblood of the organization to change, innovate, collaborate, adapt and learn. On a personal level it is the same. As a Leader you need to understand this and ensure you do all you can to create healthy information and feedback currents within your organization…and it starts with you!

Now out you go and ask someone what they think…what they really think. Be ready for a few surprises!

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My husband is gets really annoyed that I don’t put clothes back in my cupboard after I have worn them.  I tend to pile them up on the table in our bedroom until I create a high pyramid of creased outfits.  I have struggled to change this habit so, as a last resort, my husband playfully implemented a fining system.  If he sees clothes on the table, he fines me 50p.

I have started changing my behaviour because it is now being measured.  Dumping clothes now has a monetary value and it’s starting to hurt my pocket in a big way.

The moral of the story is this – sometimes the best way to encourage a certain focus or behavior in an organisation, is to measure it and attach a value to it.

Companies want to make money and increase the bottom line.  Organisations are also gradually realising that, in today’s global economy, talented people can give them their competitive edge.  Very few companies have married these two concepts.  How do you use your talent to make more money for your organisation?

One of the effective way to create wealth from people and entrench talent development into the fabric of the organisation is to measure it.  Use metrics that make people accountable for it.  But, how?

Lowell Bryan and Claudia Joyce from McKinsey have an interesting proposition in their book ‘Mobilizing Minds’.  Their idea, which will take time to implement, is the best way to measure return on talent that I have come across so far.

Performance reporting from the past – talent doesn’t feature

If you flick through the annual reports of companies, you will notice there is endless information about capital and the way it’s managed in a business.  Capital is the assets a company has which are used to generate more income.  Generally these assets are tangible such as property, vehicles, plant and machinery and other equipment. 

In any annual financial report, there is very little detail about the number of employees, the types of people the company employs and the way in which talent is used to make money.  This is ironic because, in the 21^st century organisation, it is generally no longer just capital that drives wealth creation – it is also people.

Most companies today have an organisational structure and design which was set up in an era when money was made by mobilizing physical labour and capital.  Work was mainly factory based and required little thinking or problem solving.  Now, in most cases, competitive advantage lies in the minds of people who are required to think, solve problems, build strategic relationships and apply their judgement. 

It makes sense for the emphasis to move from return on capital to return on your talented ‘thinking intensive’ employees.  If you want to get the best out of your talent, measure it and then report on it.

Generally accepted accounting principles don’t encourage reporting on talent

Financial reporting is currently based on generally accepted accounting principles (GAAP), which focus on accounting returns on capital.  Companies use GAAP to prepare financial results for the external market.  They generally use the same information to manage performance internally too.

Companies need a new way of reporting internally

The authors, Lowell Bryan and Claudia Joyce, say that net profit per employee should become the primary metric for internal performance.  Management should still report to the market in accordance with the required accounting principles.  However, globalisation and the new digital age demand a different financial measure to manage the economic benefit of talent internally.

‘If your organisation can harness mind power and boost the profits from each thinking employee’, say Bryan and Joyce, ‘then your organisation with be on the path to great success and competitive advantage in the 21^st century world.’

The value of intangible capital – such as talented people – has increased.  If companies focus on increasing economic returns from these assets, they can make the best use of their people and maximise the value of talent.

Net profit per employee

Net profit divided by total number of employees = Average net profit per employee

Profit per employee is the best reflection of performance because it measures returns on the people/talent which companies profess provides their competitive edge.  It also reflects the average profit generated by each employee after the cost of salaries and wages has been fully expensed.  Companies must increase profits relative to the number of people they employ.

Opportunities to increase profit per employee are unlimited.  Talented people can produce real cash returns by turning their knowledge into intellectual property, strategic relationships, brands, patents or cutting edge software.  On the other hand, the opportunity to improve returns on capital, other than employing more talented people to deploy that capital, is more limited.

This measurement will force companies to become more efficient and reduce internal complexity.  In their book, Bryan and Joyce have proved that most companies have the opportunity to improve net profit per employee by simply structuring the organisation in an efficient, streamlined way.  Surveys show that workers in ‘thinking-intensive’ jobs waste half a day to two days per week on unproductive emails, voicemails and meetings.

Bryan and Joyce say ‘Real wealth creation comes either from increasing profit per employee (without offsetting reductions in the numbers of employees or offsetting increases in capital intensity) or from increasing the number of employees earning such profits.  Or from both’.

Return on capital

This measure should be used as a sense check rather than a metric to aspire to.  Returns on capital should always exceed the cost of capital.

Show me some proof

Bryan and Joyce studied the 150 largest US companies by market capitalization in 1984.  In 1984, they noticed:

• There were strong links between profits and number of employees
• The more employees these companies had, the lower the profits per employee

Then, they studied the 150 largest companies by market capitalization 20 years later, in 2004.  The link between profit per employee and the number of employees disappeared.

To confirm their conclusion, Bryan and Joyce divided the 150 companies in 2004 into ‘thinking intensive’ and ‘physical labour intensive’ companies. 

In the physical labour intensive companies, the link between profit per employee and total employees had not changed much in 20 years.  However, profit per employee in the thinking intensive companies was much higher than in 1984.  This means people in thinking intensive jobs are adding more value to the business 20 years later.  Companies can create value and profit by mobilising their people’s minds.

The future 

Companies that are serious about managing talent and making more money should change their internal financial reporting systems to also focus on average net profit per employee.  Talented staff is driving the economic engines of most 21^st century organisations.  The best way to see the fruits of talent management is to measure it.

Profit per employee will draw attention to unproductive, unnecessary complexities within companies and provide an incentive to streamline.

Talent should create wealth for you.  The more talented people you have in your company, the more money you should make.  Manage it by measuring it.

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As the recession deepens, with customers dwindling and staff morale dropping, strong leadership is required. Too many companies, and the individuals in them, are falling into a trap of trying to keep their heads down and hoping the downturn ends soon. They’re trying to get away with doing what they’ve always done – but on a tight budget. They’re desperately hoping that wave after wave of cost cutting measures, while making no operational mistakes, will be enough.

But, this is no time for low cost business as usual. Equally, though, it’s not a time for panic or self-destructive short-term strategies. The world truly has gone mad, and sanity and reason seem to have fled. If companies want to survive this recession, and take advantage of the few opportunities it might provide, they have to be level headed and have a clear “downturn strategy” while focusing on a few key areas that can give them competitive advantage in rapidly shifting markets. This requires a new mindset with clear thinking and single-minded execution.

There seems to be too little of that going around at the moment. But the solutions are actually surprisingly simple.

Insanity Rules OK

These are strange times indeed. In November 2008, I watched a fairly strange interview on CNN’s Larry King Live. Edward Liddy, the CEO of AIG, was answering questions and being called to account. Remember that AIG had just received a massive public funds bailout – one of the biggest in history at $123 billion. This happened after they posted one of the biggest losses in history and were in danger of collapsing the whole financial system. The new CEO had been in his job for two months, and was now been called to account. For what? You’d expect it to be about strategy or financial management or their turn around plans. But, it was not. It was about AIG organizing a conference for their top marketing partners and independent financial planners (IFPs).

It is a sign of the insanity and short-term thinking pervading the business world that the media hyped this story up, putting so much pressure on AIG that eventually the CEO had to appear on an international talk show to explain the situation. It seemed as if the expectation is that AIG, and other companies that have received a bailout, should spend no money at all, yet somehow grow and thrive enough to repay the taxpayer some time soon. An impossibility, of course. But this is precisely the type of twisted logic being applied to many businesses today.

In AIG’s case, the reality is that 90% of the costs of the conference were paid for by product sponsors – this is how these types of events normally work. As Liddy patiently explained, “The total cost to AIG was $ 23,000… It was 150 independent financial planners. They’re not AIG employees. They could sell any products they want from any of our competitors. The purpose of this is to do education and training so they would understand our products, how to sell them and to whom they should sell them… The group of 150 people that were there sold over $200 million of our product year to date in 2008. You simply have to find a way to stay in front of those people and make sure that they’re selling our products the right way… you really have to train the people who are selling the product. What we want to do is make sure they understand the product, all of its features and they know what to sell to whom. We don’t want a variable annuity sold to an 85-year-old widow. So there’s a certain amount of training and education that simply has to take place, particularly in an organization this size. That’s exactly what this was.”

It seems insane that this issue made it onto Larry King Live. Yet, many other companies are crumbling under the immense pressure to think and act insanely at the moment.

Wishlists Are Not Strategies

Uncertainty. That seems to be the key word at the moment. The real problem for most business right now is not actually that they have no funding at all. Money has not entirely disappeared from the system. The biggest issue holding companies back from spending – and holding banks back from lending – is the complete uncertainty in which most people are currently functioning. This feels unprecedented. No-one can give any forecast for the next quarter with any confidence. And budgets feel meaningless.

If you are under budget by more than 20% one month, and then over your targets by an even greater amount the next, how helpful are your budgets anyway? Budgets have become wishlists rather than strategic tools. In fact, wishful thinking has replaced strategic analysis in many companies. If your budget for 2009 is based on some percentage increment from 2008 (“increase sales by 10% and profit margin by 2%”), and if you’re still comparing year on year sales to previous years, you’re horribly out of touch at the moment. Historical trends are meaningless right now. The strategic horizon has been dramatically foreshortened, and if you’re not changing your management style and operational metrics to take this into account, you’re going to get into trouble fairly quickly. Obviously, I can’t tell you in this article what to change or how to change it. But I can tell you that it needs to have changed.

There is No Recession

On the other side of the coin, there is a whole group of people who seem to refuse to acknowledge that anything has changed, and are desperate to just continue doing what they’ve always done. As a professional speaker and workshop facilitator, I am involved in a number of different organisations filled with management consultants and motivational speakers. Whilst I appreciate the sentiment, and certainly enjoy the sunny dispositions of these people and the business leaders they influence, there does seem to be a touch of the insane when I hear them say, “I just refuse to accept that there is a recession”.

Now, I do understand the intent behind this sentiment. They’re trying to say that a recession should not hold them back from seeing – and grasping – opportunities. They do have a point.

Here’s a quick test for you. What do the following companies have in common: Hyatt, Disney, General Electric, Burger King, Ben & Jerry’s, Apple Stores, FedEx, Microsoft, CNN, MTV, HP and Revlon. They were all started during a recession. The rules of business have not changed. There will be winners and losers, and those companies that get the basics right, offer good value to their customers and get their systems and processes right will emerge ahead of the pack in their industry.

But, we are still in the worst financial crisis anyone in business has ever seen in their lifetimes. We cannot deny this. These are exceptional times, and adjustments need to be made to our strategies and operations to take account of this fact. Simply carrying on doing what we were doing will mean that we could easily miss the opportunities – and challenges – this downturn will present.

A Dose of Reality

Recessions come and go and are a natural part of the business and economic cycle. It’s obvious that companies need to reduce costs, adjust their targets, understand the new realities of their situation and get their business basics right. These are obvious. At TomorrowToday, we like to go beyond the merely obvious, and give you some food for thought that stretches you a bit.

Below you find some key things that need to be considered if you want to go beyond mere survival in the next year or two. Obviously, your company is unique and your industry has its own distinct challenges. This article cannot provide all your solutions, but hopefully it can get you and your team thinking correctly and head you in the right direction. With this in mind, you’ll find great questions to ask your team, and some surprising insights to get them to think and act differently – and successfully – during this downturn.

Beyond Safety to Strategy

Back in the days of mainframe computers and huge IT investment, the common wisdom was, “No-one ever got fired for buying IBM”. They might not have had the best technology, or the best value for money price, or the best backup service. But they were safe. They did what they said, when they said they would do it. Their stuff worked, and they backed up their promises with a team that delivered. This was IBM at their best, back when they used to sell and install hardware for a living.

There is something of that attitude in a recession marketplace. Your customers are not necessarily looking for the cheapest option (although they will try and push you to lower your price, obviously). What they want is the best value for money. They want safety, actually. They want to know that they will get what you promise, and they don’t want to take any risks in getting it.

A few months ago, I was working with a top advertising agency in Canary Wharf, London. They were quietly optimistic about their outlook during the downturn. They have seen this before and know that during a downturn, big corporates who need to keep advertising often leave the “funky”, experimental smaller agencies and return to the large, multinational brand name agencies. They may not be as creative or innovative. They may not be as flexible on price. But they get the job done, and they get it right.

What are your customers really looking for? What are their “safety” criteria for your product and service? How can you convince them that you are a safe bet in the midst of chaos and uncertainty? These are the questions you and your marketing team should be prioritising. This should be the basis of your short-term survival strategy. The focus should be on your clients and what they want, not on your capabilities or internal systems and structures.

Customer Service That Really Works

We all know that it’s much easier, and cheaper, to keep your existing clients and customers than get new ones. Customer retention comes down to customer service. Will your customers buy from you again? And will they recommend you to others? How do you know? A lot of nonsense is written about customer service. I believe that these three questions are all you ever need to know to get customer service really working for you.

During a recession, delivery of effective customer service is more critical than ever. But it must be done on increasingly limited budgets. There is a way to reduce costs whilst retaining and improving customer experience and relationships. My team, at TomorrowToday, calls this method the “Moments of Truth”. It’s about identifying the key moments when the decision to purchase is being made, and identifying the potential points of pleasure and pain at that moment. You can find out more about this method at our website, http://www.tomorrowtoday.uk.com

Simply put it is about understanding what your customers do with what they buy from you. For example, no-one wants a newspaper. They buy a newspaper in order to get the news. Very few people go to a hardware store to buy a power drill because they are desperate to have a new tool to put on their mantle piece. They want a hole in something. These insights can change how you see what you do. Parker Pens, for example, know that very few people buy their pens to use for writing. If you want a pen to write with, you’ll buy a cheap Bic or Biro, or expensive Mont Blanc. But, middle of the road Parker Pens are usually given away as gifts (if you own a Parker Pen, did you buy it for yourself, or was it given to you as a gift?). This changes how Parker packages their pens, how they market them, where they sell them, how they price them – in other words, it affects everything. So, what do your clients do with what they buy from you?

A recent survey on customer defection identified a key reason for customers leaving: staff turnover. In, up to 70% of the reasons customers leave can be traced back to staff turnover. It is to this critical issue we now turn our attention.

Hold On To Your Talent

With bailouts, layoffs, unemployment, and salary and bonus freezes dominating the headlines, focusing on motivating your employees may seem counterintuitive and a waste of money. But downturns are when talented employees matter most. They’re the most innovative of your team. They are also, more importantly the high performers, the ones who deliver on your brand promises. You need them now during the downturn. And, you will need them to stay around when the upturn begins.

As the unemployment rate approaches double digits, having a job at all might seem a sufficient employee motivator. But that’s not what the research is showing. Talented people tend to be mobile, regardless of the economic situation – they know how important and valuable they really are. If the writing is on the wall, for example, your best performers may leave before layoffs even happen. The war for talent is still waging on.

But how do you define “talent”? It may be true that “everyone is talented”, but you might need the particular talents they have to offer. I happen to be a fairly talented trumpet player. Of what use is that to any potential employer (unless they are a symphony orchestra, or better yet a Big Band or Swing ensemble with a weak brass section)? “Talent” is only talented in context. And the only talent worth paying a premium for is that which really enhances your business.

If you have defined your “moments of truth” and understand what your customers are really looking for, then it’s easy to define what talent you actually need. You only need talented people where your moments of truth happen. Some companies really don’t get this. They often only see staff as a cost, without looking at the related opportunity costs or benefits associated with having engaged, talented, experienced, and trained staff available.

My favourite recent example is Circuit City. In March 2007 they fired 3,400 of their “highest-paid” store employees. At the time, they explained that they needed to replace expensive employees with cheaper workers to shore up the bottom line. But 60% of the fired employees were front-line salespeople, many of whom worked on commission. I am sure you would not make such an elementary mistake. The reason these salespeople were “expensive” is that they were selling more than their peers. Regardless of the cost and commission structure, though, it was a dumb move because new staff were brought in who were much less knowledgeable and less able to sell high margin goods. It was later reported that those expensive salespeople were instrumental in selling computers and flat-screen televisions to cautious consumers. It is probably no surprise that Circuit City went on to post losses and ultimately collapse.

So, while you contemplate how to reduce your staff costs, make sure you ask the right questions, and look at the correct metrics. And treat your talented employees with the respect they deserve and ensure they give you their best efforts.

Raising Your People’s Morale

A good friend of mine has recently been through a really scary bout of depression. His symptoms are remarkably similar to those of depressed companies: hoarding, hiding, moping and irrational behaviour. The solution included some good medication to sort out his chemical balance (get your thinking right), getting out of the house and interacting with other people (meeting and communicating with customers and staff), being creative and trying new things (innovation and fun), and doing some physical exercise. He explained how he felt safe just retreating to his home, and locking into a “same old” routine. But this fed the problem rather than solving it. Depression can be beaten, as he happily discovered. It needs to be identified and beaten in your company, too.

Many of the people who work for us and with us are feeling stressed at the moment. Depression is rising. This is being fuelled by work environments that have become less fun, less interesting and much more stressful. Workplace layoff survivors are often angry, and feel powerless, overwhelmed and highly stressed. They’re required to do more with less and are distracted by a flood of bad news and job security fears. Perks are disappearing, bonuses are unlikely and the pressure to produce has never been higher.

In addition, the culture of the organisation itself often changes during difficult times. Sudden drops in revenue and profit often lead companies to panic and mobilise to stem the losses. Leaders feel that action is required – fast action! The need for fast decision-making often leads to a return to command-and-control style management. This can alienate “knowledge workers” and the more creative staff. Younger team members, especially those from Generation X and Y do not respond well to this and often disengage.

All of these issues will sap staff morale. Good leaders know that staff morale is essential to productivity and customer service. It’s not my intention to give you a list of things to do to raise morale – a simple Google search will give you some great ideas to try. But I do want to make two points.

• Make sure you keep talking to your team. Involve them in discussions about how to raise morale. They know you’re in tough times. They know the limitations under which you are currently trading (if they don’t, this is the agenda for your first meeting with them). So, get them to give you some ideas of what can be done to make their work interesting, exciting and fun.
• You don’t have to spend a lot of money to make people happy. In fact, many people would take a 10% increase in flexible working hours over a 10% pay increase. If you can’t pay more, maybe you need to accept more flexibility. But, there are other, inexpensive things that can be done, including just taking time out for a laugh. Send hand written notes of thanks to your team. Send them home an hour early one day. A Mars bar on the desk with a note saying, “I know you’ve needed extra energy the past few days – I hope this helps”. Don’t think BIG all the time – sometimes it’s the small things that make all the difference.

Develop Their Skills

One of the keys to keeping talented people is to help them develop and grow. They don’t work for you because they want to one-day become CEO of your company, or because they want to make your shareholders wealthy. One of the major reasons they work for you is to develop their CV, enhance their skills, broaden their experience, and improve their chances of getting another job somewhere else some day when they need it. (If you don’t know for sure why your younger staff are working for you, this would be a good topic of conversation at your next one-on-one meeting with each of them).

One of the keys to motivating younger staff especially is to continue to invest in their development. This could be through training courses, mentoring or any other method you know.

A few days ago, in a workshop, a sales director confirmed this point. He had realized that most of his young sales team had never experienced a downturn before. Given the products they sold, they had never experienced a market where selling was difficult. And, actually, they did not have decent basic sales skills. In other words, his sales team had been lucky for the last few years, rather than clever or determined. Now they needed something more. He did some basic sales training with them, and went on sales calls to mentor them on-the-job. It worked. More than he could have dreamed. His best salespeople went from being fairly depressed and demotivated to being excited to hit the streets. And they have learnt to celebrate – and really appreciate – the sales the close. Motivation is high. Skills are being developed. His business is flying.

Sometimes it can be that simple.

Meetings, Away Days and Conferences

A few times I have mentioned meeting with your people and having conversations. As companies need to get more from less, they often put meetings and conferences on a back burner. Worse still, there is now growing pressure from the public to not have any conferences at all. The AIG example above is only one example amongst many of companies that might be able to afford to have a conference, but don’t believe they can afford to be seen to be conferencing.

Despite a Meetings Professionals International Association and George P Johnson Foundation study showing that meetings and events have the highest return on investment of any marketing platform, there’s been a knee-jerk reaction against the industry following the AIG scandal. This is really short-sighted.

You cannot stop meeting with your team. You cannot stop taking some time out to focus on strategy, communicate that with your team, and ensure that everyone is headed in the same direction. You might want to downgrade your venue selection slightly, and you need to make sure that professionals you get in are worth the money you spend (so no more vacuous motivational speakers who talk about nothing, but do so with passion). But you nevertheless still need these moments of reflection, focus, input and inspiration for your team.

Don’t Stop Thinking About Tomorrow

Saving money often means cutting back on developing new products and services during an economic downturn. This hurts companies when growth returns and they have fewer offerings in the marketplace to attract consumers. By turning defensive, top managers take innovation off the priority list and replace it with systems management and cost reduction. The entire organisation follows. It can be extremely hard to reverse this when growth returns or an opportunity presents itself. And, right now, innovation needs to be a key strategy. At worst, the focus of innovation should shift to recession strategies and opportunities, but innovation should remain a high priority.

For example, if budgets are really tight, you can still keep innovation alive by involving your staff in ongoing discussions about opportunities that they seem emerging. Why not place a noticeboard in a prominent position and ask people to post their ideas on it. Encourage people to add to these ideas and interact with them. This could be the “dream board” where people can make suggestions of possible products and services that might be increasingly in demand during the recession, or that will grow in demand when the recession ends. The “dream” is of time when the company has enough money to pursue these opportunities.

You don’t want to go into hibernation and complete cost-cutting mode. For example, you should not be retreating from globalization at the moment. The recession is not biting equally hard around the world, and many emerging markets have actually weathered the subprime credit crisis quite well so far. It’s expensive to expand globally and managers often save money by cutting back on emerging markets. It’s a big mistake. Emerging markets are sources of new revenue, business models, and talent.

Retreat to the Castle

Cutting back on outside consultancies is often seen as a quick way to save money. In fact, in late 2008, many head offices in large corporates instituted top-down across-the-board freezes on the use of external consultants. This is a massive overreaction. One of the key ways of introducing change into business culture is to bring in outsiders to assist. Not only can they see things you might miss, they also bring fresh expertise and focus. They know what companies across a broad range of industries around the world are doing to promote change. Not receiving this information can hurt a company’s competitive position.

Act Now

These are tough times. They’re difficult. And in many industries, it might get worse before it gets better. You might make some mistakes, and you might go under. No-one can say for sure what will happen to any company in the next few years. But of one thing you can be sure. If you do nothing now, you definitely will not survive this downturn. You have to do something. Doing the things outlined above will provide a good start and a solid foundation for surviving the recession, taking advantage of opportunities that may emerge, and navigating successfully towards the upturn when it comes. There are no silver bullets and no magic formulas. Now is the time for good leaders to step up and become great.

Dr Graeme Codrington is a business strategist, keynote presenter and thought leader on the new world of work. His specialism is helping companies attract, retain and engage talented staff and clients, across the generations. Contact him at graeme@tomorrowtoday.uk.com.

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The Battle for Innovation

Nelson’s Column is a monument in the centre of London’s Trafalgar Square. A 5.5 metre statue of Lord Horatio Nelson stands on top of a 46 metre granite column. Thousands of business people walk past it every day on the way to and from work. Few of these people realize that, even though he died over 200 years ago, Lord Nelson could teach them some valuable techniques that could help them and their companies innovate in today’s business world.
Lord Horatio Nelson is regarded as the greatest officer in the history of the British Royal Navy. He is renowned for his innovative, confident and unorthodox battle techniques. He died in 1805 after he and the British fleet annihilated their Franco-Spanish enemies in the Battle of Trafalgar. This battle was one of the most decisive naval battles in history and it established Great Britain as the leading naval power. After this humiliating defeat, Napoleon Bonaparte of France abandoned plans to invade Great Britain.

Innovation will give 21st century organizations competitive advantage. But, as Nelson showed, innovative and cutting edge ideas are not random. They come from relentless, focused preparation. Wisdom, experience and preparation provide the confidence to follow through with seemingly risky, unconventional ideas.

It’s the way we do things around here.

In the 18th century, traditional naval war tactics were formal and predictable. The two attacking fleets knew exactly what to expect from each other because they generally followed the same battle formation.

Each side would arrange their ships so that they were facing each other in two, parallel lines. They pounded each other with gunfire until someone surrendered. Countries preferred this familiar, linear approach because all ships in a fleet could see their commander’s signals better so it was easier for the admiral to control the fleet. This approach was fairly time consuming because it would take a while for the ships to form the lines. Battles were also costly as ships in the line were particularly vulnerable and were often badly damaged during fighting.

Sharpening his intuition

Every day of his naval career, Lord Nelson monitored the weather regardless of whether he was on land or at sea. He carefully observed the direction and speed of the wind, the air temperature, the type and position of the clouds, the strength of waves and the size and direction of swells on the sea. He would jot down his observations in his diary twice daily. To an observer, this must have seemed a dry, dull daily routine.

Preparation revealed opportunity

When he woke up on 21 October 1805, Lord Nelson observed the weather like he always did. He noticed the calm, light wind and the swells on the sea and suspected there would be a storm later in the day. His consistent, daily weather observations gave him the astuteness and wisdom to see that the wind and sea were providing a powerful, yet subtle, window of opportunity. That morning, he knew it was an ideal time to confront his Franco-Spanish enemies.

Lord Nelson and his fleet of British ships sailed in the direction of the wind and approached their enemy in two columns. Instead of forming the usual linear pattern, they sliced through the Franco-Spanish line. They split the enemy fleet in the centre and at the rear. The enemy ships were crippled, as they were unable to see signals from their commanding flagship. Lord Nelson’s focus on the rear ships forced the stronger Franco-Spanish ships in the battle frontline to turn back and support their colleagues in the rear. This took time and gave the British another competitive advantage.

The calm, northwesterly wind made it difficult for the enemy to position themselves in the usual straight line of battle. The light wind meant that the slower, heavier, more powerful ships were not as effective in battle. If Lord Nelson had waited until the storm gale started, he would have lost his competitive advantage.

Lord Nelson discussed his battle plans with the ship captains before they set sail. However, his plan was not rigid and rules based. He simply said that their fleet should cut the enemy line and focus on the rear. He allowed his captains to execute this battle plan as circumstances on the day dictated. Lord Nelson gave them a broad outline of what he wanted and gave them freedom within these boundaries.

Lord Nelson’s regular, fastidious weather monitoring ritual gave him the benefit in a critical moment of judgment during the Battle of Trafalgar. He dipped into this reservoir of insight and wisdom in order to capture strategic advantage over his Franco-Spanish enemies. His preparation gave him confidence at a time of critical stress and judgment.

Innovation in the 21st century

Innovation is the latest business buzzword. Companies see it as one of the keys to their future competitive advantage, which it is. But, many people misunderstand innovation and believe it is easier than it really is. Companies falsely believe that if you create an environment that encourages random creativity, a fountain of ideas will follow. Innovation cannot be cooked to order, like a steak in a restaurant. It grows over time out of wisdom, experience, discipline and preparation. Innovation is not just about spouting creative ideas. It is about what you, as a company, do to recognize and implement these ideas in a timely way.

Lord Nelson identified his window of opportunity and put his audacious plan into action after small, consistent steps, by being sensitive to signals from his environment and by giving his subordinates freedom within boundaries. Preparation refined his intuitive instinct and he created his own competitive advantage. His innovative, unconventional battle plans were successful because he understood his environment so well.

Innovation is one of the battles of the 21st century. What is your plan of action? Audacious, unconventional, cutting edge tactics come from preparation and discipline. Innovation is not random creativity. Innovation is creativity with wisdom, discipline and direction.

If you know your product from A to Z you will have a feeling about it that is difficult to describe. You will be so positively charged, so fortified, and so strengthened in your own mental attitude that you can be both irresistible and unconquerable.
Dale Carnegie

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REFERENCES:

1. Historyofwar.org
2. http://www.royal-navy.mod.uk/server/show/nav.3878
3. http://www.thebiographychannel.co.uk/biography_story/602:21/1/Horatio_Nelson.htm
4. http://history-world.org/horatio_nelson.htm
5. http://www.historynet.com/napoleonic-wars-battle-of-trafalgar-vice-admiral-horatio-nelson-did-his-duty.htm
6. http://www.metoffice.gov.uk/leisuremarine/trafalgar.html
7. Carnegie, Dale. How to develop self-confidence and influence people by public speaking. Vermilion, 1957
8. Costa, Ken God at Work Continuum 2008

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May I suggest that the distinction between the two is not helpful in today’s business environment!

The lines between manager and leader have become very blurred. In this highly pressurised environment there just isn’t time to make the distinction any more. We’re thin on the ground. We need managers to lead and leaders to manage. Perhaps it’s time to scrap both these terms and come up with a new one. Of course that’s not going to happen. There’s too much money to be made by keeping them separate. Step outside of academia for a while and ask those on the ground whether they’re managers or leaders? Their answer is almost always both. And this is not because they’re not smart enough to understand the difference, it’s because today’s business environment requires them to do both and to be both.

Today, almost all of our work functions are highly documented. Is there a business function left in the world that doesn’t have a manual attached to it, showing in accurate detail, how to go about what it is you do whenever you’re doing it? With that much detail why do we need managers? Just follow the manual. Managers in the context of these manuals have become the go-to reference people. You go to your manager when you’re not sure how to interpret the manual, not because you don’t know what to do.

The role of leader has also shifted considerably. Tom Peters has the following to say, ““In weird, wild, text-book defiant times like these, the
model of leaders as ‘all knowing commander and order-giver extraordinaire’ is fatally and fundamentally flawed.” Increasingly, organisations are moving away from this model. People all over the organisation are being asked to take up the role of leader. (Leaders and Leadership at every level)

If management as a term is defined as ‘getting work done through people’, then one can quite safely say that management as a discipline is extremely healthy. Never before has so much been produced and delivered by so few people. Managers focus on ‘getting the work done’.

The role of leader is on the people. My colleague Keith Coats defines the role of the leader as ‘Helping people navigate change’. Leadership, like management is very healthy. Never before have we known so much about people than we do currently. Of course there is much room for improvement in both disciplines.

In football, one of the ways you differentiate yourself and add value is to learn from an early age to kick with both your left and right feet. In organisations we need people who can manage and lead with equal ability. It’s tough out there. The roles traditionally executed by managers and leaders need to be combined into one body. We can no longer afford to have our people schooled in only one discipline. Our leaders must manage and our managers must lead.

The challenge will not be in how we do this, or how we develop our people. The merging of these two disciplines is happening right now. As I said earlier, find someone who has some responsibility within any organisation and ask them if they’re managers and leaders? Those on the coal-face are on the front of the curve (as they always are). The challenge will be for those with much to lose (current leaders and academia) to accept a changing world and the need for new frameworks.

Long Live Leaderment / Manageship, Long Live!

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An interview with Sharon Kersten

Sharon is a skilled and experienced business professional having worked as MD at Old Mutual’s retail banking arm Nedbank. She is also a guest lecturer at INSEAD. We interviewed Sharon to ask her what she believes companies need to be doing as recession looms on the horizon

TmTd: What do you believe companies need to be focusing on as corporate differentiators during current economic downturn?

SK: The first thing striking me recently is companies that are getting rid of complexity and that their value proposition speaks clearly to customers; there needs to be a decrease in the complexity of the offering. The Monmouth coffee shop operating out of Borough Market in London is doing this. They just do coffee, that’s it. There is a central table where you can get jam and baguette for £2, which you leave at the table, just help yourself. This speaks to me. Companies that are differentiating are cutting through the clutter, they are able to get customers attention and their customers are able to understand what the proposition is very quickly.

That is the first thing that I’m noticing at a trend level. The other thing I’m noticing is that people respond to the experience they are having to a brand at a people level. Customers might be attracted initially at a value proposition level, by the simplicity of an offer that speaks to them; but if they interact with a company and there isn’t congruency in the experience and the message they are providing, then customers feel uneasy and I’ll walk away.

So the ability to cut through the clutter and to find a simple message that speaks to customer; and then ensure the people experience fits proposition creates the wow factor.

TmTd: Isn’t there is more to it than just creating a simple value proposition?

SK: Be careful of the word simple, because there can be deep complexity. There is a lovely way of explaining this; you have to manage the complexity to be able to simplify it. It’s not simple it is simplified.

That is the challenge you can do so much and throw all of this at your customers, but keep the richness of who you are as a business and what you are doing and find a way to simplify it for your customers so that it doesn’t clutter and make it feel inaccessible. I have a sense more and more that with so many of the value propositions out there, people are trying to be too clever and it becomes overwhelming with options, features and benefits and it just doesn’t work.

But I suppose the heart of it always is how do I experience it, an interaction, a purchase or a service and that boils down to the people who are delivering the value proposition.

TmTd: You keep coming back to the importance of people and delivery of the experience. Most companies though only see the value proposition as a product and marketing issue.

SK: For me it has always been fundamental I think there is so much concern around price, promotion, position all those good p’s and it is now really time to take care around the associated behaviours of your value proposition. And I assess you not on whether you are meeting your cost proposition or feature and benefits proposition I actually assess you on whether you face me effectively

TmTd: You see the people and delivery side as crucial, however, during an economic downturn there is always a tendency to cut on staff and talent initiatives what do you think companies need to be doing as we enter an economic downturn?

SK: High percentage of fixed costs are people related so it does tend to become a focus area for cost cutting but this often goes at odds with trying to create strong connections with staff and customers. A lot of companies have done a good job at going back to basics, people are far more in tune with what the basics of their business are. But it is so important to be deeply appreciative of the core of people that you need to take you through the downturn and position you well for the upturn going forward. Companies need o be focusing now, more so than before on all the good things you know about people management and delivering on it.

Most importantly during a downturn please don’t stop talking. I’m finding that during a leadership often go silent. They almost become reticent about having the tough conversations. If the numbers are tough, be honest, what are implications for your staff. So the worst thing to do is to under communicate. This is the time to over communicate, leadership tends to get stressed about the results and amount of work that needs to be done. But you need to invest in the conversation making sure you communicate and that there is deep honesty and to try and minimise surprises for staff.

TmTd: What about things that need to be done on the business or value proposition side?

SK: Companies need to be matching both the brand and the employee value proposition. The people in your business are a manifestation of both your brand and your value proposition and if you are not developing an employee proposition that feels congruent with that brand, then you are going to be sorely challenged in any economic climate to deliver on that promise.

TmTd: If company brands and employee value propositions need to match, what can companies do to improve connections with their staff?

SK: Get to know your staff, make them feel engaged with your business. Staff perform better when they feel they are seen and known within and then beyond the role that they are doing. No one wants to be just a label. So and so is the bank teller or a marketing manager. People are so much more than just a labelled. I think the extent to which any first line, middle, and senior executive creates a culture around individualising their leadership is the extent to which they will create a legacy where people will deliver

And when I talk talent I’m not talking the top 2% of clever folks, I’m talking the regular staff. You are able to get very special behaviour and extraordinary commitment to work that is quiet mundane, routine with very little prospect. I’ve experienced exceptional talent in these positions. Talent for me is not necessarily people passing through the job but people who can commit to one position for almost a lifetime of work and each day show up and make it meaningful for the people they engage with and for me that extraordinary

For me the challenge is not just for the A list, at Nedbank I manage large groups of people and if I didn’t get the B players singing I was in trouble.

TmTd: That is a pretty difficult outcome to achieve. You are talking about engaging with staff on a very personal level. But with an economic downturn achieving targets will be more difficult, surely the “soft” side of management is not going to be the focus?

SK: What’s important is how you create the quantitative piece. So on a scorecard you make staff retention a measure. That is staff retained within a company not staff retained by you the manager. This is to encourage managers to create career paths. So let’s say you have a retention matrix in the people side of the scorecard and you want to reduce it to single digits. At our call centres we were experiencing 100% turnover over a three-year period. Now that costs so much in terms of recruiting, training and loss of knowledge it’s scary. The retention target was set to single digits so managers know it is measured and matters to leadership.

Now underlying that is we shaped behaviour at each of the different tiers. And it can be simple stuff, retention is a complex matter but the workable solutions were found to be the simple things that worked. We wanted to create a culture where you are known as an individual. That meant Monday mornings a ten-minute conversation that isn’t about work but a personal conversation about what the weekend meant. So we encouraged activities and processes during meetings to allow people to learn more about their colleagues on a personal level. You have to work at some of the culture side of the organisation to create that sense of I know you as a person.

TmTd: How would you then translate this into business deliverables and uplift in sales and profit for instance?

SK: If you experience internally a set of behaviours then you stand a better chance of reflecting that behaviour externally. So, if there is internal culture that I treat you and know you and personalise my interaction with you, then there is a better chance of a call agent doing that to an inbound caller; a better chance of your store retail assistant doing that to a client; and that to me is where one of the biggest gaps lies in any experience; the inability to see me not as another customer but that I’m a person presenting you with my specific needs and to get a sense of who I am and not the next number that they are dealing with.

So it’s really all about the crossover, what experience you create internally for your staff, manifests itself externally during customers connections. What I experience internally I have better chance of positioning externally. You get this right and sales and profits follow.

It is absolutely essential, you have to get the internal and external value proposition to be congruent. You can’t create an external value proposition and then behave differently internally, it represents a disconnect that people, both your staff and your customers feel as soon as they interact.

About the author: Dean van Leeuwen is a founder partner and Director of the TomorrowToday UK office.

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Detailed Introduction to Generational Theory

“Baby Boomer”, “Generation X”, the “Millennial generation”, “Generation Y” – these and other similar terms to describe groups of people of different ages have become fairly well known and well used in recent years. These terms arise from a theory that attempts to explain how different generations develop different value systems, and the impact that this has on how younger and older people interact with the world around them and with each other.

This understanding of different generations and the “gap” between them has many applications in all areas of life, from parents interacting with children, to sales people selling to younger or older clients, to managers who work with teams of people of different ages.

Brief Overview

Simply stated, generational theory explains that the era in which a person was born affects the development of their view of the world. Our value systems are shaped in the first decade or so of our lives, by our families, our friends, our communities, significant events and the general era in which we are born.

In the past century, global forces, combined with the effects of international media and news channels, communication technologies and the increasing interconnectedness of the world have meant that increasing numbers of people around the world are impacted by defining events. Facing similar issues, impacted by the same events and sharing similar experiences, people of the same age are likely to have similar underlying value systems, regardless of their country or community of birth. These “value systems” are the drivers of behaviour and attitudes, and are good predictors of behaviour and expectations.

A “generation” tends to be about 20 years in length, representing roughly the time from the birth of a cohort (or group) of people to the time they come of age and start having their own children. Typically, generations are bounded by significant events in the country or region being considered. This leads to slightly different dates in different areas, although defining global events in the last century tend to group quite remarkably around specific years (consider, for example the turbulent summer of 1968 followed by man on the moon the following year; or the tumultuous year starting with Tiananmen Square protests in China in April 1989, through the tearing down of the Berlin Wall, the opening of Eastern Europe, Perestroika in Russia, the release of Nelson Mandela in February 1990 and the end of Pinochet’s Chilean dictatorship in March that year).

Although in some countries, there are very specific moments in time when one generation ends and a new one starts, in the UK and Europe, most generations do not have precise start and end dates. There is also a fair amount of “overlap” between two generations, producing a “cusp” generation between the each successive generational cohort.

The generally used labels for the currently living generations in the UK are: GI (born 1900-1920s), Silent or Veteran (born 1929-1945), Boomers or Baby Boomers (born 1946-1960s), Generation X (born 1968-1989) and the Millennials or Generation Y (born mid 1980s-present). Some writers are starting to refer to the generation born after “9/11? (2001) as the Homeland generation, but this is mainly in the USA.

The Sociological Research

Generational theory is sometimes considered contentious, especially because “pop psychologists” have over-used the generational labels, and sociologists have not worked hard enough to establish commonly accepted definitions. However, there is plenty of hard evidence and ongoing research to show that a generational approach to understanding society and groups of people is scientifically acceptable and well grounded in good social science.

The first serious, modern scholar to investigate the phenomenon and attempt to explain and describe generational values development was the German, Karl Mannheim. In a series of widely debated essays in the 1920s and 30s, he outlined the idea that young generations are imperfectly socialised because of a gap between the ideals they have learned from older generations and the realities they experience.

Of course young people learn values from parents and communities, and often share similar core ideals through life. However, as they become aware of the world around them, members of the younger generation experience society differently, leading to what Mannheim described as a “visible and striking transformation of the consciousness of the individual … a change not merely in the content of experience, but in the individual’s mental and spiritual adjustment.” Mannheim referred to “fresh contact”, explaining that as young people grow up and experience and process their surroundings for themselves, rather than merely through their parent’s eyes, they adapt the value systems they have received for the realities they experience. Mannheim explained how a person develops meaning based on personal experiences within a social context, “which is necessarily different from other generations.”

Mannheim explained that a generation is a social location that has the potential to affect an individual’s consciousness in much the same way as social class or culture does. Driven by the imperatives of biology and social context, “individuals who belong to the same generation, who share the same year of birth, are endowed, to that extent, with a common location in the historical dimension of the social process”, and a generational consciousness is formed. This involves the development of “collective mentalities that mirror a dominant view of the world, reflecting similar attitudes and values and providing a basis for shared action.” These mentalities lead to “continuing practice,” meaning that the defining values that formed collectively by a generational group will continue to influence the behaviour of individuals throughout their lives.

The anthropologist, Margaret Mead, in her controversial studies of the Polynesian cultures, referenced generational theory particularly showing examples of islanders making contact with the “outside world” for the first time. When doing so, they developed through a predictable series of stages of value development similar to the value shifts between generations.

More recently, Morris Massey was a legend in academic circles in the early 1970s for identifying the arriving Boomers in his lecture tour, “Who You Are Is What You Were When”. The primary European contributors to generational theory in the 20th century have been Pierre Bourdieu, Jose Ortega y Gasset, Julius Peterson, Willhelm Pinder and Julian Marias.

Generational theory was probably most popularised by the works of Neil Howe and William Strauss in the 1990s. Since then, a veritable tsunami of books has been released. The best and most well researched authors on the topic include Bruce Tulgan, Claire Raines, Ken Dytchwald, Warrin Bennis, Don Tapscott, Mike Regele & Mark Schultz, Walt Mueller, Christian Smith, George Barna, Bob Mayo and Peter Sheahan.

The best up-to-date research into generations seems to be emerging from sociology and practical theology departments of top universities, with an emphasis on understanding how these value shifts will impact societal institutions, including religious institutions. You can track references to these research projects and their reports via TomorrowToday’s blog. (http://www.tmtd.biz)

Modern research notwithstanding, the concept of generations is much older than any of these recent studies. Historically, philosophers who have attempted to describe generational theory include Auguste Comte, Maximilien Littre, John Stuart Mill, Gustav Romelin, Ottokar Lorenz, Wilhelm Dilthey and Emile Durkheim. A 14th century Bedouin, Ibn Khaldun, was the first philosopher to describe a four-generation cycle in detail. Greek historian, Cicero, Greek writers, Heraclitus and Homer, Chinese philosopher, Lin Yuang, and the writers of the Old Testament (especially the book of Judges), show that this cyclical nature of history and generational development has not just been recently noticed.

The Living Years

Armed with this wealth of theoretical and practical research, we can now confidently turn out attention to the current day application of generational theory. At the risk of over simplifying the generational characteristics, here is a brief summary of the living generations.

GI Generation (born 1900s – 1920s)

The oldest living generation has far exceeded the 47-year life expectancy expected of them at birth. Families were large then, with many children not surviving their first five years and about a fifth of women dying in childbirth. It was the norm in developed countries for birth to take place at home, and 90% of all American physicians had no university education. This was the world before antibiotics, insulin, penicillin, nylon and many other things we would consider essential today, and marijuana, heroin and morphine were all available over the counter in pharmacies.

The dominant characteristic of the GI generation is their civic mindedness. Society determined early on that this new generation of youth would grow up clever and cooperative (Scouts, youth groups, and even the word “teenager” itself, were all created for them), and they were driven together to rebuild the world as they grew up with the images of The Great War etched in their minds. They have always liked predictability and stability, bringing military discipline to their homes, workplaces, schools and even places of worship.

The GIs formed the manpower component of the engine that beat the combined crises of World War 2 and the Great Depression. They worked as teams, obeyed hierarchal chains of command, and stuck to their task without complaint. No wonder they believe that it’s “good” and “normal” for people to all agree, to work the same way and even to all look the same.

Defining and guiding values:

* Never give up?* Civic minded?* Conformity?* Stability and predictability?* Gallantry?* Hierarchical chains of command?* Frugal?* Male and female roles clearly defined

Silent Generation (born 1920s – 1945)

They were influenced in their youth by the Great Depression and World War 2. They grew up in serious times, when everyone had to do their duty (whether you liked it or not), and when children “should be seen and not heard”. They are conservative, hard-working and structured, preferring rules, order and formal hierarchies. They have a “waste not, want not” mentality, and hate getting into debt. Their idea of progress is slow, incremental advancement, while minimising risk. They also believe that it’s “good” and “normal” to work hard, in fact, they believe they can achieve anything by sheer hard work. They are suspicious of those who make money by luck or by gambling.

Today, they are entering elderhood, facing the future as fairly well adjusted older people, able to connect well with new technology and with young people. Their youth prepared them for a lifetime of pragmatic adaptation. They continue to work hard, even in retirement, are frugal and save every cent they can even though they may have a considerable fortune saved. As they’ve reached retirement many have mellowed. Indeed, as they’ve aged, having survived those early rough, tough years, and worked hard all their lives, some of them are, at last, learning to relax. They’re taking world cruises, hiking along mountain and sea trails, playing tennis and bowls, going on cycling and barge holidays through Europe.

Defining and guiding values:

* Dedication?* Duty before pleasure?* Adherence to rules?* Hard work?* Law and order?* Respect for position?* Cautious?* Self sufficient?* Delayed reward?* Sacrifice?* Conformity?* Modesty?* Patience?* Reticent to express emotion?* Waste not want not

Baby Boomers (1946 – early 1960s)

Baby Boomers are the postwar generation, the drugs, sex, and rock n’ roll set who grew up during a time of grand visions. The idealistic visions of politicians and those fighting for freedom, or of those putting a man on the moon, all served to energise a generation of young people, who were simultaneously being culturally and socially revolutionised. They initiated anti-Vietnam rallies and were the foot soldiers of the IT revolution.

The 1960s and 70s were a turbulent time as young adult Boomers went to university and into the workplace, rebelling against the GI and Silent generation dominated institutions they found there. Their moralistic outlook spurred them on to activism against the establishment, although their rebellion was not aimed so much at toppling the system per se but rather at removing the perceived corruption within the system and installing themselves as the leaders of it. The 1990s saw Boomer politicians in most democratic countries around the world become the youngest ever Presidents and Prime Ministers, and bringing sweeping changes to the world stage. They are destined to hold onto power – in politics, corporates and religion – for more decades yet.

They love conspicuous consumption and have created more wealth (and accumulated more debt) than any other generation, ever. They are a workaholic generation, driven, goal oriented and bottom line focused.

Boomers are passionately concerned about participation in the workplace, motivated by vision, mission and strategy, and care about creating a fair and level playing field for all who agree with them. They have no difficulty legislating against the excesses of their own youth and their rallying cry is a greater sense of morality and social standards. Their inner-directed approach, so typical of the “Me Generation” lends itself well to their style of leadership which does not consult much with other generations. They’re not going to be put out to pasture before their time. They intend, in years to come, to morph into revered silver heads, who will lead their nations and industries through dangers to a better world beyond, as a result of their principled, optimistic outlook on life.

Defining and guiding values:

* Idealism?* Image?* Optimism?* Team orientation?* Personal growth?* Personal gratification?* Group together by similarity of belief?* Self-expressive?* Media savvy?* Excellence?* Big talkers?* Youth?* Work?* Involvement?* Health / wellness?* Nostalgia

Boomer-Xer cuspers (1964 – 1969)

A “cusp” is the point at which two parts of a curve meet. In generational theory, this is the group of people who fall into the overlap between two generations, born in a time between eras and influenced by both eras. Interestingly, most cuspers tend to choose characteristics of one or other of the generations they straddle, rather than displaying characteristics of both.

There is obviously a cusp generation between each of the main generational types. In this overview, we will highlight only this Boomer-Xer cusp group, as they are now becoming quite influential in the workplace and society. Barack Obama and David Cameron are both candidates for global leadership in 2008, and both demonstrate – and articulate – a sense of generational change in their approach. In many companies, new senior management are increasingly these cuspers.

They are able to fit into the Boomer world. They know when to wear a suit and tie and have a sense of how to behave appropriately so they don’t irritate Boomers in the way that full-on Xers do. They know it’s necessary to “play the game” by attending the office party so that they are seen there even though they don’t enjoy it. But, when they get home, off comes the suit and ripped jeans are pulled on. They put their ear rings back in and spike up their hair. These cuspers have hair that can be slicked down or gelled up. They wear beaded necklaces under their collar and tie, bracelets under their shirts and tattoos where nobody can see them.

Because of this, cuspers have a hugely important role to play in the world, bridging the divide that so often exists between Boomers and Xers. Cuspers also make great generational mediators and may not feel the discomfort that people who are really typical of a one generation experience with another. This makes them extremely valuable in multi-generational workplaces.

Xers (late 1960s – 1989)

Generation Xers grew up as “latchkey kids”, children of divorce, experiencing an era of crises – from Watergate and Vietnam, to the energy crisis and the collapse of communism, it was clear the adults didn’t know what was going on. Adults had also become busier, and Xers were the first children in history that mothers could take a Pill not to have. As young adults, maneuvering through a sexual minefield of AIDS and blighted courtship rituals as the legacy of the 60s revolution and feminism lives on, and remembering, with pain, their parents’ failed marriages, they date and marry cautiously – and later than previous generations.

They’re skeptical of corporations, realising that long-term commitment is unlikely to pay the dividends it did to their parents and grandparents. They are, therefore, opposed to paying their dues the way their Silent grandparents did and they look for quick, short-term rewards, are prepared to embrace risks and work hard for themselves. This entrepreneurial, selfish and individualistic attitude is often mistaken for the rebelliousness displayed by Boomers and many of the older generation simply ignore it, believing that Xers will soon grow up and move out of this phase. However, Xers are not rebelling against authority, the way Boomers did (and still are in some cases). They’re simply asserting their individuality, one of their defining characteristics.

Today, they need options and flexibility; they dislike close supervision, preferring freedom and an outputs-driven workplace. They love change so much they actually need it. Xers strive for balance in their lives – they work to have a life; they don’t live to work. They want rules but from the right authorities only; their “now” matters more than their future; they don’t want to know “is it true?” they want to know “does it work?” They are spiritual seekers who believe in the supernatural. Music is huge in their lives, it is the “window on their soul” and the language they use to express themselves.

Defining and guiding values:

* Change?* Choice?* Global awareness?* Techno-literacy?* Individualism?* Lifelong learning?* Immediate gratification?* Diversity?* Survivors?* Informality?* Whiners?* Thrill seekers?* “Experiencers”?* Pragmatism?* Not scared of failure?* Self-reliance

Millennial Generation (1989 – 2000s)

Globally, Millennials are defined as the generation growing up after the Cold War and in the new era of globalisation, communication technology and wireless connectivity. They are living in an age of unprecedented diversity and exposure to other cultures. They are growing up quickly, too quickly, some would say. As some of the most protected children in history, this generation is confident – almost arrogant, they’re so confident. Eric Chester, in ‘Employing Generation Why?” writes that the Millennials have, more than any other young generation, an ability to “filter out every command, every request and every instruction that is not bundled with acceptable rationale – they demand reasons and rationale, so the traditional ‘because I said so’ isn’t going to cut it with them.”

They are growing up in a world that is creaking under the strain of our lifestyles, and they are daily made aware of the fragile environment. So, it is no surprise that they are emerging as ethical consumers who want to change the world.

Defining and guiding values:

* Optimism?* Confidence?* High self-esteem?* Media & entertainment overloaded?* Street smart?* Diversity?* Conservative?* Networkers?* Civic duty?* Ethical consumption?* Achievement?* Morality?* Naiveté?* Change?* Techno-savvy?* Global citizens, with a multi-everything view

At first glance, generational theory has an elegant simplicity to it. Unlike more complex segmentation tools, generational theory is immediately applicable. In the corporate environment it is often used to help front line staff adjust the way they interact with clients – face to face, by phone or in written formats. The attraction for business is that just by knowing someone’s age, you can adjust your approach to them and have a greater chance of connecting with them, and therefore influencing them.

Of course, there are always exceptions to every rule. There are many young old people in the world: people from the older generations who have adapted and changed their attitudes and outlooks to be more in line with younger generations. The same is true vice versa. There are young people who have the attitudes and expectations of much older generations. This can also be influenced by personality, gender, culture and especially religion. All of these factors must be considered when trying to understand, predict and influence the behaviour of a particular individual.

Ethnographic Dazzle

There is an inherent danger with such an appealing theory. Because it is simple to understand and apply, users of generational theory can easily be drawn into “ethnographic dazzle”. This term was coined by British anthropologist, Robin Fox to explain blindness to underlying similarities between human groups and cultures because one is dazzled by the more highly visible surface differences.

In her 2006 book, “Retiring the Generation Gap: How Employees Young and Old Can Find Common Ground”, Jennifer Deal of the Center for Creative Leadership in the USA, rightly pointed out that an over emphasis on generational differences can lead managers and leaders to miss the common human traits that connect all people.

This is an important point to make. Although the underlying premise of generational theory is simple enough, the understanding and application of it can take quite some time to master. Just like any profiling tool, care should be taken not to abuse the theory or to apply it as a “blunt instrument”. If you have become interested in generational theory while reading this article, please continue to investigate and read some of the follow up articles we have written, applying the theory in a multitude of areas, from marketing and sales, to training and education; from parenting to team dynamics; and from leadership and management to recruitment and retention of staff. You will find all these resources and more at the TomorrowToday websites (see http://www.tomorrowtoday.uk.com as a starting point).

Other generational issues

Finally, then, in this introduction to the theory, we turn our attention to some common concerns and questions about how generational theory interacts with other obvious developmental and formative issues.

Generations and lifestages

Human beings grow up through distinct and predictable lifestages. These relate to physical changes in their bodies (infant, childhood, puberty, teenagers, adulthood, menopause, old age, etc), their relationships (child, single, married, divorced, widowed, etc) and their economic circumstances (dependent, part-time worker, student, employee, manager, owner, etc), and a few other factors normally considered when creating lifestage segmentation models.

Life-stage has a lot to do with behaviour in the workforce and in society in general. People in their 30s and 40s, for example, tend to show greater organisational loyalty and stability than they did in their 20s because they have children and commitments (such as mortgages to pay). Many Boomers heading into their 60s aren’t workaholics anymore as they look for ways to wind down their careers.

Having said this, generational theory correctly predicts that each new generation entering a specific lifestage will redefine that lifestage and change it either subtly or dramatically. There are definite differences in the ways that the generations approach their various life-stages – usually by attempting to correct what they see are the errors of their parents and immediate elders. Generation X parents, for example, tend to take more time off of work to be with their children. Paternity leave has only become really popular in the last 10-12 years, and the parenting practices that were common in the 1970s would probably lead to a visit from Social Services today. Boomers are starting to change retirement, as they do not head out of the workplace completely. They seem be “retyring” – coming back to their old companies as highly paid, part-time “consultants”.

Strauss and Howe, the generation gurus, summarise it this way: “History creates generations, and generations create history. The cycle draws forward energy from each generation’s need to redefine the social role of each new phase of life it enters. And it draws circular energy from each generation’s tendency to fill perceived gaps and to correct (indeed, overcorrect) the excesses of its elders.” Using generational theory, we can actually predict how each generation is likely to tackle the next lifestage they face. This is incredibly helpful just now, as many generations are facing significant lifestage shift moments (Millennials are heading into the workplace, Generation Xers have children and mortgages, and the Boomers are starting to retire).

Generations and culture around the world

One of the most common questions about generational theory is whether it is globally applicable. There are really three questions here: does it apply equally in different countries around the world?; does apply equally to people from different cultural backgrounds?; and, does it apply equally to rich and poor, and upper and lower classes?

It would be foolish to claim that any theory could have such a broad reach and applicability, and certainly generational theory suffers the same weaknesses that all sociological models would suffer when faced with these questions. The majority of the research has been in middle class, developed nations, and so this is where the theory is most obviously applicable. Research is still sparse in some parts of the world, yet, anecdotally, TomorrowToday can confirm that as we have done presentations on this issue around the world – literally on every continent, and to delegates representing at least 100 countries – we have found audiences to be enthusiastic in their acceptance of the theory and affirming of its applicability.

My country of birth, South Africa, might be a good example to consider. The theory has been tested in South Africa in a number of studies. Kelly SA, a personnel company, did research in 2005 called the “Workplace Satisfaction Survey”. One of their major conclusions was that the younger the person, the less race and the more age became a predictor of attitudes and behaviour. In other words, today’s young South Africans have more in common with each other than any of them have in common with their own parents. In 2002, I did research with Ogilvy & Mather SA, in which we looked at the stratified data of sociomonitor studies, using a longitudinal study sample that spanned the last 25 years of their data. We compared people of different ages and different race groups, and found age (generation) to be a much more powerful predictor of attitude and values (that’s what sociomonitor tries to identify) than race was. This study received a Global WPP merit award for market research.

It is probably fair to say that the theory is mainly applicable to those who are higher up Maslow’s “hierarchy of needs”. Many sociological theories battle to be applicable to children at risk, or to those who live in extreme poverty. Nevertheless, we see massive value shifts taking place amongst the younger generations of all cultures and economic classes. In the case of the newly affluent (this applies as much in Russia and Eastern Europe as it does among Polynesian immigrants in East Australia and the middle class of Nairobi’s suburbs), the children often portray the characteristics of second generation immigrants. When parents move countries, the first generation of children (often born in the old country, but with very little memory of it) are caught in between cultures. At home, they may follow very closely the rituals and traditions of the original culture (including speaking the language, wearing the clothes, fulfilling rituals). But, away from home (at school, work, etc), they very often pick up the language (and even accent) of the host culture, wear those clothes and participate in those rituals. They’ve been called the “one-and-a-half generation” by researchers.

We can therefore confidently apply generational theory in different countries and contexts. In each new country, work needs to be done to identify unique, local defining events, and show how these events specifically influenced the generations in that country. This requires knowledge of the country and region’s history, as well as some time to investigate generational cohort attitudes. TomorrowToday has done this work in nearly 30 countries, and in each case have found the generational age bands to be fairly similar, and quite closely aligned to the general age ranges provided in the overview of the living generations above.

Generations and class

In the UK, as in some other countries, class is an incredibly important factor in how people perceive themselves and others. Recent studies have shown, however, that generational mindsets seem to be taking precedence over class as driving forces of societal identity. In their 2002 book, “Generations, Culture and Society”, for example, John Edmunds and Bryan Turner set out to show “the value of generations over class in understanding cultural, intellectual and national change in the twentieth century”.

As with other indicators and predictors of behaviour and attitude, such as personality, culture and gender, class plays an important modifying role in societies where class (or caste) are important. However, within each of these societal class tiers, one can identify generational shifts taking place. This is probably especially true of the generations since the Boomer generation, and particularly true in countries and regions where there are growing middle class populations.

A Repeating Cycle

A final consideration will show the deep-rooted value of generational theory as a predictor of values, attitudes and expectations. Most generational theorists (but most notably Howe and Strauss in “The Fourth Turning”) have identified a repeating cycle in historical generational values. Typically, four different generational archetypes are identified, alternating between active and passive types. In an Appendix on the last page of this article, a summary of the four archetypes is provided.

The concept is that over an 80 year period of human history, we start with a crisis period, when society has to stop and deal with an issue that actually changes institutions and structures. Children born during such a time grow up to be like the Silent generation of today. This is followed by an outer directed and driven period of rebuilding, with grand visions and big dreams, giving rise to a Boomer-like generation. This idealistic world cannot be sustained, however, and a period of disillusionment and breaking down follows, with society being reconfigured and adjusted. The children of this era grow up to be like Generation X is today. This era is followed by an inner-directed era, where leaders, institutions and society itself focuses on consolidating and building new foundations, rebuilding institutions and protecting the young. This era gives rise to the type of people who are from the GI generation and the Millennial generation today. Finally, this inner-directed focus cannot be maintained, and a crisis occurs, sparking a new cycle.

If this is correct, then generational theorists are expecting a major crisis to hit global society in the next few years. This is something that will cause society to stop, reconsider and reconstitute itself.

Why this is important

The challenge for leaders in all sectors of business and society comes from a clash of the generations: a collision of values, expectations, ambitions, attitudes and behaviours.

In particular, the human factor is increasingly important for maintaining a competitive advantage in business. In virtually every industry, the competitors are becoming indistinguishable on the basis of product or service. What a company sells is becoming less and less of a competitive advantage. Competing companies offer the same stuff at about the same price and quality, to the same people, delivering through similar channels and advertising in the same media using similar techniques. And they even swap staff every few years. Innovation is not the competitive edge it used to be either. Even if one company comes up with the industry’s “next big thing”, their competitors will copy it within a matter of days (without the R&D costs).

Competitive advantage is therefore found less and less in what a company sells, and more and more in who a company is, and how it sells. In this environment, talent is the primary commodity, and the ability to attract, retain, nurture and motivate talented staff (young and old) is a critical success factor for any company in any industry. It is vital to create an internal environment that allows people to individually and collectively create far more value than they could if they were employed elsewhere. Generational theory provides a powerful framework for creating such an environment, where multiple generations interact effectively.

Conclusion

Generational theory is a sociological, rather than psychological theory. It does not claim to be able to explain the individual actions of individuals, nor to be able to predict an individual’s behaviour. But, combined with personality profiles, understanding of gender, culture, religion, race, etc, it can be a very helpful additional “layer” or “lens” of analysis of people’s behaviour drivers.

For more information and a detailed look at different generations, look at “Mind the Gap” (by Graeme Codrington and Sue Grant-Marshall, Penguin, 2004), or the information and resources available from www.tomorrowtoday.uk.com

Dr Graeme Codrington is an international expert on the future of work and people strategy, specifically how to attract, retain and engage talented staff and valued customers. He works internationally with some of the world’s top companies, and is sought after keynote presenter, best selling author and award winning researcher. He can be contacted at graeme@tomorrowtoday.uk.com

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The Accounting Profession: Power, Pressure, Perfection and People

Since 2002, the accounting profession has been rocked by sensational corporate scandals and subsequent strict regulations.  The four largest global accounting firms (the ‘Big Four’) still have more challenges on the horizon.  All of them see their talented staff as the best tool to embrace these challenges and add the value demanded by clients.  Each of the Big Four believes their people are the source of their future competitive advantage.

But, most graduates who are recruited by these firms write the same exams, are affiliated to the same professional bodies and are overseen by the same external regulators.  The structure of an audit, the deadlines, the type of people who are recruited, the pressure and the opportunities are similar at each of the four accounting giants.

If talented people are the key to differentiation for each of the firms, why and how should they change and structure themselves in order to capitalize on this critical resource?  How can they each use their people to differentiate from each other?

In spite of the new networked, knowledge economy, increased regulations and changes to the profession, the organisational design and way audits are staffed and performed has generally remained the same.

Is it time for the Big Four to change?

The power of the Big Four

Ernst & Young, KPMG, PricewaterhouseCoopers and Deloitte are the four largest accounting and professional services firms.  They are the global ‘Big Four’.  In 2007, they had combined revenue of $89 billion and this is likely to exceed $100 billion in 2008.  Together they employ over 500,000 people globally.

According to AccountancyAge.com, the Big Four audit 100% of the FTSE100 and 97% of the FTSE350.  Recent research done by BDO Stoy Hayward in the UK revealed that investors would be concerned if a company switched to a non-Big Four auditor.  A third would then review their investment decisions.  Of those investors who expressed concern, they could not articulate exactly why they would be worried.  The reputation alone of the Big Four giants gives the public a sense of confidence and security.

Clearly, the Big Four accounting firms have created a powerful, global oligopoly.

Why everyone has a vested interest in the Big Four

An audit identifies whether the financial statements, prepared by management, are fairly presented and are a true reflection of the financial position of the company.  Audits provide vital confirmation and confidence to investors so that they can allocate their capital wisely.

The dominance and power of the Big Four has risen out of the importance of reliable accounting, which is the foundation of the commercial system.  They are perceived as the stewards of the integrity and reliability of global capital markets.  The integrity of capitalism depends on the integrity of accounting systems.

The landscape

The accounting and audit landscape was shaken by the sensational accounting scandals of 2002 and the subsequent reactive regulatory burdens.  The bankruptcies of WorldCom and Enron, the collapse of Arthur Andersen and the loss of public confidence in the accounting profession were triggers for change.

In response to the corporate scandals, George W Bush passed the Sarbanes Oxley Act of 2002.  This was the most sweeping amendment to US securities law since 1934 and it had a global ripple effect.  This Act made management responsible for their company’s internal controls.  Independent auditors, like the Big Four, had to attest these controls and report any material weaknesses.  Failure to adhere to these rules imposed criminal penalties on management.

In order to comply, the Big Four, and their clients, entered an internal-focused frenzy of compliance.  They became preoccupied with avoiding risks which may lead to criminal action.

Now that this rush of compliance is calming down, commercial finance functions within companies are recognizing that they need to keep pace with the rapidly changing global market and reinvent themselves in spite of regulatory and reporting burdens.  They see consolidation, simplification and centralisation as vital, necessary change for the future.

As clients streamline processes, eliminate redundant procedures and move routine functions offshore and into shared service centres, so auditors need the knowledge to understand and add more value to their clients’ new business techniques.  The revenue from Sarbanes Oxley work is beginning to wane so it is becoming more and more important for the Big Four to differentiate, position themselves in the market, improve operational effectiveness, manage talent and establish a market position in both developed and emerging markets.

Most audit firms have placed their people at the front of their strategic agenda.  The Big Four are dependent on the knowledge, networks, relationships and reputation created by their staff.  Their people are the primary source of their current and future wealth.  In order to retain talent, what do the Big Four need to change in order to get a bigger slice of the global market?

If it’s not broken, don’t fix it

In July 2007, the Economist published an article about how the Big Four accountancy firms set an example to other companies by the way they manage talent.  Their performance management systems, partnership structure, global mobility opportunities and innovative recruitment strategies show that the Big Four do not simply pay lip service to talent management but also take concrete, visible steps to practice what they preach.  The UK Graduate Survey in 2007 revealed that graduates rate all four accounting firms in the top 15 best companies to work for.

According to McKinsey consultants, Lowell Bryan and Claudia Joyce, professional service firms like the Big Four are models of 21st century organisations.  They do not need to change their organisational structure and design as many traditional companies should.

In their book called, ‘Mobilizing Minds’, Bryan and Joyce examine how companies can mobilise the mind power of their people in order to create wealth from talent in the 21st century.  They believe the cutting edge company of the future should have a combination of both hierarchy and collaboration.  It should also mix individual accountability with mutual accountability to drive the company’s strategy and increase the bottom line.  They tout professional service companies, like the Big Four, as prime examples of this quality.

Qualities of the 21st century company, which the Big Four already have, are:

1.    Partnership-at-the-top model

• A partnership culture increases the number of people who feel personally responsible and accountable for performance of the organisation.  It forces leaders to think outside the bounds of personal self interest.

• Bryan and Joyce’s model is made up of a group of senior partners who form a top management committee.  They are responsible for running the firm, dividing returns between partners and they serve as board of directors.  All of the Big Four already have these executive management committees of senior partners.

• A partnership provides more senior job opportunities to which junior staff can aspire.  The traditional top down hierarchy has limited space for senior people at the top.  The Big Four do not have these restrictions – there is room for more talented people because there is a broad plateau of leaders.

• One dominant profession, accountancy, should make it easier for partners at the Big Four to make strategic decisions.

2.    Role-specific performance management

• This standardizes performance management across the organisation.

• The Big Four accounting firms encourage collaboration by defining the behaviour that is expected from every role – associate, manager, senior manager, director and partner.  They set expectations for performance and define the skills which are essential for each role.

• ‘We believe that by defining how people with different roles should work with one another and holding them accountable for doing so,’ say Bryan and Joyce, ‘you can make it in their mutual self-interest to collaborate effectively.’  If people are held both individually and mutually accountable for helping others succeed, they have a vested interest in developing others.

3.    Formal networks

• A formal network is a structured community of people who have a common interest.  The Big Four have organised their professionals into networked communities for many years.

• Each of the Big Four has grouped industry experts into global networks who collaborate and share knowledge.  There are financial services, public sector, mining and energy, media and entertainment and consumer and industrial product specialist networks.

• These networks stimulate interaction and streamline decision making because it is easier and faster to find knowledge and resources using the network that it is elsewhere.

4.    Talent Marketplaces

• Talent marketplaces try to match employees who are seeking challenging, career-enhancing job opportunities with managers who need talented resources for projects.

• It puts more responsibility on the individual for managing their own personal development.

• The Big Four are already talent marketplaces where employees are a pool of resources.  They are staffed on projects and when a job is over, they are reassigned to another one.

5.    Knowledge Marketplaces

• Knowledge marketplaces allow information to flow through the organisation in a streamlined, structured and accessible way.

• The Big Four are already formal knowledge marketplaces.  Many have dedicated knowledge managers who filter information and distribute it to the people who could use it the most.

‘In brand terms, both the profession and the Big Four are highly desirable and high profile [to graduates],’ wrote Hugh Thompson in the Accountancy Age magazine.  If the Big Four are so popular with graduates, why do they still battle to retain talent?

According to the Economist, the Big Four have about 15-20% turnover every year, compared to 5% in other industries.  Jim Wall from Deloitte believed every annual percentage drop in turnover rates equates to a saving of around $400 million to $500 million.

Why do these model 21st century talent-focused companies find it so difficult to engage employees?

The Big Four face certain inherent challenges that are engrained in the nature of the accounting profession.   Their people obstacles lie in the nature of the work, the reasons why people choose to be accountants and the motivation behind the new generation of young talent which is the core of Big Four work force.

Accountancy firms have to understand and accept that the obstacles they face cannot simply be solved by changing the structure of the audit or launching a new recruitment campaign.

True talent differentiation for the Big Four lies in responding to these fundamental points:

1.    Understand the reasons why most people become accountants

The reasons why people choose the accounting profession are not usually congruent with their deep, personal passion and talents.  Money, status and future career marketability are some of the main reasons why people choose the accounting profession.

In his book, A Whole New Mind: Why Right Brainers will Rule the Future, Daniel Pink says:

Relatively few people become accountants out of a sense of intrinsic motivation.  This weekend, there will be accountants doing watercolours in the garages.  But I guarantee you that you won’t find any sculptors who on weekends will be doing other people’s taxes for fun.  In other words, there is a growing congruence between the sorts of things that people do because they love doing them and the sorts of things that confer economic advantage.

Few auditors use their profession to express their true purpose and passion – they do this out of working hours.  This is the challenge for the Big Four.

Thomas Friedman, who writes about globalization in his book The World is Flat, sees passion as a critical part of the future working world.  He believes it is passion that drives people to create, discover, achieve and improve.   It is passion that adds a personal, intangible dimension to vanilla work and gives people the motivation to push themselves to the limits of their capability with commitment and focus.  It is this kind of energy which can create real economic value for The Big Four.  Their challenge is to harness this intrinsic energy and talent and integrate it into people’s jobs so they get the very best out of their staff.

2.    The work that entry level graduate audits do, is generally cumbersome and dull

The authors, Daniel Pink and Thomas Friedman, believe that we are moving from an era which focuses on logical, analytical, linear thinking (left brain thinking which is typical of accountants) into the Conceptual Age which is built on big picture, innovative, creative abilities (typical of the right hand side of the brain).

While the details focused skills are still required, they are no longer sufficient.  Pink says, ‘The future belongs to a very different kind of person with a very different kind of mind – creators and empathizers, pattern recognizers, and meaning makers.’

The work which is given to junior graduates generally does not nurture these right brain skills.  In most cases, work is detail focused and it is easy for staff to lose sight of the big picture as they immerse themselves in the invoices, bank statements, ledgers and reconciliations of typical junior sections of the audit like bank, cash and fixed assets.

The Sarbanes Oxley Act created a huge revenue stream for the Big Four.  But, most accountants would agree that the detailed work it involved was cumbersome and mind numbing.  If anything, it moved people into the left brain realm and away from the creativity, innovation and energy that right-brain activities ignite in people.

Junior staff is the most impressionable and are a pool of potential partners.  The Big Four’s challenge is to manage the initial perceptions of these impressionable graduates and avoid demotivating them along the way.

3.    Remove bureaucracy and corporate inertia.

Bureaucracy compensates for incompetence and lack of discipline.  The Big Four’s challenge is to wipe out the complacency and comfort that has come from their oligopoly, the legal requirement for certain companies to be audited and the Sarbanes Oxley income stream.  They should create a healthy discomfort which stimulates people and processes to change and improve.

Jim Collins said, ‘Good is the enemy of great’.  The temptation of the accounting titans may be to stick in the safety, comfort, and complacency of the good.

4.    Define the line between regulatory compliance and calculated business risks

The Big Four’s challenge is to define the line between regulatory compliance and taking calculated business risks in order to identify new, exciting and value-enhancing opportunities.  It is difficult to be bolder, more daring and unconventional so that staff remain positive, inspired, big picture right brain thinkers. The market and regulators do not tolerate failure.  But, failure and innovation go together.  Some of the greatest learning experiences, decisions, and growth opportunities have come from failure first.  Innovation and creativity are a requirement of differentiation.

Unforgiving markets and regulators often send the accounting profession into a frenzy of perfectionism.  Accountants generally score a Type One on the Enneagram personality type indicator.  This personality type is conscientious, orderly, well-organised, details focused and easily falls into perfectionism.  This focus on perfectionism prevents many accountants from experimenting.  There is an engrained reluctance to learn from both success and failure.  There are few systems (particularly the performance appraisal ones) in place to stimulate and reinforce evolutionary, trial-and-error behaviour.

5.    Understand, accept and embrace generational differences

Generational differences are particularly acute in the accounting profession.  In most audit teams, there is at least one Millennial, one Generation X’er and one Baby Boomer.  Each of these people was raised in different era and approaches work in different ways.

Each of the Big Four recruits about 1000 graduates per year in the UK alone.  These Millennials are led by people from a different generation (generally Baby Boomers) who do not understand the way young people today communicate and respond to authority, rules and opportunities.

Leading the new generation of employees is like herding cats.  They have a mind of their own and value fun, freedom and flexibility.  They focus on outputs and not inputs.  They want to be included in big decisions.  The older generation in the firm comes from an era which values loyalty and is more appreciative of the stability, rewards, experience and opportunities provided by their firm.  Millennials do not necessarily respect people because of rank or experience – they want their leaders to act in a way that demonstrates why they are at that spot in the hierarchy.

The collaborative structure of the audit team is encouraged by futurists like Lowell Bryan and Claudia Joyce.  So, the challenge for the Big Four is to manage acute generational differences within these teams.

6.    Communicate a unique vision (if you have one)

Each of the Big Four says they are different from their competitors yet none has articulated the vision that makes them unique.  What is their differentiating purpose in business, other than making money?  Their challenge is to ensure they are not driven solely by fear – fear of failure, fear of client rejection, fear of regulators, fear of becoming another Arthur Andersen.  Why are any of the Big Four a better place to work than their competitors?  If it is not any different, then don’t pretend it is.

Talented people want to work with other great people to achieve a big vision.  Financial rewards for the company then become a natural by-product of that vision because people understand it, can apply it and it is clearly defined to the market, clients and staff.   The Big Four’s challenge is to communicate this vision clearly and then let their actions speak for themselves.

The new generation entering the work force, the Millennials, crave meaning and purpose in their work.  The nature of audits makes this difficult as the audit is done once every year.  The following year, the slate is wiped clean and the team begins the cycle over again.

During the Middle Ages, a traveller came upon a building site.  He asked a couple of workers, ‘What are you doing?’  One mumbled, ‘I’m cutting stone.  It’s hard, boring and my back is aching.’  The other responded, with an excited gleam in his eyes, ‘I’m building a cathedral.’  Are any of the Big Four building their own ‘cathedral’?  The perception from bored junior staff, is that they are not creating something lasting and significant.  The challenge for the Big Four is to define what that vision is (aside from making money) for each of their business units.

The future

Business strategists, like those from McKinsey, have revealed that the organisational structure and design of the Big Four is one of the models which 21st century organisations should use to create wealth from talent.

So, the future is not about changing the structure of the firms, but understanding the deep, profound challenges which are inherent within the accounting profession.

The Big Four firm who will truly differentiate, capture market share and retain highly skilled talent is the one who embraces generational differences, removes bureaucracy, communicates a vision, makes entry level audit work more exciting, harnesses people’s passion and intrinsic motivation and takes calculated business risks in spite of the unforgiving market and regulatory environment.

Achieving these things requires above average innovation and creativity.  That’s why the accounting profession needs more right brain thinkers …

REFERENCES:

1.    Bryan, Lowell L and Joyce, Claudia I.  Mobilizing Minds:  Creating wealth from talent in the 21st century.  McGraw Hill, 2008

2.    Collins, Jim and Porras, Jerry  Built to Last Random House Business Books, 1994

3.    Collins, Jim  Good to Great  Random House Business Books, 2001

4.    Fisher, Richard W The Future of the Accounting Profession  American Assembly Columbia University, November 13-15, 2003

5.    Friedman, Thomas.  The World is Flat Penguin Books, 2006

6.    Pink, Daniel H.  A Whole New Mind: Why right brainers will rule the future Marshall Cavendish, 2008

7.    The Economist.  Accounting for Good People  19 July 2007

8.    Smith, Philip.  Accountancy Magazine  Big Four spawn more FTSE 100 FDs 3 March 2008

9.    Thompson, Hugh.  AccountancyAge.Com Talent spotting at the big four 11 April 2005

10.    Wikipedia http://en.wikipedia.org/wiki/Big_Four_auditors

11.    Accounting Profession in 2006 – The big trends  http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=149534

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This is not another comment on how tough it is out there. There’s plenty of that going around, and then some. This is rather a question on how one should prepare people for the ‘flip side’? And there always is a flip side, whether you’re running a company or flying an Apollo Mission.

There are clearly some difficult decisions to be made when resources are tight, cash flow is under pressure and business isn’t flowing in like it did 12 months ago. Of course it doesn’t help when you don’t know when the cycle is going to turn, how quickly and to what levels the economy will return? Making a bad decision when the pressure is turned up can have far reaching consequences. Containing costs and doing everything to keep sales to an acceptable level are all part of the mechanisms most managers turn to.

What about people in all of this? The enormous value people contribute to a business cannot be reduced to a neat Newtonian formula. There is no, “x + y = z” with people. My favourite term for people comes from the IT world. They accurately describe people, in the spirit of terms like hardware and software, as Messyware. People are messy. They’re unpredictable. Most managers I know spend much of their careers doing everything they can to get the best out of and from their people. And many feel like they failed. While a forklift can’t intuitively tell the difference between a bull and a bear market, people most certainly can.

Their energy, philosophy, engagement levels, interest, motivation, inspiration, resilience, health, smiles, fun, productivity, etc can be impacted by their coffee being cold. How many cups of cold coffee would you guess an economic slump is equal to? Add to that electricity blackouts, political uncertainty, high crime levels, etc.

So while there’s no hard and fast science to this, I feel confident suggesting that when times are tough our focus on people, within our businesses, is more critical than when times are good. In reality, however, the converse plays itself out:

• Managers are under more pressure operationally, so key conversations that were happening, are happening less and less.
• Budgets are tighter and smaller, so less money is spent on the warm fuzzies we know are so important.
• Business isn’t walking in through the door, so people are spending more and more time pounding the pavement and less and less time sharpening the saw (learning and development)
• Instead of the passage talk being dominated by promotions and bonuses, the whispers begin to focus on lay-offs and head-count freeze.

The danger of course, is that when the economy eventually turns and business starts to grow, your people are in absolutely no position to take advantage of it. They’re tired and worn out. Their emotional bank accounts are severely withdrawn. Clearly this is not the scenario you want to have.

We had coffee with a client the other day who is determined to avoid people feeling insecure in this climate. One of the mechanisms they’re using is to invest in learning and development. The popular wisdom has been to cut back and freeze, their wisdom has been to invest and spend. It’s not an obscene amount of money, but it will impact on at least two areas I’ve touched on above:

1. Participants in the project will naturally feel invested in as they have opportunity to grow and develop.
2. When the economy turns they’ll have a far better chance of having a team who are fresher and more prepared to take advantage of the opportunities.

My point, however, isn’t how much you’re spending or saving. It’s how hard you’re working to ensure that the people in your business stay very high up on your agenda. It’s a true-ism for all of us, in any context, that when things are good we need little from those around us. It’s when things get tough that we need all the support, energy, connection, etc that we can find.

Barrie Bramley is a founding partner of TomorrowToday and heads up our talent development project. He invites you to engage him in further conversation. He can be e-mailed on barrie@tomorrowtoday.co.za

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I was left pondering his answer. Answer? What kind of answer was that anyway? I was left with two thoughts: Firstly, Sipho has a bright future in politics and secondly, he did a masterful job at managing parental expectations!

It was the second conclusion that led me to thinking about two of the most important aspects of leadership, namely the need to manage expectations and the need to manage perceptions. Neither of these aspects of leadership will make it onto the list of ‘hard skills leaders need to learn’ nor have I ever heard them the subject of formal discussion in leadership development programmes or listed on the curriculum of any business school, but that doesn’t mean that they are not important aspects of leadership. In fact one could argue that these two aspects of leadership represent to leadership what smoke and mirrors are to the art of illusion.

As a Leader, clarifying expectations and understanding the perceptions of those you lead is vital if you are to be effective. It might be that before you can even begin with your task, work will need to be done in these two areas. Any dislocation between you and those who make up your constituency in these areas of expectation and perception will only result in failure, frustration and pain.

There are some pointers as how to navigate these cross-currents without being swept away:

Have a clear understanding of the direction in which you are heading. Without this the danger is you will ‘manage by expectation’ rather than ‘managing the expectations’. There is an important difference. The former is like a sailing vessel which leaves the sanctuary of the harbour with no fixed destination and navigational plan. That means that without knowing where it is heading, any wind becomes the ‘right wind’. It conjures up a meaningless and random journey, one devoid of leadership and direction. Any leader who only dances to the popular tune of the masses, will ultimately be ineffective and will be found wanting. Current South African politics provides a good example of the failure to manage expectations (and perceptions) as one reviews the Mbeki presidency. Equally dangerous is the accusation levelled against the President-elect, Jacob Zuma that he is guilty of being ‘managed by expectations’. In both situations, time will be the judge.

Assess the gap. This is the gap between the need to steer a specific course and the expectations and perceptions of those you lead. Author Scott M Peck describes the task of leadership to intentionally lead people towards authentic community. To put this into more accessible ‘business speak’ – to lead teams to where they can relate and function effectively. To do this, you as the leader, have to lead your team into the area that Peck terms ‘emptiness’. Not much inviting about that! Peck states that groups naturally oscillate between ‘pseudo-community’ (level one) and chaos (level two). In other words we naturally organise in a pleasant way (pseudo-community) but every now and then, somebody will ‘break the rules’ resulting in chaos (level two) before we naturally restore ‘order’ and revert to pseudo-community. This dance happens continuously and without the intervention of leadership. However, in Peck’s model, to reach level four (authentic community) the group has to negotiate level three (emptiness). This does not occur naturally and requires intention leadership. Understanding this means that you lead in an intentional, deliberate manner and can better manage the gap between the expectations and perceptions and the desired objective.

Remain connected. All too often leaders become estranged from their constituency resulting in a real disconnection. This is often an insidious, subtle slide that happens over time and not something that most leaders would have intentionally undertaken. But all too often, with the added perspective of hindsight, it is reality. In the course of this regression, leaders loose touch with the ‘on-the-ground’ expectations and perceptions. Practices such as ‘walk the floor’ and ‘coffee conversations’ are those practices designed to avoid losing touch with those being led. Spend time integrating yourself into some of the regular process that surround you: attend the odd meeting or forum where you are not expected; sit in on some training courses; invite random conversations; ask questions and listen carefully; take the ‘Maverick’ to lunch; seek out the opinion of others – other outside of your immediate team.

Acknowledge the perceptions of others and provide information. There was once a leadership mindset that held the belief that information needed to be guarded and the ‘company line’ defended at all costs. Certainly today’s public are too discerning to buy that – and so too are those within your organisation. Honest acknowledgment of the perceptions that differ from that of your own can go a long way to removing the ‘sting in the tail’. The real work here sits in not merely acknowledging the perception but in endeavouring to understand why it exists. This will require maturity, humility and a willingness to listen carefully. It is the very essence of savvy leadership and these are qualities that go beyond mere skills.

In leadership, understanding and managing the expectations and perceptions of your constituency will go a long way to determining what kind of leader you are. Discernment and skills in this area of leadership will help eliminate a blind-spot, one that all too often leaves leaders exposed and, as I was in the face of Sipho’s answer, somewhat dumbfounded.

Good luck.

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Talent. I love that word!
So different from ‘employees’
So different from ‘personnel’
So different from ‘human resources’
Talent! Just uttering the word, per se, makes you puff up and feel good about yourself!
Talent! I do indeed love that word!
- Tom Peters

Talent. I dislike that word!
So difficult to define
So difficult to see
So difficult to measure
Talent! Just uttering the word, per se, make you want to run and hide, even put your head in the sand until it goes away!
Talent! I do indeed dislike that word!
– Barrie Bramley

It’s not Tom Peters I have an issue with. I enjoy him. I love the style with which he puts his thinking out there. It’s the sudden preoccupation many companies have with ‘talent’ that has my attention. It’s the confusion it’s causing, as those who are grappling with it struggle to work out what to do with it?

All this grappling is not without reason. There is a crisis looming. Some would even suggest the crisis has arrived? From where I stand the crisis is not primarily a talent crisis, it’s a shortage of skills crisis. To be more accurate, in the ‘Northern Hemisphere’ it’s a shortage of young people to replace retiring Baby Boomers, and in the ‘Southern Hemisphere’ it’s an abundance of young people lacking some specific skills. Put this all together and there is a problem of scarce skills in the market place (in some specific spaces). Of course when there’s a shortage of people with skills, you want to ensure that you ‘acquire’ the best people available. And there you have it; ‘the war for talent’ is born.

This is where the confusion begins. For example – you manage to capture the attention of someone with a scarce skill that your company needs. This new person clearly must fit into the ‘talent category’? You’re paying them a lot of money. You’ve spent some significant time, energy and resource capturing their attention. The competition had their eye on her as well. So talent she shall be. Expectations of grandiose proportions develop. Hopes of extra-ordinary performance are announced in the boardroom.

But you have over-looked a key point. Just because they have a scarce skill doesn’t make them superhuman. You only need a 50% pass mark to attain most university qualifications. Someone had to come last in the class. You may have just hired that particular person!

I don’t really dislike the word. I’d just like to suggest that not enough is being done to think through this recent upsurge in a focus on talent. It’s not a new concept either. Businesses have, since their inception, understood that getting the best possible people is a competitive differentiator that mostly works in your favour. Investigate the story of your own company or the one next door in a completely different industry. They’ve been on a ‘search and retain’ mission for talent since they began.

Separating out the issues in order to gain clarity is paramount in order to avoid wasting time, resource and energy.

While I think there are a few issues that need to be put onto the table for discussion, simply appreciating that a different strategy is required when one is attracting the attention of someone with a scarce skill and someone with enough talent to shoot the lights out, changes everything.

Talent! It’s certainly an interesting word : )

Barrie Bramley is a founding partner of TomorrowToday.biz and works in our ‘future of work’ research team. He is a strength-perspective evangelist and invites you to engage him in further conversation. He can be e-mailed on barrie@tomorrowtoday.biz

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The era in which you were born has an extraordinary effect on your value system, your expectations of the workplace and how you approach life. In this article, Dr Graeme Codrington, one of the world’s leading experts on generational theory, gives an introduction to the concept of the generation gap.

One of the most important keys to success in any service industry is the ability to quickly evaluate other people and connect effectively with them. In fact, in an increasingly commoditised world, where you and your competitors are essentially selling the same products and services, in the same way, through similar channels, at the same price to the same customers, the key to competitive advantage is found less and less in what you sell and more and more in who you are and how you do business. In this environment, your ability to connect is critical to your ongoing success.

Our ability to connect is directly related to our understanding of other people. This understanding is influenced by many factors, including culture, gender, education, lifestage and socio-economics. There is one factor, however, that is almost always ignored, yet is one of the most important in predicting underlying values and attitudes, namely, a person’s generation.

What are ‘Generations’?

Generational theory is another tool in the segmentation or profiling toolbox. Simply stated, the era in which a person was born affects the development of their view of the world. As people, we are shaped and formed by a wide variety of forces and influences, including our culture, language, religion, parents and life circumstances. We are also, to an extraordinary extent, shaped by the era in which we were born. In the last century, people in different countries and communities have been exposed to the same defining global events and forces, and people of a similar age can therefore be shown to share certain underlying values, regardless of their country or community of birth.

Here is just one set of examples of these global defining moments. On 21 December 1988, the cold war and terrorism threat reached the UK, with the downing of Pan Am Flight 103 over Lockerbie – in apparent retaliation to the July 3 downing of an Iranian passenger jet by an American warship. But the “cold war” was nearly over. In the first few months of 1989, students led a Chinese revolution, culminating in May and June’s iconic Tiananmen Square protests. On 9 November that same year, the Berlin wall came down. On 20 December 1989, America invaded Panama in one of their early “pre-emptive strikes”. On Christmas day, 1989, the Romanian dictator, Nicolae Ceausescu was hanged outside his palace and Eastern Europe continued to open up. The following day, Mikhail Gorbachev announced perestroika in Russia and banned the communist party. On 11 February 1990, Nelson Mandela was released after 27 years in jail and his African National Congress and the Communist Party were unbanned in South Africa.

Everyone in the world was amazed at the changes evident in these few tumultuous months. But the young people of that time had these events imprinted onto their value systems, and were defined by them. Similar key moments and global forces have shaped other generations in the past century. Understanding these defining eras helps us understand the underlying value systems they helped to produce in these generations.

Defining the Generations

Silent Generation (born 1920s – 1945)
While not the oldest living generation, this is the oldest still likely to be economically active or in the workplace. They were influenced in their youth by the Great Depression and World War II. They believed that they should “get a good job in a big company and stay there”.

To this day, they are conservative, formal, hard-working and structured, preferring rules, order and hierarchies. They have a “waste not, want not” mentality, and hate getting into debt. Their idea of progress is slow, incremental advancement, while minimising risk.

Baby Boomers (1946 – late 1960s)
This is the postwar generation, the drugs, sex, and rock ‘n’ roll set who grew up during a time of grand visions. The idealistic visions of politicians, of those fighting for freedom or of those putting a man on the moon, all served to energise a generation of young people who were simultaneously being culturally and socially revolutionised. Their parents told them that they would have “all the things we never had”.

Boomers are passionately concerned about participation in the workplace, motivated by vision, mission and strategy, and care about creating a fair and level playing field for all. They are quick to form committees and paperwork. They love conspicuous consumption and have created more wealth (and accumulated more debt) than any other generation, ever.

The highlight of this era was definitely 1968/9. Riots in London, Paris and other European countries, Vietnam, the moon landing, assassinations of Robert Kennedy and Martin Luther King Jr, Woodstock and more. Those were the days!

Xers (1970s – late 1980s)
Generation X grew up as “latchkey kids”, children of divorce, experiencing an era of crises in which it was clear the adults didn’t know what was going on. As they entered the workplace, they realised that the system would not provide for them, and that “the only person who can look after me, is me”.

Today, they need options and flexibility. They dislike close supervision, preferring freedom and an outputs-driven workplace. They love change so much they actually need it. Xers strive for balance in their lives – they work to have a life, rather than living to work as the Boomers did.

Millennial Generation (1990s – 2000s)
Today’s children and teenagers are living in an age of unprecedented diversity and exposure to other cultures. They are growing up quickly – too quickly, some would say. They’re confident – so confident they’re almost arrogant. They’re the chief technology officers of their homes, sociable, optimistic, environmentally aware, collaborative, influential and achievement-oriented.

It’s too early to see the full effect of global defining events, like 9/11 and 7/7, and the threat of global warming, but it’s likely these young people will be driven and focused in their desire to change the world.

Applications

Generational theory can be applied in a variety of ways, including helping you to provide a better service to clients by locking into their expectations and the values that drive their attitudes and behaviour, and working with talented staff to create an environment that will attract and engage them. The theory should not be used as a blunt instrument to try and answer every problem with a generic response, but it can provide insights that help you with breakthroughs and insights that can be successfully applied by astute managers.

Dr Graeme Codrington is an author, speaker and consultant on all issues related to people strategy. He is the founder of a global consulting firm, TomorrowToday. He can be contacted at graeme@tomorrowtoday.uk.com. More information is available at http://www.tomorrowtoday.biz

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“Business is now so complex and difficult, the survival of firms
so hazardous in an environment increasingly unpredictable,
competitive and fraught with danger, that their continued existence
depends on the day-to-day mobilization of every ounce of intelligence.”

– Kanosuke Matsushita, founder, Matsushita Electric

CHALLENGING TIMES REQUIRE NEW ACTIONS

The competitive and market environment is growing increasingly volatile. Just this week (2 June 2008) information emerging from the United States suggests that unemployment is the highest in 22 years. Banks in the UK and around the world are announcing record losses, the housing market is taking a battering and consumer confidence is at a low.

How do companies need to compete in these tough times? Most companies have stripped out excess costs and as a result of practices like Six Sigma, Lean Sigma, outsourcing, right-sizing and downsizing have very streamlined operations. As a result there are slim pickings left for competitive advantage in re-engineering department. The added problem is that companies are doing the same thing, they are selling the same products to the same customers and delivering more or less the same experience. So with a credit squeeze and consumer confidence ebbing, this article, in two parts, looks at what companies need to be doing to keep ahead.

One of our UK & European Directors, Dean van Leeuwen, has researched the opinions of over thirty Directors and MD’s working for leading financial service companies and combined the results with our broader global research. The results are illuminating. They show that the business world is facing the dawning of a new alliance age / revolution that will bring about a new business model more symbiotic and substantially different from the business model of today. The competitive and changing economic landscape demands a new business model…one removed from the shareholder value model to one where value for all stakeholders is created. A model where symbiosis is common place, a model where an entirely new set of rules, governances and structural design/architecture is created; a model that makes joint ventures look antiquated and obsolete, a model that requires the mobilisation of every ounce of intelligence from the managers managing the relationships.

Thomas Malone in his HBR article – “The Dawn of the E-lance economy,” takes a leap into the year 2022, the year of the Harvard Business Review will celebrate it centennial year of publishing. Predicting that many “may comment on the speed with which giant companies fragmented into the myriad micro-businesses that now dominate the economy. And they may wonder why, at the turn of the century, so few saw it coming” Malone is alluding here to the mushrooming of what he terms “elastic networks” as the dominant form of business, alluding to a new game of business.

Ash Vasudevan and Geert Duysters founding partners, ICANSI, take this thought process further and exemplify on what they call the alliance revolution. “The digital revolution…greatly facilitated by this alliance revolution has fundamentally changed the way companies acquire resources, build capabilities, develop core competencies, and seek ways to create, build and sustain their competitive advantage.” They continue, conferring that this leads to the creation of…“value webs” that integrate specialised resources, specialised capabilities and specialised competencies, to develop new rules, new ideas, new markets, and offer fundamentally new value propositions. These connections have led to the emergence of the network economy, profoundly impacting businesses in the process.”

Hence, network alliances are the buzz of the business world, particularly in the technology industry. Academics, economists and consultants talk about a move away from mergers and joint ventures towards multi-lateral alliances, eco-webs, Bio-economies, nodal positions, groups of competition – “Them vs. Us”, constellations, federations, elastic networks, etc. The list is endless, however, regardless of the terminology used they all appear to have a common theme: The business model of the future will be incredibly complex to manage and it will be built around multiple cooperative partnerships.

“THE SMARTEST STRATEGY IN WAR IS THE
ONE THAT ALLOWS YOU TO ACHIEVE YOUR
OBJECTIVES WITHOUT HAVING TO FIGHT.”
- Sun Tzu 500 BC

It is interesting to note that a few years ago alliances were viewed with scepticism and few companies made alliances the cornerstone of their strategies. Ironically, a decade of re-engineering has made many corporations more reliant than ever on strategic alliances. Hamel & Doz in their book Alliance Advantage purport that “Most management teams have addressed demands for greater shareholder value creation by a mix of refocusing around core competencies…reengineering, downsizing and de-layering (to an extent that) the self contained, vertically integrated companies of yesteryear are largely extinct’. And they continue saying that as a result of a decade of concentrating on core competencies and downsizing companies are now unable to deliver comprehensive value propositions without entering into alliances.

The problem however, is that recent studies suggest that only 30% of alliances achieve or exceed initial expectations, with the remainder destroying shareholder value and that in 70% of the cases, failure of the alliance is caused by:

• Breakdown in relationship
• Lack of structure to formulate and manage alliance.
• Lack of management skills to manage alliances.

THE NEW ALLIANCE GAME

Most alliances are set up as joint ventures, structured and clearly defined. However, we now live in an economic environment that is non-linear, discontinuous, and changing at an extraordinary rate. In one industry after another, we are seeing the entry of new firms from unusual and hitherto unexpected directions, bringing in new thinking, new technologies, new attitudes, new market-shaping concepts, and most importantly radically new price/performance capabilities for products and services. Now more than ever, firms are faced with the critical and daunting challenge of maintaining the cutting edge of their core competencies while simultaneously striving to maintain the feverish pace at which they must develop and introduce a slew of new products and services. These changes represent the parameters of the new game with its new players and its new rules.

Through our research and work with companies we’ve identified five new traits, which can be viewed as the source of the new rules:

1. STRATEGIC ALLIANCES NEED TO BE CENTRAL TO THE FIRM’S STRATEGY: Alliances of old rarely made the cornerstone of corporate strategy. Typically alliances are formed to exploit specific opportunities that are somewhat peripheral to the strategic priorities of the firm.
2. ALLIANCES NEED TO BE FLEXIBLE AND CAPABLE OF WORKING OUTSIDE OF THE FORMAL LINES: New alliances face greater uncertainty, they push the leading edge of new technologies and bring together emerging and rapidly evolving skills.
3. NEW ALLIANCES INVOLVE MULTIPLE AND DIVERSE PARTNERS. Alliances of the past were generally bi-lateral in nature.
4. ALLIANCES ARE NOW FORGED TO DEVELOP COMPLEX SYSTEMS AND SOLUTIONS that require resources of many partners. The old model of alliances generally resulted in the co-production of a single product. New alliances require a readiness to collaborate in areas of new exploration as well as areas core to the business.
5. NEW ALLIANCES ARE INHERENTLY MORE DIFFICULT TO MANAGE. As a result of less stable and more fluid evolving markets, resources and skills required are not necessarily known from the outset. They require a stronger concentration on the softer elements of business, culture, greater human connection and leadership skills.

The development and refinement of these five new alliance traits appear to be challenging conventional alliance thinking. To be successful in the new alliance game companies will have to embrace the following elements:

• The corporate DNA will need to be reinvented, leaders must invent the future–innovate–rather than pursue the proven norm.
• Conventional wisdom must to be challenged.
• The “excellent company” does not exist in isolation. Downsizing and concentration on core competencies has resulted in an inability to deliver excellence without the collaboration of best-of-breed partners.
• A fluid structure that responds adapts and evolves in response to today’s non-linear discontinuous and rapid changing economic environment is required.
• The new alliance model involves multiple interconnected partners.
• Alliances of the past were generally bi-lateral in nature, new alliances are multifaceted, face greater uncertainty, they push the leading edge of new technologies and leadership skills.
• As a result of growing complexities the notion of centralised control is dead. Interdependence is at the heart of the new-networked company.
• Development of a “meta-capability” in collaboration and innovation is crucial.
• Stellar leadership is required as the new alliance model will tax management capabilities.

TO NETWORK OR NOT TO NETWORK…?

Whilst collaboration and innovation are important, they are also difficult skills to master. The question therefore is, do companies have the capabilities for multi-lateral collaboration? Our research study in the shows that 45% of the respondents strongly believe that their companies do not have the managerial skills, resources or appetite necessary to enter into multiple alliances. With most respondents believing that multiple network model is too complex to manage.

Indeed senior management’s concern about the pros and cons of the new alliance game is warranted. Alliances represent a difficult and often unchartered management model and although alliances have become inevitable, few live up to their early billing and can also become black holes for management time and resources.

Thus the management of network alliances would appear to be the major stumbling block in developing network alliance. On one hand though management is seeking the fluidity and uniqueness of collaborative partnerships yet in the other they are concerned with the loss of absolute control.

It would appear as if management is stuck between a rock and a hard place. On the one hand they understand that multi-lateral network alliances offer the ability to orchestrate value propositions necessary in today’s highly competitive environment. But, on the other they are concerned with the management complexities of the network model and therefore prefer to manage and follow the simpler joint venture model or “go it alone”, even though it may not provide the necessary competitive value propositions in the long run. It is not however, the alliance deals per se that are strategically flawed. Rather management needs to be in a position to learn and evolve the necessary skills required for a complex network model. Partners need to learn how to creatively manoeuvre their alliances through the thickets of uncertainties, changing priorities, organizational frictions and competitive surprise. Companies who identify the new alliance game will need to pay attention to its fluidity and more ambiguous evolution.

In our next ezine Dean van Leeuwen looks at this evolutionary process and the lessons that can be learnt from it.

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