Andrew and Nada Kakabadse are Professor of Governance and Leadership, and Head of Marketing and Reputation respectively at Henley Business School.
Our ongoing research into tracking board performance has revealed that many managers and leaders can’t agree on the prime purpose or competitive advantage of their organisations.
Each individual’s views may be based on impeccable logic, but there is often no cohesive or agreed approach.
Over the last decade we have accumulated data from more than 500 organisations across 35 countries, including Russia, China, the US, Middle East and UAE.
The results and analysis of this work highlight stark disparities between directors’ perceptions of their own behaviour and performance, compared to how they are perceived by their management teams.
In Germany, 75% of chairmen and presidents surveyed believed that trust exists within their top teams. However, only a third of the general managers in the same organisations agree.
In Britain, 60% of chairmen and CEOs consider themselves to be understanding and supportive, but only 30% of their general managers confirm this opinion. In China, 80% recognise that there are organisational issues which should be discussed by the top teams, but are not.
These results vary significantly from country to country, and many boards are inundated with compliance and protocol issues. In the US, with its highly dictatorial system, boards appear to be more inhibited than anywhere else.
In Russia, perhaps surprisingly, more honest conversations appear to be taking place. In South Africa there are massive disparities, while Australia stands out in a very positive way, most likely because it has instilled a culture of allowing individuals to sit on a maximum of three boards only.
Board members in 66% of the world’s top teams simply don’t talk to each other enough. They are too concerned about their own specialist areas, or are too inhibited to raise challenging issues.
A prime example is Marconi. The precise timing of its bankruptcy was predicted by senior figures within the company five years before it happened. Everyone knew the strategy wasn’t working, but this issue was never formally raised, simply because it was an uncomfortable topic.
There is a clear impact resulting from this lack of engagement and alignment within organisations. However, a straightforward shift and diversity in thinking can reap tangible rewards.
By changing the emphasis away from strategy, and towards engagement and alignment, organisations can move from a value proposition-based approach to one of value-delivery. This shift is expressed by transposing the x and + elements of the following equations:
Strategy x (Engagement + Alignment) = Value Proposition
Strategy + (Engagement x Alignment) = Value Delivery
In other words, no matter how strong a strategy appears to be, it won’t yield a positive result if engagement and alignment are not in place.
Many companies are suspicious of this approach and courage is needed to face up to the truth and gather necessary supporting evidence. This requires much greater resilience and inner strength, as well as morals and ethics.
EasyJet is a classic example of this approach working in practise, having had the foresight to appoint a CEO with no previous airline industry experience, but a track record of rallying the workforce. Its progress has been slow but sustainable.
To achieve success leaders need to be more open, transparent and, above all, should base their decisions on real evidence to ensure strategy works and delivers sustainable value to all parties.