I saw this article on Harvard Business Review earlier today, which argues that a CEO should step out of the saddle before losing relevancy. There are some really well made points about tenure length, growing ‘stale’ and it leading to a cessation in ‘adaptive changes,’ much of which I agree with. The balancing piece that the article didn’t address was - How do you continue to stay relevant if a leader in a large business?
Speaking at the Telegraph Festival of Business in November, I outlined a philosophy I simply call Out/On/In (OOI) for how I broadly manage my diary. I use this to dictate how I invest (not spend) my time as head of a large organisation. It’s pretty simple and looks something like: -
OUT – 1/3 rd of time. Experiencing, seeing customers, visiting conferences, establishing new relationships, media relations activity, networking, connecting and creating. What’s changing in the external environment?
ON – 1/3rd of time. Processing what I’ve seen and the impact it has on our strategy, direction, course, decisions, organsisation. Reviewing the high level impacts of the things that I’ve seen and experienced for the longer term 3-10 years, so you can always keep rolling perspective of the future. What should we change about our direction now from what we’ve seen and heard?
IN – 1/3rd of time. Being in the business, reviewing process, people, performance and culture. Dealing with the practical implications of it all aswell as the other things that you need to service a large business as a leader. What should we change about our practice, process or culture to deal with the changes we need to make?
It’s a very simple system and it serves me really well, I don’t run it strictly to 1/3rd all the time, it’s a broad brush. Some months I’m more in that out. ‘ON can mean being in the office or thinking ‘OUT’ of the office depending on what’s going on and where I am relating to optimising my travel and diary optimisation. The key point is this, unless you spend time ‘Out’ you can quickly become one of those CEO’s who do become stale, losing perspective, relying on past data for decisions not the current day climate. You become the person in the HBR article.
Unless you are feeling, experiencing and seeing what is going on at a ‘meta’ level with the world, it’s so easy to fall asleep at the wheel oblivous to the landscape whizzing by at 125mph like landscape from a train window. By investing time ‘OUT’ in this way, you can make highly relevant decisions relating to your ‘ON’ and your ‘IN’ that are meaningful for the climate of today.
As a leader it energises you, pushes you to constantly ask yourself – “What does this mean for us?” Meeting lots of people, studying organisations, people, cultures and management styles gives you a shot in the arm to ensure you are always keeping up, learning, absorbing and keeping your skin in the game for mood music of today and tomorrow. If you do that, in my view, you won’t hit a sell by date because you are always remaining relevant my drawing on the now.
Boosted by reading books, being open to everything, staying approachable and always seeking feedback is a framework for staying in the saddle and galloping towards the future – saddle up!
Senior Vice-President and Chief Financial Officer of IBM – Mark Loughbridge – visited Manchester last week to deliver a lecture at the business school about IBM and their 100 year journey from a small punchcard company to global giant. In an hour long talk, he covered the four phases of IBM’s existence, including the disastrous imploding which saw their share price collapse between 1973-1993 as the company lost it’s way and drifted from its core competency, losing $16bn in 3 year period at one point.
Compare that with now and IBM is unrecognisable. They totally turned the business around and made an astonishing 125 acquisitions from 2000 onwards, totalling $33bn, quite a story. Highly articulate money man – Loughbridge, 57 – lived through all of this. Joining IBM in 1977, he now has over 11,000 financial people reporting into him across the globe.
A few things stood out for me from the lecture, which I think are worthy of note: -
- Between 1951-1972, what he described as “The System/360″ years, the then president discontinued every single product line they owned and threw an incredible amount of money at product development. During this period, they spent as much on R&D as the American government did putting the Apollo space rocket on the moon. After a period of re-consolidation, IBM came back stronger and went on to grow at 20% CAGR.
- When they had their bad times, it was because the company launched into so many non-core areas, in so many countries, they lost the DNA of the businesss. Son of the founder – Thomas J. Watson Jr – was quoted as saying “It’s harder to keep a business great, than it is to build it.” This took a massive amount of energy to turn round and at times the business came close to running out of cash. A far cry from the hugely profitable business it is now with $47bm a year in gross margins alone.
- They achieved the turnaround by jettisoning low margin, non-core businesses and launched themselves into the services/consulting sector, focusing on performance, information and content. They acquired buinesses with high margin potential and proprietary technology, improving productivity and margin as they consolidated them into the group. IBM now employees over 420,000 people – some wage bill that must be.
It’s a fascinating story of a business that grew and grew and grew, had a major period of drifting in the wilderness which nearly bought it to bankruptcy, which turned itself round to become a huge global organisation with massive profits. There’s some lessons there: -
- Sometimes you have to be bold, to stay relevant. Discontinuing every product they produced was a massive gamble or calculated risk? Looking back, their CEO was a visionary, he studied what he felt the future might look like and got the business ready for it. What’s the future for your business/category/space?
- Big decisions need implementing. Jettisoning the low margin businesses, cost a lot of money and time, however they had to cut them loose to grow their profitability. Think long term, don’t wed yourself to something because it has been great in the past. If you decide to do something big, do it.
- They standardised quickly. Using the same language for financial reporting, sales reporting and group KPI’s. It was “my way or the highway” when it came to implementing reporting. Those that resisted were quickly exited in favour of progress. Time was against them, they had a sense of urgency to save IBM in the dark days. What could you do to standardise more and get a common language going in your business as you grow.
- They dealt with the brutal truth. Read Jim Collins book “Good to Great” and you’ll see the importance of doing that.
- They had a strong vision of the future. Loughbridge put up some interesting charts which they used with investors, to give clarity as to their future plans and reasons for acquisitions. Many of those reached out over ten years. It’s important to financially plan, to know what course you’re ultimately sailing.
It was an hour well invested. Some good lessons and a great reminder that even big businesses get it wrong. The trick is, recognising it and pulling it back.
Lastminute.com. One of the big dotcom success stories of the late nineties. Founded by digital entrepreneurs Martha Lane Fox and Brent Hoberman.
Seizing the opportunity to see Martha Lane Fox deliver a keynote in London last night in her capacity as the Governments Digital Champion, I wasn’t entirely sure what my opinion of her was, pre-lecture.
I’d seen her picture a lot in the media. I’ve heard of the highs and lows of lastminute.com from foundation to flotation. I was impressed that she replied within a few minutes of my mentioning her on Twitter. Like anything, you really get to see more of a person – in person - so was keen to form my own opinion of her. Immaculately turned out, she looked every inch the ambassador/stateswoman.
I hadn’t known (until I did a bit of desk research on here), that she’d survived a horrifying car crash in Morocco in 2004 which nearly left her dead (breaking 26 bones in the process), that she sits on the boards of M&S and Channel 4 aswell as having numerous other business interests in the charity sector. She is Chair of a Karaoke business she founded called Lucky Voice (must pay them a visit) and graduated from Magdalen College, Oxford where she read ancient and modern history. More details on Wikipedia here.
Last nights keynote was governed by Chatham House rules, so I won’t detail anything here that doesn’t already exist in the public domain that she may have repeated last night. I will comment however on her speaking style, which I found relaxed, articulate, engaging and informative. A masterclass in holding an audience.
She passionately backs all things digital and is the brains behind the Race Online 2012 initiative whose aim is to address the 10m people who don’t have internet access and get them online.
Urging businesses and government to take more risk in this area, both financial and non-financial in the name of competitiveness, Lane Fox seeks efficiency improvement and to reach out to all areas of society. Privileged and underprivileged.
My thoughts – I agree. If the UK is to compete on a global stage then we have to turn the heat up here, reduce our costs, make services accessible and transcend through the process of high-touch to low-touch public service transactions.
Crossing the Divide
Whatever the future holds, we have to accept that the web will continue to dominate working practices, divide and unite societies, countries and social groups. A passionate advocate myself, what I liked most about Martha Lane Fox is the realisation that these tools are operated by humans, for humans to ultimately give us more opportunity to do the things that matter. Here here.
Wandering back to the hotel after the lecture, my reflections were that the Government needs people like Martha within it, around it, advising it and keeping the mandate going about lower transactional costs to serve, simplification and accessibility, to us, the taxpayer. She’s a credible voice, with a “been there, done it” t-shirt to boot.
Post-lecture, she’d more than convinced me of her ability to energise, question and create momentum in the projects she is running. To come back from such a serious accident, shows guts and a steely determination. If you get a chance to hear her speak, turn up.