Category Archives: Blog

Blog

Can We Help You Prepare for the Top Job?

Patrick Macdonald
SMF Patrick Macdonald, Partner, School for CEOs

There has never been a greater need to prepare businessmen and women to become CEOs. The biggest recession in 80 years, intense media scrutiny and investor nervousness all combine to make the top job tougher than ever.

When I was CEO of John Menzies – a £1.5bn quoted plc with a substantial family shareholding – it struck me that, as in any position, CEOs get better as they learn. I certainly did. But the old dictum “leaders are born and not made” still holds sway in many quarters. We still expect CEOs to take on the toughest job in business without any specific preparation.

This seems a little strange!

So I’ve teamed up with David Sole, the well known international rugby captain and business coach, to launch the School for CEOs. David has coached main Board directors and senior executives from a wide variety of functions including finance, human resources, sales and marketing, IT, property, legal and company secretariat.

Experienced businessmen and women will teach the next generation of business leaders using a carefully structured curriculum. A highly accomplished Advisory Board will work with us, including Sir David Reid (Chairman of Intertek plc and ex-Chairman of Tesco plc), Jonathan Warburton (Chairman of Warburtons) and Alex Wilson (ex-Group HR Director at BT plc).

  • The two-day Vital Few residential programme will cover the complexities of
    managing up – forming a relationship with the Chairman and Board
    managing down – leading the team
    managing out – handling investors and the media and
    managing in – staying centred and grounded

Future leaders will explore what really happens in the boardroom, rather than academic theories and frameworks. There will be follow on coaching to help embed the learnings, insight and wisdom gained on the programme. And delegates will join a fantastic network which will grow as the School grows.

The Vital Few is a standalone programme. It also forms the first module of the comprehensive Alchemy of Leadership programme which lasts eight days spread over several months.

The first programme takes place in London on 19/20 September. It’s aimed at anyone three years or less from becoming a CEO, as well as those already in the job. For future programme dates, visit www.schoolforceos.com

Blog

NEDs Just Got Interesting?

Mark Winkle - IDDAS Executive Coach and Chief Operating Officer (small)
Mark Winkle, COO, IDDAS

The world of the NED has been moving at a pace, the traditional view of a NED; ex-top executive, one or two board positions after retiring and aged in ‘his’ 60s, is still with us, but there is a marked trend towards, younger professionals, who are making a deliberate choice to abandon corporate life and pursue an NED portfolio and who have reached senior executive positions relatively early in their careers and want a change of lifestyle.

This trend has been articulated in the recently published IDDAS NEDs Perspective Report, which is the third in the IDDAS Board Dynamics series.  These Reports provide a unique insight into the Board world, with the previous two Reports giving the Chairman’s Perspective and a Females FTSE 100 Perspective on Boards.

This powerful triangulation of Reports provides a real sense of how the Board works and what it is like to be on a Board; ‘hearing’ directly from NEDs, Chairman and FTSE 100 female Directors the reality of the Boardroom.  The most recent NED Perspective Report has given a number of insights and views, for example.

  • The majority of NEDs are reluctant to have compulsory quotas introduced to increase the numbers of women on boards, but recognise the need for change.
  • A third think the level of remuneration for NEDs is too low given the increased workload and greater risk to corporate reputations now involved with the role.  However, most acknowledged they were well rewarded and that too much focus on financial reward could compromise independence.
  • NEDs see challenge in the boardroom as vital to their position, however they agree this should come with an equal measure of support – a balance they sometimes find difficult.
  • The lifestyle and practical changes between executive and NED roles are vast. As well as stepping back and accepting less control, NEDs commented on the lack of administrative support they were used to in their corporate careers.
  • NEDs have mixed views on whether those from outside the corporate world such as media, HR or academics should be considered for NED roles.
  • Many said that the board should not be a team, rather that they should learn to understand each other and work effectively, which should be done outside the boardroom.

The full report consists of a wonderful array of quotes directly from the NEDs and we hear the ‘real voices’ of their motivation, frustration and excitement.  In particular, I was stuck by the sense of the ‘Board’ not being viewed as a team, but as a collection of individuals who meet in a common space, the inference being that being a ‘Team’ takes away objectivity and is too cosy.  This provided a fascinating insight which got me thinking of how we define this Boardroom space.  How can we start to provide the ‘Board’ with the sense of their own worth as a ‘Team’, based on the definition of a high performing team, as needing, a common vision, values and strategy; constructive, creative, challenge and debate, which surely is a prime function and description of an effective Board?

Potentially, this misunderstanding of what a team is, could well be at the core of how we develop effective challenge and behavioural frameworks for the ‘Board Team’ to become most effectively.  We may need to re-calibrate this space in a different way from traditional ‘team working’ and be more cognisant of the different perspectives that the constituent cohorts bring to the Board. Certainly the NEDs are coming to this ‘team space’ with a clear and increasingly demanding ‘governance’ perspective and a keen eye on their duties and responsibilities as a NED, which are increasingly in the spotlight.

The Executive Team, additionally brings a set of perspectives and energies which are closely linked to their central individual values and ‘status’, to which any ‘threat’ is likely to elicit a strong reaction.  One of the key developments emerging from neuroscience research is the impact that threats and anxiety can have on our power for rational deliberation and perspective.  As the brain is threatened it becomes overwhelmed and reverts to a short term protective mode, with a shortening of horizons and acute awareness of the immediate, at the expense of the longer term.

The Chairman’s role is to ‘orchestrate’ this space and develop a coherent and robust atmosphere of Trust, Challenge, Vision and Coherence, which is quite a balancing act.   There are many artful Chairman who able to ‘pull’ this off, but one of the aspects of our Chairman’s Research was how little Development and Support Chairman had received to achieve this level, most having got there through a process of previous experience, trial and error.

Some of the aspects of this balancing act have been identified by the Financial Reporting Council (FRC) in their ‘Guidance on Board Effectiveness’, which identifies the need for appropriate decision making frameworks and the creation of an atmosphere of effective challenge towards strategy and the risk model of the organisation.  The refining of this ‘Board Team’ space is overdue, the challenge is for Boards to more clearly understand their own interpersonal dynamics and create an open and recognised decision making framework which stands the test of tough times.  The FRC guidance describes the dangers of ‘group think’, and a casual and untested decision making process which can be overrun by events.

Additionally, the IDDAS Chairman’s Report and the FTSE 100 Female Directors Report, along with other reports in this area have identified the ‘female’ approach to challenge and decision making, which is less directly confrontational, more systematic and less ego driven, as a positive influence on Board performance.

It is likely, that as we drive toward the achievement of the Lord Davies Report targets of 25% females on FSTE 100 Boards by 2015, there will be an updraft of females onto Public quoted Boards and also onto the organisation’s Executive Committee, which the Davies Report rightly identifies as the feedstock for Board Directors of the future.

So, it is my hope, that as Boards review their performance and fitness for purpose for the future that we will see both the desire for; and increased capability, to deliver an open and interactive ‘Team Space’ environment which leads progressively to enhanced board effectiveness.

Blog

Is Manufacturing the linchpin of the British economy?

Chris Coopey - SMF Guest Blogger
Chris Coopey, Partner, Carpenter Box LLP

The 3,000 redundancies planned by BAE come as a bitter blow to the firm’s employees and to perhaps, the 6,000 subcontractors who supply the firm.  But what does it say about manufacturing in general in the UK?  As someone who trained as an Engineer but is now a Partner at a chartered accountancy firm I believe that unless some real action is taken to fundamentally shift the balance of our economy, these redundancies and more like them will change nothing.  Whether we are talking about BAE or Bombardier (1,400 jobs lost at the train manufacturer in July 2011) or numerous other examples down the years, what seems obvious is that as a nation we continue to lie back whilst our engineering and manufacturing skill-base is inexorably eroded.

For more than 30 years manufacturing has been written off as a mainstay of the economy.  We’ve blamed foreign competition, trade unionism, poor management and a lack of investment for the decline in our manufacturing fortunes but the truth is we haven’t as a nation stepped up to the plate.  If the same care had been taken to protect and nurture manufacturing as has been put into promoting the UK as a major global financial centre we would have a strong and vibrant manufacturing base keeping people employed, paying valuable taxes and selling the products we are so good at inventing and developing for other nations.  Imagine the engineering equivalent of the redeveloped square mile and Canary Wharf and you start to understand the analogy. I’m not for a minutes suggesting that we abandon our banking and services industry, but what I am saying is that we should recognise that the balance has swung too far away from creating tangible wealth.  We’ve come to depend far too much on the intangible wealth associated with city.

In the words of George Osborne, wrapping up his last budget speech;

‘We are only going to raise the living standards of families if we have an economy that can compete in the modern age. So this is our plan for growth.

We want the words: ‘Made in Britain’ ‘Created in Britain’ ‘Designed in Britain’ ‘Invented in Britain’ To drive our nation forward. A Britain carried aloft by the march of the makers. That is how we will create jobs and support families. We have put fuel into the tank of the British economy.’

Sadly the present government, despite its own words, has still not woken up to the fact that manufacturing should be the linchpin of the economy rather than the poor relation of the banking and the business service sector.  To put manufacturing back into centre stage will take billions in investment and a long term structural shift, but it has to be the future.  Now is the time for the government to stop talking and to start to take action.

Chris Coopey is a Partner with Carpenter Box LLP, Chartered Accountants and Chartered Tax Advisers.  He originally trained with a subsidiary of Simon Engineering in Gloucester, qualifying as a design draftsman.  In 1979 he moved to the telecommunications industry where he worked for 10 years.  Chris subsequently went to Exeter University before qualifying as a solicitor.  He joined Carpenter Box as Practice Director in 2005.
 

Blog, SMFs (Members)

Creating Strategy Middle Up

Paul Christodolou Group
SMF Paul Christodolou

The age of top-down strategy is long gone. This doesn’t fit with the guiding principles of modern, empowered business cultures as it tends to disempower and demotivate the people who are our greatest asset. Strategy is now developed ‘middle-up’, often involving cross-functional teams of managers, subject experts, and the handful of wise old heads that often sit quietly hidden away in every organisation. This, in theory, shouldn’t be a problem. Indeed, since the people that live-and-breathe the business everyday know the strategic levers better than anyone, this should be the ideal way to create breakthrough thinking. All we need to do is liberate this latent power within the organisation to beat the pants off the competition (and, at the same time, save a fortune in high powered consultants).

The problem is that this middle-up, consultative process for creating strategy is prone to severe pitfalls if managed poorly. Without structure, process and clear deliverables, this can end up as ‘strategy by committee’. One board member of a leading airline recently expressed her frustration and horror at this modern, workshop-based approach, bemoaning the ‘death of individual thought’.  Furthermore, since strategy naturally destabilises the status quo and challenges territories, organisational politics can often interfere and create unhelpful tension and even strategic paralysis.

However, the prize from getting this right is so big that middle-up strategy needs its own definition of best practice. This approach is too good to miss. It not only taps directly into the best source of rich and vibrant thinking, but it automatically creates a motivated and unified implementation team. And anyway, the best alternative is to use expensive consultants whom the in-house team will just end up resenting and whose outputs they will almost certainly disown.

There are golden rules that can help make a success of this empowered strategy approach. Here are seven important ones.

Plan a structured ‘journey of discovery’: It’s no good just scheduling a strategy workshop and expecting this to lead to innovative, joined-up thinking. Developing strategy this way should be a structured ‘journey of discovery’ for the project team. Designing the journey is the first crucial task. There are natural phases and milestones in the journey, and different types of activities to ensure the right blend of workshop, individual thought and background analysis.  Carefully planned workshops typically form the backbone, with supporting analysis filling out the flesh. The project needs to start with divergent, creative thinking and move steadily towards more convergent, analytical thinking. The journey needs to cover exploratory pilots, decision points that help distil new strategic principles, and practical planning sessions so that everyone understands how to make it all happen. 

Create a ‘burning platform’: Launching major strategy projects with cross-functional teams requires a sense of urgency – the so-called ‘burning platform’. The term originates from the oil industry (i.e. a burning off-shore oil platform) and refers to the urgent need to move from an uncomfortable position.  In business terms, this demands a clear articulation of exactly why we need to change in a simple and compelling fashion. This might also paint a disturbing picture of what might happen if we just let the status quo drift while the competition forge ahead. Without the burning platform, time-starved managers will not be motivated to get involved.

Get everyone on the same page: When a major strategy project is launched, it is amazing how quickly key participants develop different ideas of what it is all about. Some will want this to fix their own pet problems, some will have wildly over-ambitious views of what this can achieve, others will just get the wrong end of the stick. Creating a clear project charter is the obvious way to get everyone on the same page as they become engaged. This may be a written document or, more likely, a short presentation to guide a personal briefing. This can be followed up with workshop techniques such as roadmapping – simple but powerful visualisation approaches that help liberate, structure and distil the accumulated wisdom of the team.

Predict winners and losers: As soon as the project is launched and the team is engaged, the likely winners and losers will start to become apparent. The problem is that at least some of the big potential losers will be on the team that is shaping the strategy and, as the saying goes, turkeys rarely vote for Christmas. The strategy leader needs to be considering this right from the project inception as this can create a negative influence or even derail the project completely. The key point is that individual roles will almost certainly change during the course of a major strategy programme. If you want to take everyone with you, you need to facilitate a change in every individual’s position and contribution that aligns with the emerging picture.

Blend experience, gut feel and facts: Developing innovative strategy requires a balance of ‘hard’ data analysis and ‘softer’ inputs such as the collective judgment and experience of the management team. Many organisations go to one or other extreme. Intensive strategy workshops are the perfect means for combining hard and soft inputs in a balanced way. But this means careful preparation of meaningful data pitched at the right level – it’s easy to try to ‘boil the ocean’ of possible data. It also means preparing each workshop in full detail, using appropriate visualisation and analysis tools, and making sure that every activity leads to a useful outcome and a clear set of strategic insights.

Expose the really breakthrough thinking: Strategy development can tend to polarise around two extremes – constraint-driven improvements on today or sexy blue sky thinking on what might be possible. The former can lack ambition and the latter is often unrealistic.  Both of these are useful calibration points, but the best answer lies somewhere between the two. Breakthrough strategy refers to that elusive middle ground – the point that represents new, visionary thinking that is also practical and do-able. Getting to breakthrough requires particular workshop approaches, constant iteration and dogged determination.

Move seamlessly from planning to doing: A common problem in traditional approaches to strategy development is that, even when the final strategy has been agreed, there is huge inertia that delays the launch of implementation. There are various ways of ensuring that the transition from ‘planning’ to ‘doing’ is seamless. One crucial issue is seeding implementation champions into the process early on. These may not be the clearest thinkers on the team, but they may be the barrier-smashing enthusiasts who will make it happen. Another important step is to define pilot implementation projects and not be afraid to launch these even before the overall strategy is complete. Strategy shouldn’t be developed in an ivory tower and there is a lot to be said for learning by doing.

But can we demonstrate that middle-up strategy works?:  One leading multi-national recently used this consultative, workshop-based approach to develop an innovative strategy across a large, complex organisation. This $5bn global leader with 15,000 staff had grown significantly by acquisition over the preceding 10 years, leaving a latent need for integration. The imperative was to develop a unified, global strategy that would optimise the operational network to reduce cost and provide a platform for growth in the major emerging markets.

This company was made up of three autonomous regional businesses (Americas, Europe, Asia) co-ordinated across four global product lines. The dynamics and tensions within the complex matrix of responsibilities was a key feature of the project. The strategy process involved running a set of pilot strategy workshops within each global product business, followed by a set of aggregation workshops organised by geographic region, then culminating in a finalisation workshop covering the whole business. All this was interspersed with significant exploratory and then validating analysis. The strategy development process involved 110 senior and middle managers and took around 12 months. These managers, of course, had to run the business at the same time (although special backfill support was organised to free-up some of their busy schedules).

The outcome of this intense and dynamic process was a multi-faceted strategy that was truly both global and local, and that could naturally be implemented by regional teams with consistency regarding globally standardised products and processes.  It provided the blueprint for a $250m transformation programme which required a Wall Street rights issue to fund. Five years on, the project has created $55m in repeating annual savings for the company, has helped to reinvigorate its lead in technology, and has forged market-leading positions in Asia, South America and Europe.

So it can be demonstrated that middle-up strategy not only works, but can produce stunning results. It fits the modern business culture, it intimately involves the people who know the business best, it automatically primes and motivates implementation champions, and it gets results. It is far  preferable to top-down decree or simply outsourcing strategy to external consultants.   Running effective middle-up strategy may have just become a critical success factor in 21st century businesses.

About the Author
Paul Christodoulou has over 20 years experience as a strategy leader working in international business. His career has seen him working in senior management roles, heading up global strategic projects covering manufacturing, marketing, M&A and post-M&A integration. Originally an engineer, Paul switched to strategy after completing his MBA at INSEAD which was supported by the Sainsbury Management Fellowship. SMF was established in 1987 by Lord Sainsbury who believes talented engineers make a valuable contribution to the senior management of an organisation.

Paul is currently working for the University of Cambridge Institute for Manufacturing managing collaborations with partner companies aimed at putting university research into practice in the general area of global strategy (ifm.eng.ac.uk). Paul also runs a strategy consultancy Strajectory which provides innovative and practical strategy support to businesses of all sizes (strajectory.co.uk). Paul’s recent book “Strategy Workshop Toolkit: How to Herd Wild Cats and Create Breakthrough Strategies” is available through online booksellers.

Blog

Recruiting Trends in Engineering

Mike Astell 2

SMF Mike Astell has both engineering and business qualifications, the latter he gained through his MBA study thanks to a hefty bursary from Sainsbury Management Fellows which champions the idea of having engineers in board positions because they bring a multiplicity of skills to these roles.

Mikes’ MBA enabled him to transition into senior management posts where his is responsible for hiring a diversity of staff including engineers.  Mike’s view on current recruitment is that “Engineering recruitment is at a turning point.  A major shift is taking place within  graduate recruitment as many more are seeing engineering as an exciting long term career choice.

“Our industry has long lamented the fact that large numbers of talented engineering graduates have not seen their careers in engineering roles and have been lured by City employers which offer big incentives and salaries to attract people with strategic, analytical and project management skills.

“The failure of so many financial institutions has led to the restructuring of the economy  (eg headcount reductions, divestments) and engineering graduates are starting to look at things differently.  They are exploring engineering roles more carefully and beginning to appreciate the potential for challenging careers with long term prospects for advancement.

“This shift in perspective has increased the pool of graduate talent from which to select the very best engineering graduates, creating a very competitive market – many graduates are having to do work placements or part time work to improve their competitiveness.  Now  we are recruiting some amazing graduates; not only in terms of their academic achievements, but their energy and enthusiasm to contribute to industry.

“And it’s not just engineering graduates. The upheaval in the job market has resulted in a large churn and highly experience engineers who may have stayed at one firm for a long time, becoming frustrated at not progressing, have joined the candidate market, creating even more opportunities for employers to access the best engineers. This diversion of talent into industry will most definitely help to rebuild the British economy.”

 

 

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President’s Letter

annual dinner 2010

SMF Ernest Poku
Each time I look through the profile book it impresses me how unique a group the Fellows are. Although we work in a wide variety of industries and roles, we all share a common perspective and experience. We have also all participated in the vision of Lord Sainsbury.

The Society has in essence two broad aims. Firstly to add value to the UK and international economy by supporting the aims and vision that Lord Sainsbury expressed in setting up and supporting the scheme and associated bursaries that we have all benefited from. Secondly, to add value to each individual Fellow by organising and encouraging interaction, and otherwise supporting our careers.

We are entering a period where the future form and role of the society may well be decided. There are now almost 300 Fellows, representing a considerable network of talent covering all major sectors and functions, and many countries. The debate on what makes us unique, what aims we should have and how we can realise them is coming to a head.

Recently, a strategic review was initiated to better understand what role the Society should or could fulfil. To further understand the Fellows’ profiles and their current views on the scheme we have asked Hall Associates to undertake a telephone review. You will therefore be contacted over the next few weeks and asked a range of questions. At one end of the spectrum we can be a mere alumni association, at the other, we can seek to positively influence views and attitudes across commerce. We are interested in your views on the Society’s future role and how you would like to be involved.

Re-Engineering the Board
You will have found enclosed our publication Re-engineering the Board to Manage Risk and Maximise Growth, or “HR Pack”, targeted at key HR decision makers. This pack was designed by our Communications Group to challenge the view that accountancy and legal training are the best qualifications for effective boardroom directors, and to highlight the strengths of the engineering mindset. Most of our outward communications to date have been via Public Relations. The HR Pack is a deliberate break from this approach and provides a more direct channel. If the evaluation of this new approach is positive then we intend to look at additional opportunities for new publications and forums for challenging views and arguing for wider adoption of our values. Please give us your feedback on this pack.

Website & Improved Engagement
We will shortly be launching a new website and interaction platform. Many of you will already be members of the SMF group on LinkedIn but this new website has vastly increased functionality and a new social engine to allow for private communications between Fellows.

As Fellows are geographically dispersed, the website is also intended to provide a material forum for useful interaction on a variety of initiatives irrespective of geographic location.

How we support each other and add value as a community will no doubt dictate the future success of the Society. We hope that the website will enable a higher degree of interaction and engagement by delivering value to every Fellow that uses it.
Funding
As you know, the SMF bursaries are funded by Lord Sainsbury via his Gatsby Charitable Foundation. However, the Society itself has been funded to date almost entirely by Lord Sainsbury’s private funds. Whilst we have been informed that the future of the scheme continues to be assured, and all recent feedback on our performance has been most positive, we have also been asked to take a hard look at whether there is a point at which the scheme becomes self funding.

We are currently reviewing whether to incorporate the Society and establish a registered charity to further pursue this question. A key benefit of this incorporation would be a tax efficient vehicle for those Fellows who have expressed an interest in investing back in to the scheme.

We also collect annual subscriptions from the Fellows. These subscriptions go directly to supporting the Society’s aims. They are not a ‘social fee’ but, rather, they underline the identity and activities of the Society and point to the responsibilities of the individual recipient of the award. We continue to ask for your support in collecting these fees.

Mentoring and Other Activities
An outstanding success of last year was the launch of the mentoring scheme. Fellows have been partnered with mentors at the very highest levels of UK PLC. We intend to look not only at how we can extend the scheme in size, but also how to access new key sectors of Fellow involvement such as Finance and Entrepreneurship.

We also launched the successful Energy Roundtable. This is a forum – currently physical but soon also to be online too – to exchange latest ideas between those with a role or interest in the Energy arena. We would like to have additional roundtables in areas of key importance to the economy such as Finance and Manufacturing. Please let Cathy know if you would like to be involved in this.

Other activities where our involvement continues include supporting the next generation through the RAEng’s BEST Programme and the Engineering Leadership Award scheme. If you feel you now have the time and would like to become further involved please do not hesitate to contact Cathy or myself.

There is no easy way to measure the sphere of influence that the Fellows have. However, by rising to the challenges we are set, and increasing our ability to collaborate, we can exert a positive influence of a disproportionate magnitude to our size.

Lastly, I would like to warmly thank outgoing President Ernie Poku for all of his hard work, initiatives, and achievements during his term of office.