HBR Nov 2016 – a few highlights

Cover theme this time is: What really keeps CEOs awake at night? A few interesting articles as always. Please find below a few notes.

Finance Corporate Venture Capitalists are often conceived as strategic investors but many are over emphasizing financial returns. Nobody has cracked the code for measuring strategic returns. Financial returns do count but future strategic direction is more important.

The 100 best performing CEOs in the world 2016. # one is again Lars Reiben Sorensen of Novo Nordisk, Denmark, with two more Danes (Lars Rasmussen of Coloplast and Anders Runevad of Vestas) and three Swedes (Johan Molin of Assa Abloy, Ronny Leten of Atlas Copco, and Ola Rolle’n of Hexagon)also among the top one hundred.  # two overall is Martin Sorrell of WPP of the UK, and # 3 is Pablo Isla of Inditex, Spain. The US got 43 among the hundred, France 9, the UK 8, Canada 5, Japan and Spain 4, Germany 3 and Australia 2. (This is an American HBR ranking).

In 2015 turnover among global CEOs reached 17 % and more than a fifth of the CEOs who left their posts the last five years were dismissed. On average, the world’s 100 best CEOs have been on the job for 17 years and have generated 2,091% overall return on their stock (adjusted for exchange rate effects), or a 20.2 % annual return. This list was derived from S&P Global 1200 companies representing 70 % of the world’s stock market capitalisation. 80 % of the ranking is on financial grounds and 20 % on environmental, social and governance grounds (ESG).

In a discussion with the three top performers and Adi Ignatius, HBR Editor in Chief, Sorensen said “to be honest, I think we as CEOs are highly over-rated. At least in my business, success is far more of a team effort than the public would like to believe, especially in America.” He also credited much of his success to decisions that were made by his predecessor.  The Isla CEO said “I’m gradually learning to be less rational and more emotional. Motivating people and generating a sense of spirit inside a company are essential parts of the CEO role. We need to appeal to our employees’ emotions to help create an environment where they can innovate.”  Martin Sorrell said: “40% of WPPs business is now Digital and 25% is Data. And we are operating in 113 countries. It is impossible to run the company from the centre; you need to be purpose-driven, to appeal more to customers, to clients, and to our own talent.”

Sorensen said “Absolutely everything we do has to be grounded in an assessment not only of the financial implications but whether it aligns with our values and brings us closer to realizing our purpose as a company.” “People need to see that we are contributing to society and not just enriching ourselves. When we have too wide a disparity between what I earn and workers compensation, we create a barrier to the employees’ passion and engagement that all companies need to achieve their objectives.”  Sorrell agreed that “Doing good is good business if you are in the business for the long term. We take into account every one of our stakeholders: our people, our customers, our clients, the government, NGOs, suppliers, pressure groups.”

Right Tech, Wrong Time – how to make sure your ecosystem is ready for the newest technologies by Ron Adner and Rahul Kapoor. Start ups need to consider not just when their innovation will be viable, but also what external bottlenecks will arise. Incumbents, meanwhile, should use the transition period to up their own game – and to figure out a strategy for long term survival. Better timing will improve the efficiency and effectiveness of the innovation efforts.

The Problem with Legacy Ecosystems – they separate you from your customer by Maxwell Wessel, Aaron Levie and Robert Siegel. To build effective new business models that take advantage of digital technology, older companies need to agree on the way forward, adopt new performance metrics, and rebuild their supplier distributor, and partner network. The ability to connect more personally with customers creates immense opportunity for companies to capture data about the market, supply new products and services, and build extremely defensible network effects and feedback loops. Transforming a customer relationship is not simple; it requires doing things differently up and down the value chain. As business leaders everywhere start to deal with the pressures that digital change can bring, establishing some type of polestar is invaluable. If business leaders can acknowledge that digital requires changes beyond software – and often beyond the direct control of their businesses – the opportunities are enormous.

Managing Multiparty Innovation – How big companies are joining forces to seize opportunities at their intersections by Nathan Furr, Kate O’Keeffe, and Jeffrey Dyer.  Large established companies frequently find themselves facing opportunities they cannot seize on their own. Organizations need to work together to develop novel solutions to shared problems – ecosystem innovation. The process allows companies to bring extremely diverse ideas, skills, and resources together to solve ecosystem problems at astonishing speed.

Getting Reorganizations Right by Stephen Heidari-Robinson and Suzanne Heywood. How you go about your reorg is as important as what you do. 1 Develop a Profit and Loss Statement, 2 Understand Current Weaknesses and Strengths; 3 Consider Multiple Options; 4 Get the Plumbing and Wiring Right, and; 5 Launch, Learn, and Course Correct. If you are contemplating a reorg, you owe it to your shareholders and employees to follow a rigorous process rather than wringing it, as so many leaders do. / someone said – I don’t work for an organization, I work for a reorganization./

Let’s Not Kill Performance Evaluations Yet by Lori Goler, Janelle Gale and Adam Grant. This article points out that although performance evaluations are rarely perfect, not having them leaves a big void. As long as there is a commitment to fairness, transparency and development the process can be very beneficial. Focus on assessing a period of time rather that assessing an individual.

Managing Yourself, Beating Burnout by Monique Valcour. Burnout has been shown to produce feelings of futility and alienation, undermine the quality of relationships, and diminish long-term prospects. Burnout has a three component  syndrome: Exhaustion, Cynicism, and Inefficacy. Remedies are: prioritize self-care, shift your perspective, reduce exposure to job stressors, seek connections.  By understanding the symptoms and causes and implementing these four strategies you can recover and build a road map for prevention. /the article doesn’t talk about friends, you need at least one good friend, better yet 3- 10 really good personal friends – people with whom you can discuss all your personal and emotional concerns – I think this is absolutely crucial – up to 2/3 of all people are lonely and/or bored – keeping loneliness and boredom at bay will work wonders.  Helping others to feel less lonely and bored is a very effective relationship tool.  The other point is that responsible people will keep 10% reserve at all times. If you don’t retain time to think and in reserve for extraordinary challenges you are not managing your time well – my comments/

Notes by frank@new-olsson.co.nz.s226623.gridserver.com 16 October 2016

Harvard Business Review Summaries

I am a keen reader of Harvard Business Review. In an America where everything seems a little too commercial and monetized it is refreshing to experience the integrity and wisdom of the HBR magazine. I have followed it for twenty five years and a little more intensely the last 12- 13 years.

being an ethical and good corporate citizen, looking after people and the environment is not a trade-off but a success formula

From my own notes I have a one paragraph summary of each of the years 2004 to 2015. As each year is about 1,400 pages, to bring it down to one paragraph is quite a concentrate obviously not objectively covering everything useful and important, but covering my pick of important conclusions and messages.

My particular interest is in how we can build more purposeful and sustainable organisations serving the people and their communities. As many articles explain, being an ethical and good corporate citizen, looking after people and the environment is not a trade-off but a success formula.