ldrshp strgy for steering thru turbulent times
TRANSCRIPT
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Effective Leadership & Strategy forSteering Through Turbulent Times
DestinHaus LLC
Strategies for Success in a Multicultural World
Nissan Seminar
Yokohama, Japan
October 2009
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Current State of the GlobalEconomy
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The Global Economic Crisis
In the Autumn of 2008
Credit markets stopped functioning normally
Governments began nationalizing financial systems
Governments began considering bailout of other troubledindustries
Major US banks disappeared or became bank holding
companies Currency values, oil and other commodity prices lurched wildly
Housing prices in Spain, UK, US and elsewhere dropped steeply
Lack of consumer confidence
High unemploymentGlobal economic contraction
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Some of the Indicators (Chronological)
US Manufacturing output is expected to decline 12% this year
Wall St. Jl., May 28, 2009
Corporate bankruptcies set to surge by 35% in 2009
Rate of corporate collapses will reach historic heights in 2009 following
a 27% increase last year
Financial Times, June 4, 2009
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The Recession Some US StatisticsWall St.Jl. July, 2009
7.2 million people have lost their jobs since the beginning of the recession.
Unemployment rate is at 9.5%
Job losses over the last six months greater than for any other half yearperiod since World War II
Downturn began in December 2007
Decline in GDP is deepest since 1957-58 recession.
Americans have not seen so much of their wealth evaporate sine the GreatDepression
Home prices have fallen by $5.1 trillion, a 41% drop
People have lost trillions of dollars in the stock market As households struggle to cope with their wealth reduction, they spend less
Through first quarter, GDP was down 3.1% from peak it reached last year
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LA Times, Sept 11, 2009
US poverty rate reaches 11-yearhigh
46 million people withouthealth insurance
Unemployment at 8.9%
Poverty rate at 13.2%
Median household income fell3.2% to $50,300
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Now Some good News !!!
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The Turnaround
Several indicators point towards a recovery
?
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Business Week, Sept 28, 2009
Commerce Dept. said on Sept 15 that retail sales excludingautomobiles increased by a better-than-expected 1.1% from July
The cash-for-clunkers program helped inflate sales by 10.6% from
the previous month Producer prices jumped 1.7% in August (but still 4.3% below their
year-earlier level
Consumer price index rose by 0.4%
Year-over-year decline in CPI eased to -1.4% VS -1.9% in July
Fed Chief Ben Bernake called the recession very likely over
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So, what was the fundamental
cause for this mess?
Lack of Vision Lack of Strategy
Lack of Ethics
Lack of proper Leadership
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What can leaders do to steer their businesses
through such turbulent times?
What can each one of us do?
Each one of us has a
responsibil ity within our
own sphere of influence
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Effective Leadership & Strategy for
Steering Through Turbulent Times
Creating the right Culture Communication
Innovation
Risk-taking
Conflict Resolution
Leading & Managing Change
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Effective Leadership & Strategy for
Steering Through Turbulent Times
Creating the right Culture Communication
Innovation
Risk-taking
Conflict Resolution
Leading & Managing Change
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Business Culture
A corporate culture is the sum of the unwritten norms, beliefs andvalues that define appropriate behavior
Like human personalities, corporate cultures result from the
interaction of temperament and experience Over time, their dictates slip from the consciousness into the
realm of habit:
Changing the culture is the most nebulous area of corporate
management, by far the most challenging It is about changing the often unspoken values and beliefs that
guide any organizations conduct
Executive power cannot accomplish much here
Subordinates voluntary cooperation becomes essential
The difficulty of the task is such that even revolutionary leadersusually place cultural change last on their agendas
However, no transformation is complete without itControl your destiny or someone else willNoel Tichy & Stratford Sherman
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Creating the right business cultureCould transform a company
Make the difference between success & failure
Create significant increase in stakeholder value
Culture as it should beThe way in which a group of people solves problems and
reconciles dilemmas
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The Wall Street Jl. October 13, 2008
Ford Finance Chiefs departure said to reveal tensions in automakers management
Financial crisis, shrinking prospects push Detroits big three toexplore once-unthinkable options
GM to close plants, restrict lending
Honda to trim sport-utility output, add sedans Ford executive rejects talk of Mazda stake sale
Nissan will cut jobs at Spain plant
Toyota keeps idled workers busy, honing their skills
A Study in Corporate Culture!!!
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Culture Spurs Innovation
(Source: Textron survey of 150 senior executives) What is the most important driver of innovation for
companies?
Supportive Corporative Culture (53%)
Top Management Support (21%)
Clear Processes and Measurable Goals (13%)
Creative Talent (5%)
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Inspiring them to soar, The Wall St. Jl., Oct 1, 2007
Engage the workers hearts and minds
Direct correlation between employee engagement and theproductivity, profit and revenue growth
Employees who contribute the most to corporate performance alsotend to
Trust management
Be stimulated by their jobs Believe their work affects corporate performance
See opportunities for career growth
Take pride in the company
Have co-workers who feel the same way
Believe the company wants to help build their skills
Like their bosses
(Conference Board Study)
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How to stay ahead of the curve
Build and protect the culture
Stay focused on culture, people, and values; it is the area mostlikely to get compromised in this environment
Eric Foss, Chairman & CEO of Pepsi Bottling Group
If you dont invest in the future and dont plan for the future,there wont be one
George Buckley, CEO of 3M
Companies that nurture flexibility, awareness and resiliency are
more likely to survive the crisis, and even to prosperLeading through uncertainty Lowell Bryan & Diana Farrell,McKinsey & Co.
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Food for Thought
Think about
The culture that exists in your business
What have you done to create / change that culture?
Ask yourselves the following questions
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Strategic Assessment of Your Business
Which issue is absorbing more of senior managements attention?
Reengineering Core Processes Reengineering Core Strategies
Within the industry, do competitors view our company as more of a rule-taker than a rule-maker?
Rule-taker Rule-maker
What are we better at, improving operational efficiency or creating fundamentally newbusinesses?
Operational Efficiency Fundamentally New Businesses
What percentage of our advantage-build ing efforts focus on catching up with competitors versusbuilding advantages new to the industry?
Catching-up New
To what extent has our t ransformation agenda been set by competitors actions versus being setby our own unique vision of the future?
Driven by Competitors Driven by Our Vision
As a senior manager, am I working mostly on the present or am I an architect designing the
future?Present Future
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Leade
rshipSe
lf-Asses
sment
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Effective Leadership & Strategy for
Steering Through Turbulent Times
Creating the right Culture
Communication
Innovation
Risk-taking
Conflict Resolution
Leading & Managing Change
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Communicate
Clear communication
Builds alignment
Builds confidence
Lets people know that they matter
Builds trust in leadership
Motivates the troops
Even the best organizational ideas are worth nothing if they are not
communicated and supported clearly, with a thoroughly concrete
explanation of why and how -- Carlos Ghosn
Tell me & I will forgetRemind me & I might rememberConvince me & I will understand
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To lead, create a shared visionKouzes & Posner, Harvard Business Review, Jan 2009
Being forward looking, envisioning exciting possibilitiesand enlisting others in a shared view of the future
This is the attribute that most distinguishes leaders fromnonleaders
What leaders struggle with the most is communicatingan image of the future that draws others in that speaksto what others see and feel
Leaders need to listen closely to others
Appreciate their hopes
Attend to their needs
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Engaging Others
Engagement is not just about
conversation
Small voices can silence a room if used atthe right time
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Motivating People The Power of Alignment
The work has to be understood as important
It has to lead to a well-understood, shared goal
Values have to guide all plans and actions
Team members control achieving their goal
Respect your people; listen to them
A little encouragement goes a long way
Gung Ho! Turn on the people in any organizationKen Blanchard & Sheldon Bowles
The Spirit of the Squirrel
The Way of the Beaver
The Gift of the Goose
e = mc2
Enthusiasm = mission times cash and congratulations
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Effective Leadership & Strategy for
Steering Through Turbulent Times
Creating the right Culture
Communication
Innovation
Risk-taking
Conflict Resolution
Leading & Managing Change
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Culture Spurs Innovation
(Source: Textron survey of 150 senior executives) What is the most important driver of innovation for
companies?
Supportive Corporative Culture (53%)
Top Management Support (21%)
Clear Processes and Measurable Goals (13%)
Creative Talent (5%)
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Innovation
McKinsey Study
Innovation: Whats your score? Berwig, Marston, Pukkinen, Stein
Business model innovation tends to generate biggergains than product or process innovation
Harder for competitors to copy
Strong innovators do consistently well as regards stock-
market performance Top innovators continued to outperform their peers even
during the tough times
Agility & capacity to innovate made it easier to copewith challenges
Many important products have been introduced
during times of crisis
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Innovation and Recessions
Digital computers were born during the Great Depression
The Ethernet during the 1970s oil crisis
The IBM personal computer in the early 1980s recession The World Wide Web emerged from the recession of the early
1990s
During the last recession (in the early 2000s), innovative companiesbegan staking out new leadership positions via the Internet
Apple changed the business model in the music industry when itlaunched its popular iPod music player synched to its popular
iTunes music store Google became an online industry leader by linking its search
engine to advertising
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Innovation
To become a world-class center of innovation, asociety/organization / business must have three
basic elementsDrive A culture that supports change andhungers for it
Human Capital The personal abilities thatmake world-class innovation possible
A capacity for mobilization a societys abilityto pursue ambitious new goals
DestinHaus Workshop: Creating an Innovation Culture
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Thinking Out-Of-The-Box
Coca Cola
Tata Nano
The Computer
Apple
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Problem or Opportunity?
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Problem or Opportunity?
Infrastructure!!!
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Growth Values at GE
Need to embed growth into the DNA of a company
Leadership traits necessary for innovating, creating new businessesand expanding into new markets
External focus Clear thinking
Communicates clearly and concisely
Imagination Takes risks; displays courage and tenacity
Inclusiveness
Expertise Has domain knowledge; continuously develops self; loves
learning
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Effective Leadership & Strategy for
Steering Through Turbulent Times
Creating the right Culture
Communication
Innovation
Risk-taking
Conflict Resolution
Leading & Managing Change
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Critical Success Factors
Constantly step back and think about organizational effectiveness
View this as your company. Every action should be justified by asking
yourself Would I do this if I owned the company
Encourage risk taking
It is okay to make mistakes
The most important things are
What did you learn from the experience?
What do you do to prevent such a mistake from happening again?
Learn from the past but do not focus too much on the past
Use the past to make the future a brighter one
People who focus too much on the past will get confined to thehistory heap
People who ignore the past will tend to repeat mistakesCowboy proverb: Good judgment comes from experience;and a lot of that comes from bad judgment
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Effective Leadership & Strategy for
Steering Through Turbulent Times
Creating the right Culture
Communication
Innovation
Risk-taking
Conflict Resolution
Leading & Managing Change
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Conflict Resolution: What is It?
Methods for reducing or eliminating
conflicts Conflicts between nations, within
governments, between companies andgovernments, between and withincompanies, between individuals
Usually involves tools such as negotiation,mediation, and diplomacy
Always involves communication
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The United Nations
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The Six Party Talks
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EU-3 Talks with Iran (FRG, UK,
France)
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World Trade Organization
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Japanese Supreme Court
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External Corporate Disputes
International Trade
Intellectual Property Labor Cases
Tax Cases General Commercial (joint ventures, M&A)
Product Liability Anti-trust cases (anti-competitive issues)
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Internal Corporate Issues
Personnel Management
Productivity Sales
Subcontractors Delivery
Customer Service Overseas affiliate issues
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Different Cultural Approaches
Individualistic Culture
More contentious, shorterterm approach;
Want answers now and
clearly outlined; Less likely to negotiate,
and if they do, prefer to doso on their own terms;
Can walk out of talks,especially if must answerto constituents
Collectivistic Culture
More consensual, longerterm approach;
Want to develop a long-
term positive relationship; More likely to negotiate,
and when they do, morelikely to cooperate;
More likely to concede orengage in problem solving
A Spectrum of Cultural Values
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A Spectrum of Cultural Values
That May Affect Negotiation Informality: Informality is the norm,
almost everyone uses first names.
Mobility: One often leaves family andfriends for a new job and so must
make home, new friends quickly.
Direct communication: each personis expected to have an opinion andexpress it freely. Saying what is onyour mind is important and expected.
Competition: Competition, ambitionencourage superior performance.
Future Orientation: Emphasis is lesson the past and more on the presentand future. Focus is on youth.
Reputation: People are measured by
what they do.
Formality: Permission is needed to usefirst names; some never use them.
Stability: A great number of the worlds
people have never left home. Friendsare those they have known all theirlives.
Indirect communication: Deference isgiven to those in power or authority;directness and open criticism areconsidered rude.
Harmony: Harmony is valued andpersonal ambition frowned upon.
Reverence for past: Reverence for thepast and ancestors drives behavior.Age is respected.
Reputation : People are measured byfamily and origin.
C lt l V l Aff ti
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Cultural Values Affecting
Negotiation in Business Individual vs. the group values: Do we value individual
vs. teamwork accomplishments, who gets the credit, the
reward?
Power distance: Manifested in a hierarchy or equality ofrole of the individual (formal vs. informal values)
High vs. low context: Are we making direct statementsor hints direct statements, using code words or thenaked truth? (direct vs. indirect styles of speech)
Monochromic vs. Polychromic Thinking: Do we doone thing at a time or multi-task?
Tolerance for Ambiguity: Must we know the end goal
before we start, or is it alright not to know?
Principled Negotiation
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Principled Negotiation
Technique Separate the people from the problem
Negotiate from interests, not positions Work together to develop new options
Make decisions using objective criteriayou have all agreed upon
(From Roger Fisher and Bill Ury, Getting to Yes, Harvard NegotiationProject)
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A Strategy for Solving Conflicts
Build Relationships, answers Who am I dealing with?
Be Non-Reactive, answers, What does each of usreally want?
Do Something Disarming, and unexpected, answersWhat are our real interests
Problem Solve by Participation, answers: What arewe willing to do?
DestinHaus Stepping Stones to
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DestinHaus Stepping Stones to
Conflict Resolution Building KnowledgeAssessing managements needs
and their problems they want resolved; in the process
we may find other ways to improve your business
Building SkillsTraining managers to cope withtensions and conflict through active listening, problem
solving, developing options, writing agreements, andaction
Building Positive AttitudesUsing non judgmental
approaches for those involved in personal or businessconflicts
Building ConfidenceIn your own capabilities, and in
the potential of your employees to manage conflict
Ron Bees Conflict Resolution
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Ron Bee s Conflict Resolution
Motto
There is no limit to what you canaccomplish if you are willing not to takecredit for it.
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Effective Leadership & Strategy for
Steering Through Turbulent Times
Creating the right Culture
Communication
Innovation
Risk-taking
Conflict Resolution
Leading & Managing Change
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Stages in the Evolution of a Business
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S Curves
Organisations and teams gothrough natural cycles ofgrowth from upscale tomaturity
Different qualities andcapabilities are effectiveat different stages ofteam and organisationalgrowth
winter spring summer autumn
winter spring summer autumn
The result of letting things
go
The result of timelytransformation
The Automotive Industry
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The Automotive Industry
1955:
Four out of every five cars in the world were made in the US, halfof them by GM
Ford was half the size of GM VW was the largest non-US car maker; just a little bigger than
Opel, GMs German subsidiary Toyota made 23,000 cars, all in Japan (GM made 4 million cars
in the US)
Complacency
Toyota
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Toyota
Expects to sell 10.4 million cars in 2009, double what it sold in 2000
During this decade
GMs sales volume has grown at 1.5%/year
Toyotas sales have grown at 7%/year The American obsession with sales volume
Market Cap, $ bil (2006 Data, Approximate)
Which is Toyotas biggest market: US or Japan?
Honda 60Daimler Chrysler 58Nissan 52Volkswagen 29Volvo 19Ford 14Fiat 13GM 12Tata Motors 8Toyota 207
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Automotive Industry
The Next Frontier???
Tata
Geely Holding Group Co.
Beijing Automotive Holding Company
New World Order in Automobiles
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DestinHaus Workshop
Jump the S-Curve before getting pushed
- How businesses can control their destiny byreinventing themselves
P tti it ll t th t t b i
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Putting it all together to steer a business
History shows there are great opportunities during recessions More companies achieve dramatic gains during recessions than during
expansions
Take your business from your current position in the downturn to astronger leadership position when the economy recovers by Cutting the right costs in the right way while sustaining margins and
brand
Targeting the right customers, maximizing revenue while building yourbrand
Preparing for bold moves, such as game-changing acquisitions
Differentiating your f irm as one of this recessions breakawayoutperformers
As a leader you need to: Manage current resources while identifying new opportunities
Lead change amid new challenges
Difference between merely surviving the downturn and emergingfrom it stronger
H t t h d f th
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How to stay ahead of the curve
Forecasting Tell it like it is; Do not sugar-coat it
Understand and adapt to drastic shifts in market and consumerbehavior
Consumers are likely to display substantially altered preferences andtendencies as a result of their experiences in a recession
Do not be afraid to take action and change things, even if abusiness is doing well
Do not be afraid to take risks but manage risks carefully
Need courage to make hard decisions quickly
Need appropriate mechanisms and governance models to confrontmultiple scenarios
Be receptive to different points of view
Do not create a blame culture
Communicate, Communicate, Communicate The only way to address uncertainty is to communicate and
communicate; and when you think you have just about got toeverybody, then communicate some more Terry Lundgren, CEO ofMacys
Preparing for the Recovery
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Preparing for the RecoveryFinancial Times, Sept 22, 2009
Prepare for a recovery, but do not assume it is here yet. Thingscould still get worse; so plan for that too
Maintain a close control on costs at the same time as preparing for
return of growth Take a look outside your company and see what has changed
in your industry and the world generally
Has the behavior of your customers changed? Do you need to
change your strategy? Do not rely on old assumptions
Value your workers
Reward those who helped keep the group going and get ready to fightto hold on to your best employees
Continue to keep a close eye on finances
Begin to loosen some of the restraints put in place during the crisis
Give more freedom to employees
Avoid complacency
Communicate with employees honestly
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In Summary
Learning Company
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Learning Company
Do not be afraid to dream the dream
Be willing to learn from others
Including subordinates, suppliers, customers, etc Innovative, open to new ideas
Willing to learn from the past but not stuck in the past
Tolerant of different cultures
We are viewed as best-in-class; Outsiders want to learn from us
Blazing the Trail, Setting the Standard
A learning organization involves not only the development of new
capacities, but also fundamental shifts of mind, individually andcollectively
Peter Senge, Fifth Discipline