The Art of Leading by Looking Ahead
Author: Rob-Jan de Jong
Pub Date: January 2015
Print Edition: $27.95
Print ISBN: 9780814449073
Page Count: 288
e-Book ISBN: 9780814449080
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"Everything is the same until it is not." --ELLEN LANGER
UNRAVELING THE MYSTERY
"What's the one word you find in every definition of leadership?" I've asked that question many times to various audiences of senior executives around the world at the start of leadership sessions I run with them. I know what's coming. The word vision is almost always fired back at me. Apparently it's a no-brainer that leaders should, first and foremost, be skilled in the art of looking ahead and have a vision.
But then something interesting happens. I point out that they are all leaders and ask them if they have a vision. Surprisingly (or maybe not), only a few, if any, of the executives raise their hands.
This remarkable response got me thinking. If vision is one of the first things we think of when it comes to leadership--at least in theory--why is it so hard to find in practice? It can't be because there's no need for vision. In fact, a frequently heard complaint in the lower ranks of organizations is that their top leaders lack a clear vision. There's a strong desire for leadership that anticipates the future and brings direction, meaning, and inspiration. So if leaders and followers alike believe in its importance, why do so few leaders practice it?
For some, a compelling vision is like a fine work of art: it's admired, but considered out of reach for mortal souls like ourselves to create. Or it's a luxury, something we'll get to once we've got the time; right now we're just too busy with the more immediate issues, overwhelmed by our managerial re-sponsibilities. But is the absence really due to a perceived lack of ability or time? Or is something else going on here?
As I thought about an answer, I started to explore the art of looking ahead and its expressions such as vision and anticipation. You'd think something as universally acknowledged as a critical leadership quality would be the subject of countless books, tools, and required MBA courses designed to help you grow your ability to become more visionary and future--oriented. We all recognize the importance of good health, and we find thousands of books devoted to helping us develop a healthy lifestyle. But that's not true for visionary leadership. There's almost nothing that explains how to develop and nurture our visionary capacity. At least not with the soundness, rigor, and practicality you would look for with such an important leadership quality.
So maybe we can attribute the lack of visionary leadership to an absence of knowledge and understanding about how to grow this quality. That absence would explain the lack of de-velopmental guidance. After all, how would you be able to develop your visionary self if you don't have a clear idea of what it consists of? And subsequently, how would you know where to start and what to focus on if you wanted to become better at the art of leading by looking ahead? If this lack of understanding is true, then the start point toward visionary leadership depends on knowledge and developmental guidance. Waiting for inspiration to strike just isn't working.
This book is about unraveling the mystery of the thing called vision, in its broadest sense. From increasing our ability to look ahead and anticipate the future to turning that ability into a compelling story that ignites your followers. It's about demystifying the thing leaders, and their followers, say is so important, but that they struggle with to put into practice. We'll take vision from the realm of the mysterious into the real world, providing guidance for those who wish to become a more visionary and inspirational leader. Hopefully that includes you.
THE VISION THING
The January 26, 1987, issue of Time magazine featured an article on George H. W. Bush, who was serving as vice president under Ronald Reagan. It was common knowledge that he would run for president in the upcoming election. In "Where Is the Real George Bush?" journalist Robert Ajemian explored what the candidate-to-be stood for, what inspired him, what motivated him, and--above all--where he would take the United States if elected.1 A close friend of Bush confided to the reporter that he had urged the vice president to step back, retreat to Camp David for a few days, and reflect upon these important questions. Unimpressed, Bush responded with exasperation: "Oh, you mean for 'the vision thing.' " Unconvinced, he ignored the advice.
Depending on your political views, you might wince or even chuckle at this story. You might remember that it haunted Bush throughout his career. In fact, nowadays the unfortunate quote is part of his official biography on the United States Senate website.2 Some argue that his inability and unwillingness to create a vision was one of the main reasons Bush lost to Bill Clinton in the 1992 election.3
It is tempting to ridicule him for this quote. To be fair, though, it's not easy to be good at the Vision Thing. Of course we want the world's most powerful man to be more inspired in his ideas about the future, but we also need to acknowledge that creating and communicating a vision--especially a powerful, compelling one--is incredibly challenging. Even for those who aspire to lead a nation.
Creating a vision requires ideas, ideally intriguing and re-freshing ideas that trigger people's interest, curiosity, and ex-citement. It requires engagement with your imagination and an ability to think outside the clichéd box. It requires an open mind and willingness to listen to others' unconventional ideas and, in a responsible way, incorporate these ideas into your own perspectives. It requires clarity of thought on what you fundamentally stand for: the values you maintain, the beliefs that are dear to you, the enduring commitments you have set out for yourself.
Finally, it requires the courage to voice your vision, to stand up for it, and to battle the resistance you'll inevitably face in return. Because an effective vision by definition has to be original, and therefore to some degree be provocative, maybe even slightly controversial. After all, there's very little "vision" in more of the same. And because a vision deals with the future, which is by definition unknown, it is surrounded by uncertainty. Here's where a fear factor enters the equation: Your vision could turn out to be wrong. And since we've evolved with the notion that being wrong is a bad thing, it hampers our ability to stand out with something creative and different. But as the educationalist Ken Robinson once said, "If you are not prepared to be wrong, you'll never come up with something original."
So, as much as we agree that leaders need the ability to look ahead, there's very little understanding of how to develop this competence and improve visionary capacity. It's also typically misunderstood. The reason might stem from the belief that it takes too much time. Or that our overwhelming short-term focus can't prioritize it. Or that someone is either born visionary or not. It's this same confusion Harvard Business School professor John P. Kotter observed in his landmark article, "What Leaders Really Do." He writes: "Most discussions of vision have the tendency to degenerate into the mystical. The implication is that vision is something mysterious that mere mortals, even talented ones, could never hope to have."4 But developing a powerful vision isn't magic. It's not easy, but neither is it magic.
The truth--the premise of this book, in fact--is that all of us can become more visionary. My take on the term visionary (which we'll get to later) isn't larger-than-life, born-with-it-or-not. Instead, I believe it's something that can be developed, something that's practical and real, something that can be embraced by anyone willing to invest time into it. It's a lot like playing golf or tennis: We can all learn how to play these sports. Sure, some of us are better than others as a result of practice combined with perseverance and some natural ability. But practice and perseverance can take you a long way.
I believe the best thing you can give your followers is in-spiration and purpose. It's my intention with this book to coach you on this journey. You can become a leader who provides authentic inspiration, fueled with energy, passion, and meaning. In other words, you can become a leader who understands and harnesses the art of looking ahead and who seizes the real power of the Vision Thing.
Let's bring some gravitas to the argument that vision is a critical element of leadership. In an impressive effort to understand the secrets of leadership success, Harvard's Anthony Mayo and Nitin Nohria conducted an exhaustive study of a thousand of the twentieth century's most influential business leaders.5 The results are extensively documented in their book, In Their Time, which provides many insights about the Vision Thing that we will review throughout. But let's first look at some of their statistical findings.
To determine those influential leaders--those who shape the way we live, work, and interact even today--Mayo and Nohria asked 7,000 executives to rank a list of 1,000 individuals. In addition, they asked respondents for their definition of a "great business leader"--what are factors that make people great?
On the latter question, five factors (see Figure I-1) dominated the responses:
Number one was the ability to articulate and harness a strategy/vision for the company. Nearly a quarter of the re-spondents rated this quality highest, followed closely by "pio-neering" and "impact on the industry at large." Interestingly, the more internally oriented factor of financial performance is outweighed by externally oriented factors (vision, pioneering, and impact on industry).
Mayo and Nohria then identified and explored three executive archetypes: entrepreneurs, leaders, and managers. Yet even though representatives of each type enjoyed significant success for themselves and their organizations, the authors draw the following conclusion:
[L]ong-term success is not derived from the sheer force of an individual's personality and character. Without a sensi-tivity to context, long-term success is unlikely and an indi-vidual risks being surpassed by competitors or falling victim to hubris. Companies do not succeed or fail in a vacuum.6
It's this pivotal factor that leadership guru Warren Bennis, whom we'll meet again later, calls adaptive capacity: the ability to be attuned to developments in the external environment and to act on these changes accordingly. It's this ability to anticipate and engage with these changing dynamics that make organizations--and their leaders--successful over the long run. Arie de Geus, the author of The Living Company, and a lifelong scholar in future--orientation and learning organizations, observed in a study he conducted during his years at Shell, that most commercial corporations have dramatic life expectancies. They die prematurely and rarely outlive the life expectancy of human beings, which is around seventy-five years.
But some do. A handful of companies on the planet have lived for hundreds of years.7 And when de Geus studied those few companies that had been successful in navigating through the decades and centuries of change, he observed that they shared a strong sense of sensitivity to their environment. They always seemed to excel at anticipation, keeping their feelers out, tuned to whatever was going on around them. And they reacted timely to the changing conditions.8
So, context sensitivity and adaptive capacity are critical elements in developing visionary capacity. Hence, they are given a prominent role in our exploration, which includes practical approaches for nurturing these -abilities.
To enter this exploration of the Vision Thing with our eyes wide-open, we must understand its greatest enemy.
While the world is in many ways still dealing with the con-sequences of the worldwide financial crisis that has dominated the news since 2008, the "whodunit" question continues to surface in discussions. Yet the complex and systemic nature of the collapse makes the finger-pointing arbitrary. There were greedy bankers and hedge fund managers driven by the promise of fat bonuses; slacking regulators who turned a blind eye; central bankers who kept interest rates at irresponsibly low levels; ratings agencies that were unwilling to assess risks appropriately; unrealistic politicians who refused to tackle the tough issues; and reckless consumers who used credit to live beyond their means.
They all played a role. And they all suffered from the same disease called short-termism. They valued short-term gains above long-term, somewhat foreseeable, consequenc-es--whether at personal, organizational, or societal levels. "Anyone who is willing to postpone the long-term strategy to make the short-term numbers is in route to going out of business," warned Bill George, Harvard Business School professor and former Medtronic CEO, in a plea to rethink capitalism.9 He is very concerned about the effects of excessive Wall Street orientation and the aggressive influence of activist shareholders looking for short-term gains. As an advocate of the long-term perspective, his recommendation is that "it's extremely important for management of a company and the board of directors to get alignment over the long-term goals and objectives and strategy to get there, and then to shape its investor base to match that goal. Do not let your shareholders manage you; you have to manage them. You have to say what we're going to be."
Hence, he's not merely finger-pointing external forces, but he underlines the responsibility of developing a clear future-oriented perspective in order to fight the pressures that work against it. In itself, this is nothing new, and if anything, it should be one of the most important lessons learned from the crisis that hit us so hard.
Remarkably though, that research by McKinsey five years after the near meltdown of 2008 seems to suggest that little of that learning has actually taken root. Sixty-three percent of re-sponding managers admitted that the pressure to make high short-term profits had increased since the start of the crisis, and nearly four out of five managers (79 percent) reported that maximizing profits for the next two years was still a priority.10 Most (86 percent) declared that using a longer time horizon to make business decisions would positively affect corporate performance. The awareness seems to be there, but regrettably, despite the ice-cold shower of the financial crisis, the lessons are not learned or applied. Short-termism has not been overthrown; instead it seems to have increased. Today, bankers heading financial institutions that were bailed out by public money because of their recklessness have their confidence back and are arguing against intensified regulatory oversights.
We're supposed to learn from the past, but short-term success appears to shield our willingness to accept long-term implications.
Fortunately, there are a few enlightened leaders who have learned from these mistakes. Sir David Walker, the chairman of Barclays Bank since 2012, publicly admitted that investment bankers' focus on short-term targets has caused enormous damages.11 More concretely, Paul Polman, CEO of Unilever since 2009, doesn't just talk the talk. Polman decided short-term investor anxiety would hinder his plan for structural renewal of the company, designed to prepare it for the future and for long-term benefits. He set lofty and challenging transformational goals for the company (and himself), such as a 50 percent reduction of the greenhouse gas impact of Unilever products and 100 percent sustainable sourcing of raw materials, and pledged to help one billion people improve hygiene. He recognizes that such shifts require time and perseverance, and the road ahead is not a straight line. Short-term investors breathing down his neck would be unsuitable for this journey, so he did away with quarterly earnings reporting and told hedge funds they are no longer welcome as investors12--a huge and controversial step for a publicly listed multinational.
Leaders like Walker and Polman are up against a tough opponent. Short-termism has deep roots, and the influence of short-term-oriented investors continues to grow. But at the same time another study pointed out that blaming short-termism on external factors is too simplistic.13 Francois Brochet, George Serafeim, and Maria Loumioti analyzed the language used in over 70,000 earnings conference calls by more than 3,600 companies between 2002 and 2008. By counting the words and phrases that suggest both short- and long-term emphases, they found that businesses that leaned strongly toward short-term results, judged by the language they used, attracted short-term-oriented investors. Short-termism, then, is at least partially self-imposed and not just externally enforced by investors.
It's no surprise that family businesses, by and large, have weathered the financial crisis much better than those operating under markets mantras. Stijn Swinkels, currently the sev-enth-generation family member heading international brewery Bavaria Beer, likes to say that "we borrow the company from our children." A mindset defined by such values makes it far less likely to lose sight of the long term than a mindset that keeps thinking of "quarterly results" and "increasing shareholder value."
On the bright side, there is hope. Executives can influence the type of investors they attract, just as Paul Polman found, by adjusting the horizon they take when communicating about their business. The absence of a long-term view, or the inability to formulate and communicate one powerfully, not only draws like-minded investors but also reinforces short-term thinking and behavior. The presence of a powerful vision attracts a different type of investor.
Can a vision survive against this backdrop of intrinsic, hard-to-battle short-termism? It's a tough question. Short-termism is the biggest enemy of developing visionary capacity for both the organization and the individual leader. Compelling visions rarely have immediate monetary returns. In fact, the immediate consequences of a powerful vision might be detrimental to short-term results. The fear of affecting these short-term results often prevents leaders from making the kinds of organizational transformations they would want to make if they were faithful to their long-term view.
To return to Bill George's thoughts once more, he underscores this long-term responsibility in current leadership. "You cannot put a strategy in place today in the pharmaceutical industry, in the automobile industry, in the food industry with less than a seven- to ten-year time frame. That's how long it takes. Particularly [for] companies going through a cultural transformation it takes closer to ten years to get it done."14 Witness the print industry: In December 2012, Newsweek published its last print issue after its subscriber base and advertising revenue had shrunk by 50 percent and 80 percent, respectively, over ten years. (In March 2014 Newsweek relaunched its print edition under new ownership and with a different business model that no longer relies on advertising income.)
This is the publishing industry's new reality. An aging sub-scriber base won't get replaced with new, younger subscribers that have grown used to free digital content. At the same time and as a result, advertisers are increasingly moving to digital platforms, depleting the second main income stream for the print industry. Publishers soon need to face the obvious choice: Follow Newsweek's December 2012 decision and stop printing, or reinvent oneself to find a new, profitable model. (A third possibility is to mindlessly stick your head in the sand and hope it will all blow over, a strategy that, at the time of this writing, still has a remarkable popularity.)
Most executives lean toward the second option, transform, even though--as pointed out by Bill George--transformation tends to be slow and results in the immediate future are likely to be weak. From the long-term point of view, though, it's their only option. So, if you are leading a publishing house today, you better have a compelling vision for the future of your business. It won't be easy, but it should have the highest priority over anything else. And you better be prepared to fight a battle with short-termism. You will need shareholders with a long-term perspective who will allow you the time to transform. This is what Paul Polman understood so well when he led his organization forward: On this journey, there is no room for short-term-oriented hedge fund managers who enter only with an interim perspective to make a quick win (even though they would never admit that).
To conclude, a powerful vision isn't just nice to have. It's the most important tool in the transformational leader's toolbox. "Where there is no vision, there is no hope," is how George Washington Carver dramatically put it. You need a compelling story to inspire people to join the transformational journey and persuade them to stick around for the long run. But how do you do that? That's the real question. And that's where we are heading.
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