Written by
Changeboard Team

Published
08 Mar 2010

Reflections on change - alchemy influence

08 Mar 2010 • by Changeboard Team

Unlocking executive strategic management potential

The Human Capital Network organises another masterclass on Monday the 10th of May, 2010 at London Business School. The keynote speaker, Lynda Gratton, professor of management practice at London Business School will talk about importance of organisational innovation after downturn. In the run-up to the event, the Human Capital Network will publish related articles on Changeboard. The articles published for earlier events can be found under London Business School Human Capital Network resources.

According to the authors, the key to understanding and unlocking executive strategic management potential lies in the power of engineered conversation. Executives need time to reflect collectively, if they are to manage change within their business meaningfully.

With the help of three case study companies, the authors reflect on their findings and the factors that come into play when executives perform effectively.

Living in your world

For the authors, the starting point as scholar and practising executive is an understanding of the story of a company. They believe it's both implausible and na??ve to think of a company outside of its context. For them context invokes heritage, values, shared experiences, norms and myths. Each of the three companies cited in their reflections have their very different histories, and their current capacity and appetite for change is contingent on this history.

This acknowledgment of history is crucial. Understanding the past is essential if we are to make sense of why things are what they are. For example, it would be hard to understand BP's CEO interest in the peer group processes and performance management, without understanding the context of falling performance and major acquisitions that resulted in this focus. When executives take a historical perspective, their Challenge becomes one of deciding what to cherish and preserve, and what to leave behind and discard. Some practices and processes of the past will indeed have a role in the future.

In her own research at BP, RBS and Nokia, Lynda Gratton has called these 'signature processes'. The peer groups at BP and the morning meetings at RBS are both practices embedded in the past that have the potential to add value into the future. This understanding of the past creates a framework within which executives can make what the authors believe to be one of their most difficult decisions, namely the decision on how to allocate the resources available to them.

To do so, they have clearly to understand where they are now. In each of these companies, a whole raft of employee and customer metrics create a means by which this understanding can be created. These employee and customer metrics are certainly useful, but they are rarely sufficient. At BT, for example, the broad-brush of metrics is augmented by a practice termed 'back to the floor' where executives find a host to shadow for at least a day truly to understand the context in which people are working.

Each of BT's corporate leaders gets 'back to the floor' at least twice a year, shadowing people in the sales, repairs and maintenance departments. Only when they are 'living in your world' can they truly understand.

The power of meaningful conversation

Beyond understanding history and context, the authors have debated what has supported the change agenda in BP, BT and RBS. Their belief is that a key capability is the capacity for people across an organisation to have meaningful conversation. For the authors, one of the symptoms of a functioning senior team is their ability to converse with each other and their willingness to talk. This seems deceptively easy, but in fact can be devilishly difficult.

Gratton has written extensively about the 'power of conversation'. From Boyle's role as a practising change agent, she has chosen to focus a great deal of her energy and resources on equipping leaders with the competencies of dialogue. In part, this has involved these leaders considering how they relate to their circumstances, how they relate to the past, and how they see, or fail to see the future. The foundation for this changing dialogue is the 'management of the future', knowing how best to use resources. Knowing, for example, when to increase the scale of the corporation.

At the heart of this conversational competence is the willingness to reflect and to take time out for this reflection. The Challenge is clear: given the aspirations and targets of these companies, how do executives stop jumping into action and take time to think collectively? Helping executives stay in the conversation has been one of the key roles Boyle has played. As she and Gratton talk about this capability, it becomes clear that this needs both a shared language, and what Boyle refers to as a 'container'. This container is created when groups of people on equal footing are able to engage as peers in the conversation.

How is meaningful conversation supported?

The 'peer group' process at BP is exactly that, a group of business unit heads from across the corporation brought into cross-business teams to work on performance issues. The Challenge here is for individual executives to see the whole, to see beyond their own part of the business to the wider context, and to understand the context of others.

From their different perspectives on organisational life, the authors both believe that executives deliver more if they are willing to engage in collective conversations, build agreement with each other, and create a shared understanding of the context in which they operate.

One of the most powerful ways is to change the context, or container. At RBS, one of the key ways of supporting conversation was a significant investment in a series of executive development programmes with faculty at the Harvard Business School. Taking time out of working life, these executives began to learn the power of harnessing collective conversations, while also receiving 'brain food' for these conversations. As the architect of these programmes, what Boyle saw was that, as soon as these executives stepped outside their day-to-day action taking, the networks they created and relationships they built where qualitatively different.

At BT, an executive programme called: 'The Global Business Consortium' (Gratton and Ghoshal, 1990's) played a similar role. As executives from six companies, including BT, Standard Chartered Bank and ABB, travelled around the world, they had the space and time (the container) for conversations with their peers about the Challenges they faced.

At BP the 'peer group' process began with the top 400 but now involves over 10,000 people in a community of conversation. Over time, what was a single strand of conversations becomes a mosaic. For Boyle, notably these conversations are driving the leadership capability of the organisation. It is certainly hard work to make these conversations happen. The lure of the mobile phone and wonderful feeling of springing into action is always there. Yet, meaningful conversations do happen in companies. Sometimes, like RBS's Harvard programme, the external intellectual insights act as a trigger. In other cases, the stimuli come from within. Over time, these executives build what Boyle calls 'the muscle' for a richer level of conversation and strong relationships. They begin to get increasingly skilful at it.

Making commitments

What give these conversations traction are the time to reflect and the commitments i.e. the promises of performance that are embedded within them. It is a critical way to add value. Within the conversations in BP's 'peer groups', these commitments and the accountabilities that arise from them are a crucial part of the practice. In a series of events, the senior team brought the peer groups together collectively to make commitments and agree targets. Using the technical expertise and understanding embedded in the peer groups, they were able collectively to agree performance goals that were stretching but plausible.

An important element in this peer group conversation was the significant training that many executives had received. This began with a one week course, and then continued with coaching support over a nine-month period. Taking 20 executives at a time, this intervention quickly ramped up to include more than 1000 executives. These programmes, influenced by HR and championed by senior executives, created an understanding about how these meetings would work and built capability in meaningful conversation and commitments.

BP worked with outside agents to build this range of conversational capabilities over time, including intellectual stimulation, from complexity theory to whole system thinking conversation, to create a new way of thinking to build new possibilities for the future. As Boyle reflects on this time at BP, what is clear is that to be successful these commitments need both an intellectual and emotional element. It is this combination of the rationality and data of the intellect, and the engagement and purpose of the emotional that together drives commitments, and a willingness to take action consistent with the future strategies the executive wants to deliver. Boyle states: Until these commitments are real and cause you to question how you will act differently - they are not commitments. At BP there is a huge emphasis on speaking commitments and on actually saying I commit. In part, this reflects authenticity, the commitment to something that is right for you.

Using experiments to bridge to the future

One of the important outcomes of these meaningful conversations is the capacity to take risks collectively further within the organisation in order to achieve scaled change. Conversation can create the container for this risk-taking, but the three case study organisations need more, and need to involve their people in the change. One of the authors' observations is that a crucial aspect of this is how successful executives bridge into the future through the use of trials and models of what the future could be.

Take for example RBS's Retail Direct Business and the call centres that support the business. These are a central aspect of the business model for Retail Direct, and the means by which customer enquiries are received and managed. The quality of service of these call centres is dependent in part upon accumulated and shared knowledge that the operators have available to them. Much of this resides in the technology platform that underpins the business.

A new customer platform with highly effective functionality was about to be launched. So much time had been spent building the system that it raised the question: How do we Challenge and energise over 3,000 people to understand what is now possible? The way in which Boyle and her colleagues at RBS decided to engage with the business in this Challenge was through a series of trials and experiments and conversational approaches (Appreciative Inquiry).

These were designed to enable the workforce to engage in shaping their working practices around the new technology platform. The experiments created a series of ways of thinking about the work and, as importantly, of thinking about the metrics that would be most crucial in establishing the performance viability. For Boyle, the real energy of these trials comes through 'pull' rather than 'push'. By engaging leaders and employees in these experiments, there is a real opportunity for excitement and engagement. Moreover, by comparing these experiments with the current working practices, they were able to get a really good measure of the impact of the intervention.

They knew what happened to the performance metrics with the experimental intervention, and what happened without it. As a consequence, both leaders and team members were able to engage in meaningful conversations about the impact of these experiments, as well as how to scale this into everyday practice. As a consequence, they individually and collectively built up their faith and confidence in doing things differently. They were able to answer collectively the question Is this having a direct impact, and are we measuring the right things?

At RBS it is conversations on this scale that ensure that the company has one of the lowest cost bases in the industry, and one of the highest growth rates. Great organisational change is alchemy: part art and part science. However, the authors believe that by supporting conversations, through making lasting commitments and by creating variety through experiments, executives can make an important positive impact on the chances of alchemy occurring.

About Lynda Gratton and June Boyle

Lynda Gratton

Lynda Gratton is professor of management practice at London Business School. She is considered a leading authority on people in organizations and actively advises companies across the world. She wrote several books that have been translated in many languages.  In 2007, her book "Hot Spots" - why some teams, workplaces and organizations buzz with energy and others don't, was published and led to the creation of "The Hot Spots Movement". In 2009, Lynda published her latest book: "Glow - How you can radiate energy, innovation and success".

June Boyle

June Boyle is head of organisational capability and performance effectiveness at Lloyds Banking Group. June Boyle is a thought leader in the field of generalist HR, organisation effectiveness and learning and development. Her experience spans 3 major global organisations including BP, RBS and BT. She has designed, developed and implemented large scale change programmes across all areas of HR and facilitated leaders through the execution of their people plans ultimately to improve performance and deliver major organisational change.