If you want to prepare your company for the future, you must align purpose, performance and principle, write Doug Ready and Alan Mulally for MIT Sloan Management Review.
In today’s fast-changing economy, and in the face of continuing technological change and constant disruption, you must focus on building a robust, agile organisation that is able to attract the best and the brightest talent.
Performing well is paramount, but today’s employees also want to see that a set of core values, such as trust, transparency, inclusiveness and cooperation, are driving executive decision making. Millennials in particular take Corporate Social Responsibility (CSR) seriously and are attracted to organisations with a clear sense of their overriding purpose.
The successful organisations of the future will be performance-focused, principles-led and purpose-driven. It is down to you, as leader, to align these three characteristics.
THE POWER OF PURPOSE
In 2014, Dave McKay was appointed CEO and director of the board for Royal Bank of Canada (RBC). RBC boasted a strong financial performance and a set of core values that guided managerial decision making. But, in order to tackle the process of ongoing digitisation head on, McKay persuaded a sceptical senior leadership team that the bank needed to create a statement of purpose.
McKay organised dialogue sessions with staff, encouraging them to ask: why does RBC exist? The resulting statement of purpose led to an increase in employee engagement and a higher percentage of employees identifying with RBC’s strategic direction.
THE IMPORTANCE OF PERFORMANCE
Isadore Sharp founded Four Seasons Hotels Ltd in 1960. The organisation had a “powerful sense of purpose” and a coherent set of guiding principles from the start, which enabled it to become one of the world’s most successful premium hotel brands. Then, in 2007-08, the global financial crisis hit, uncovering a raft of operational inefficiencies that were having a detrimental effect on the brand’s financial performance.
Sharp and his senior management team were forced to cut spending, cut the workforce and introduce strict financial and operational performance objectives.
Purpose and principles mean nothing without performance.
ALIGNING PURPOSE, PERFORMANCE AND PRINCIPLE
The examples of RBC and Four Seasons show that it is possible for a high-performing organisation to create a sense of purpose and for a highly principled organisation to focus on performance.
But aligning purpose, performance and principle requires a leader with a particular set of skills and mindsets.
FIVE ESSENTIAL LEADERSHIP SKILLS
The successful leaders of the future will be able to:
1) Tell stories. If you want inspire your employees you must be able to tell a compelling story about your organisation's transformation that links past successes with future goals.
2) Generate a sense of collective responsibility. Collaboration is key. It is vital that every member of your team, not just senior management, is imbued with a sense of responsibility for the organisation’s transformation and future success.
3) Drive innovation and growth. Strong performance doesn’t just happen; it is the result of rigorous processes and discipline. It’s up to you to put the processes in place and create a performance-focused culture within your organisation.
4) Reward positive behaviour. To ensure you build a sustainable, collaborative culture, you must reward collaborative behavior and penalise siloed behaviour. Senior management will most often be guilty of the latter.
5) Nurture talent. An organisation is only as good as its people. You must keep track of your organisation's ever-changing skills requirements and use the information you gather to inform your talent acquisition and training strategies.
FIVE ESSENTIAL LEADERSHIP MINDSETS
Skills are not enough. Your tone, approach and sense of perspective are also important. You and your leadership team must appreciate complexity and a series of dualities. The successful leaders of the future will be both:
1) Decisive and patient. The ability to make quick decisions and get things done is key to effective leadership, but speed doesn’t always guarantee success. Sometimes you must be patient. “Patience doesn’t always mean that one acts slowly but, rather, deliberately, with a sense of context and perspective,” write Ready and Mulally.
2) Proponent of both collective leadership and individual accountability. Collaboration is essential, but in order for teamwork to succeed, each individual has to accept accountability for delivering excellence.
3) Developmental coach and performance driver. It will take time and support from you and the leadership team for positive behaviours to become habits, but you have to balance the role of developmental coach with that of performance driver, setting performance goals and holding individuals accountable. You also have to be willing to remove underperformers from your team.
4) Student and teacher. A good leader has an unquenchable thirst for knowledge and is always asking questions. You must be what Larry Fink, co-founder, chairman and CEO of BlackRock Inc, calls a “perpetual student”. But you are also responsible for teaching your employees.
5) Humble servant and catalyst for change. You are driving change for the sake of the organisation. Your motivation is to serve your organisation and your employees, not yourself, and this must come across in everything you say and do.
TEN QUESTIONS TO ASK YOURSELF
Have you told your company’s story effectively, emphasising the importance of it being purpose-driven, performance-focused and principles-led?
Have you instilled in your employees a sense of mutual investment and accountability?
Have you put in place rigorous and disciplined processes to ensure that your organisation’s performance targets are met?
Have you put in place a system of rewards that accurately and transparently aligns with the organisation’s top priorities?
Have you created talent-management processes that ensure that you will have the necessary talent to succeed?
How well are you balancing the need to express a sense of urgency about driving change with the patience it will take to do things well and right?
While you are building a sense of collective leadership accountability, are you also emphasising the importance of each individual delivering excellence?
How well are you balancing your role as a developmental coach with the role you must play as performance driver?
How well are you balancing your role as a “perpetual student” with your role as a teacher?
- How well do you balance acting as a humble servant and steward of your organisation’s reputation and legacy with being a catalyst for change?
ARE YOU ON THE WAY TO BECOMING A LEADER OF THE FUTURE?
Keep asking yourself these ten questions. Becoming a leader of the future is an ongoing process.
“To succeed in leading organisational transformations, executives need a new mindset – a fresh way of looking at their industries, their businesses, their customers, and the best way to deliver differentiated value to customers,” write Ready and Mulally. “The biggest challenge is to embrace a different style of leadership.”