Leading in Turbulent Times
Trends in business, the implications for Leaders, and
opportunities for CE Professionals
Eric J. Bergstrom
Penn State Management Development
Programs and Services
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Overview
During this session we will explore….
 Trends
in Business (Where have we’ve been----where are
we now?)
Challenges do our customers face in their
business environment?
 What opportunities exist for organizations to address
these challenges?
 What
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The Right People: Develop Great Leaders
The Right Culture: Empowerment & Collaboration
The Right Strategies: Hard on Problems, Soft on People
The Right Results: Metrics-Driven
 Action
Planning: Where do we go from here?
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Leadership
MetricDriven
Organization
High
Performance
Culture
Empowered
People
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Honed
Processes
Where We’ve Been & Our Roles
• Early 1980’s:
 Change
or Disappear
 Culture Shock….workforce reductions
 Quality Circles…getting folks involved
• Late 1980’s:
 Build Capacity  Streamline
 Self-Directed Work Teams / Lean Enterprises & Six
Sigma organizations are born
• 1990’s:
 Reengineering / Flattening the Organization
 Organization Redesign; Six Sigma / Lean
 International / World Scope
• 2000’s
 Mergers and Acquisitions; Value / Competitive Advantage
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The Economy: “Been There”
Previous Global Recessions:
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The 1980 Crisis (1980-1982)
The 1990 Slowdown (1990-1992)
The 2000 Bust (2000-2002)
The 2007 Great Recession (2007-????)
Study of 47,000 public companies:
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17% didn’t survive the recession (bankrupt, were
acquired, went private)
80% of survivors had not yet regained their prerecession sales/profits three years after the recession
9% flourished after a slowdown
Source: Gulati, Nohria, Wohlgezogen (2010). Roaring out of Recession (HBR Reprint R1003C)
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What Changes Have You Experienced in
Your Field? In Your Organization?
WHAT ARE YOUR CRITICAL
CHALLENGES?
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How do we address these challenges?
Many believe through leveraging the
interrelationships among…………
Developing The Right People
Creating The Right Culture
Applying The Right Strategies
Targeting The Right Results
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Developing The Right People
Leaders & Members
What competencies, skills, and
behaviors do leaders and members of
successful organizations possess?
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Who: Developing Human Capital
• Most companies tout their employees as “their
most important resource”--- their way for
creating competitive advantage for their
organization.
• However, in lean times, the people-development
and the people-engagement activities often are
delayed, postponed, or eliminated---sending
mixed messages to employees.
• Lean times often provide Leaders with the
greatest sense of urgency and opportunity for
assessing our business but also the opportunity
for leaders to shine by engage employees in
implementing improvement processes
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Alignment at the Top
Which Develop People Management Issues are
Most Critical to Your Organization’s Success?
 Talent Management
 Training / Development
 Ability to Integrate Acquisitions Quickly
 Creating a High Performance Culture
 Leadership Development and Pipeline
 Compensation, Benefits and Pension Planning and
Management
 Complying with Regulatory Questions
 Anticipating and Responding to Business Critical Events
Source: Aligned at the Top, Deloitte Touche Tohmatsu, 2007
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Alignment at the Top
Develop People Management Issues that are
Most Critical to the Organization’s Success
Leadership Development and Pipeline
 Executives rank this issue as #1
 Each leader needs to identify 2-3 individuals who are able to move
within the organization
Talent Management
 Find the right people
 Talent strategy = business strategy
 Retain strong performers
Training & Development
 Survey shows the most effective way to create talent is to home grow
talent
 One of the few competitive factors we can actually control
 Training is every leader’s job
 Training must be continuous
Source: Aligned at the Top, Deloitte Touche Tohmatsu, 2007
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Developing Good Leaders
Great Leaders are skilled in four building blocks of
Leadership:
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Vision
Interpersonal Style
 People
Skills
 Teamwork
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Communications
Problem Solving / Decision Making
 Tactical
Execution
 Strategic Thinking
Source: CPP White Paper “Developing Great Leaders”
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Which Critical Competencies Impact An
Organization’s Success?
Leader competencies that are developed to support
organizational success include:
 Strategic Thinking:
 Talent Management
 Operations Knowledge
 Business Acumen
 Technology/Technical Skills
 International/Global Perspectives
 Finance capability
 Flexibility/adaptability
 Change management
 Innovation and creativity
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Closer to Home----Our Research:
The Leadership Competency Inventory (LCI)
• 32 items, keyed to competencies shown to be
critical to successful performance in supervisory
or managerial roles
• Research-based, drawing on extensive studies by
the Federal OPM, which drew on the original
large scale studies by AT&T; appended with
basic, core competencies (SCANS & Work Keys)
• Self and Manager parallel versions
• Group-based results (but can be used for
individual development planning)
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(LCI) Results – Summary
Industries Represented:
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Manufacturing: Metal, food, printing, rubber,
Wholesale / Retail
Health Care
Long-Term Care Retirement Communities
Transportation & Logistics
Technology: R&D, Internet,
Education
Government
Professional Services: CPA, Medical Transport
Banking / Financial
Utilities
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Overall Results: LCI
Top 10 Competencies with the highest
Importance / Development Values in
both the Target and Manager Groups:
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Leadership & Coaching
Communications (Oral and Written)
Conflict Management
Relationship Building
Teamwork
Problem Solving
Flexibility & Resilience
Customer Focus
Planning & Evaluation
Financial Management
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Understanding Results: LCI
When reviewing the selections of specific
organizations and industry clusters, the selected
competencies were influenced by:
 Positions
of leaders within the organization
 Type of industry (health care, manufacturing, Logistics,
etc.)
 The level of empowerment of the organization
 The age of the organization
 The culture of the organization (autocratic, participative,
level of hierarchy, etc.)
 Financial status
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What Lessons Have We Learned
about People? What is Our Call to Action?
The Right Leaders demonstrate critical
competencies that lead to organizational
excellence
Leaders find members with and develop
organizational members in the competencies
that support organizational goals
Critical Work: What critical competencies lead
to organization success & how do we find /
develop individuals with those competencies?
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The Right Culture
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The Right Culture
Successful Organizations have a culture that….
 Address Crisis (demonstrate flexibility, resiliency,
efficiency)---a sense of urgency AND Operate for the long
term (effective at planning)
 is Hard on problems, Soft on people
 Provides High Levels of Communication: give people the
information they need to help the organization succeed
 Share responsibility and accountability for problem
solving and decision making
 Align structures: Hiring processes, Performance
management, Engagement / participation, Reward
systems, Talent management
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Attributes of a High Performance Culture
 Collaboration
/ teamwork
Problem-Solving
 Decision Making
 Internal / external partnerships
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 Shared
Leadership
 Empowerment of Members
 Metric –Driven
 Customer-Focus
 Quality / Excellence
 Technical Competence
 Change agility
 Business Acumen / Financial Management
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Sense of Urgency Exists in the Culture
to Address Today’s Critical Business
Challenges
1. Does a Sense of Urgency exist?
2. Are the corresponding Actions
appropriate for the conditions to
reduce complacency and confusion?
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Tomorrow’s Opportunity
Starts with Today’s Urgent Behavior
Your Checklist:
 Do a sufficient number of members feel a true sense of
urgency?
 Are teams created to guide ambitious change?
 Are visions and strategies developed to deal with key issues?
 Have we communicated visions / strategies to allow others
and to receive & to buy-in?
 Have we empowered others to act?
 Have we achieved & communicated short-term wins? Does
that lead to expanded efforts?
 Have we institutionalized desired change?
Modeled from: “A Sense of Urgency”,
Kotter, 2008
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What are the Consequences of
Little or No Urgency
• Mistake Activity for Productivity
• Miss Need for Internal Change due to
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External Change
Pursue Pet Projects of Little Significance
Engage in Irrelevant Business as Usual
Activities
Stay Stuck In Old Process & Old Ideas
Lack Vision for Immediate or Long Term
Change
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What are the Consequences of
Rash or Unfocused Action?
According to David Rhodes and Daniel Stelter
(Harvard Business Review, February 2009), the wrong action can
be nearly as damaging as inaction:
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Quick action can create anxiety and panic among
organizational members
Uncoordinated moves address the wrong problem
or overshoot the right one
Lack of proper focus distracts members from
seizing obscure opportunities
Source: “Seize Advantage in a Downturn”,
Rhodes & Stetler, HBR Reprint R0902C
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What Action Must We Make to Our Culture?
 Develop an Innovation / Creativity Environment
 Organizations that Think Nationally & Globally
 Have Visions Internally & Externally
 See Opportunities & Hazards
 Are Alert, Move & Lead---- NOW
 Do Better (Honed Processes w/ a Constant Push for
Improvement)
 Create a culture of people who have shared values, clear
responsibilities, and a passion for performance (Collins, 2009
Inc Magazine Interview)
 Partner with (vs Integrate) Acquisitions? (HBR December
2009)
 Identify & Tap What Really Motivates Workers
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How Do We Make Changes to the
Culture?
• Paradigm Shifts: Leaders / Entrepreneurs---Know the risk,
learn to work in ambiguity; work in a ferocious, volatile,
turbulent, uncertain world; be able to deal with whatever is
thrown at us (Collins, 2009 Inc Magazine Interview)
• Support Innovation within the Organization (HBR December 2009)
 Support
outside of the box thinking (association), support
questioning, directly observing to see (Toyota),
experimenting to broaden perspectives, and networking
with others outside the norm
 Develop actual career paths for innovators
 Connect workforce initiatives / innovates
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What Questions Should We Ask About
Our Culture?
Do We Need to Use New Metrics:
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(Rethinking Marketing HBR January / February 2010)
Product Profitability vs. Customer Profitability
Current Sales vs. Customer Lifetime Value
Brand Equity vs. Customer Equity
Market Share vs. Customer Equity Share
Do we place our shareholders’ interests ahead of our
customers’ interests?
Do we place our customers’ interests ahead of our
employees’ interests?
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The Right Strategies
What Strategies Lead to Success in
Organizational Transformation?
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What Six Problems Can Slow
Organizational Transformation?
Robert Miles, in his article “Accelerating
Corporate Transformations (Don’t lose Your
Nerve)” identifies….
1. Cautious Management Culture
2. A Business-As-Usual Management Process
3. Initiative Gridlock
4. Recalcitrant Executives
5. Disengaged Employees
6. Loss of Focus During Execution
HBR Reprint R1001C
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What Specific Actions Can
Leaders Take?
Rhodes and Stelter suggest balancing defensive and offensive
actions:
Stabilize the business to mitigate downside risk and provide
liquidity:
 Systematically assess organizational vulnerabilities
 SWOT Analysis
 Scenario Planning (severe, modest, best) & quantify
how scenarios impact the business finances
 Assess rivals vulnerabilities
 Reduce exposure
 Protect financial fundamentals (maximize cash position
by cost control and increasing cash in-flow)
Source: “Seize Advantage in a Downturn”,
Rhodes & Stetler, HBR Reprint R0902C
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What Specific Actions Can
Leaders Take?
Stabilize the business to mitigate downside risk and provide
liquidity (continued):
 Manage customer credit risk
 Reduce working capital (manage the difference between
the current assets and liabilities)
 Protect existing business
 Reduce costs, including in the supply chain
 Increase efficiencies (streamlining the organization /
lean processes to eliminate low-value activities)
 Protect existing revenue / generate additional revenue
 Divest in non-core business, watch capacity
investments, communicate strength vs. rivals
Source: “Seize Advantage in a Downturn”,
Rhodes & Stetler, HBR Reprint R0902C
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What Specific Actions Can
Leaders Take?
Rhodes and Stelter suggest balancing defensive and offensive
actions:
Capitalize on the downturn long term by exploiting the mistakes
of others:
• Invest in the future---priority to long term, major impact
projects & top people
 Product development
 Information technology
 Production technology
 People—upgrade management teams
• Pursue Mergers and Acquisitions
• Rethink & rework your business models
Source: “Seize Advantage in a Downturn”,
Rhodes & Stetler, HBR Reprint R0902C
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The Right Results
Who has done it right?
How
have they achieved long-term success?
What are the common themes among the
organizational approaches?
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Alignment of Efforts
Some high-profile organizations that have fostered
the interrelationships among people, culture,
process and results:
Toyota
Springfield Remanufacturing Division
Pikes Fish Market
Baptist Hospital
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Toyota (toyota.com)
A people-development company that just happens to
build cars---”we see beyond cars”
Built Around…
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Respect for People
Continuous Improvement
Process---The Toyota Way
People----Toyota Talent
Culture---Toyota Culture
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What is Open Book Management?
“Open Book Management is a way of running a
company that gets EVERYONE to focus on
helping the business make money. Nothing more,
nothing less.”
John Case, “The Open Book Revolution”
Inc. June, 1995
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Where did Open Book
Management Originate?
• Open Book Management was started by Jack
Stack at an International Harvester subsidiary
called Springfield Remanufacturing (SRC)
• The Company avoided a Plant Closure by
“playing” the “Great Game of Business”
• The results of the transformation have been
recognized in numerous magazine articles,
books, and television programs
• SRC has maintained constant growth &
expansion since 1982
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The Open-Book Management Methodology
Education
Communication
“Teach the Rules”
“Follow the Action”
#
Compensation
Key Business Drivers
“Stake in the Outcome”
As the model suggests, the components of the model are
synergistically connected
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OBM Definitions
• Business Literacy Training
 Income Statements
 Balance Sheets
 Expense Control Reports
 Budgets
• Huddles
 Weekly or Monthly
 Rollup of numbers
 Current state and forecasting
 Goal Setting (action by end of month / quarter)
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Pikes Place Fish Market (pikeplacefish.com)
• It’s more than fish; it’s the commitment to having
fun while working and making a difference in the
world
• It’s about being truly great with people---giving
each person the experience of being served and
appreciated
• Improving the quality of life for everyone
• What causes employees to tattoo the business
concept on their arms?
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Baptist Hospital (studergroup.com)
Five Pillars:
1. People
2. Service
3. Quality
4. Finance
5. Growth
Hardwiring Excellence, Studer (2003)
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Baptist Hospital
Hardwiring Excellence, Studer (2003)
Nine Principles:
1. Commit to Excellence
2. Measure the Important Things
3. Build a Culture Around Service
4. Create and Develop Leaders
5. Focus on Employee Satisfaction
6. Build Individual Accountability
7. Align Behaviors with Goals and Values
8. Communicate at All Levels
9. Recognize and Reward Success
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Wrap Up / Action Planning
At the End of the Day….
The critical question to ask is…
What are you, as a leader, going to do
differently as a result of participating in
this session?
What is your Action Plan
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