Blog 3 of The Leadership Series: Why are Leaders Successful? – Complexity.

This is the third blog in this series. It should be read in conjunction with the first two before and ideally should be read in order, as they build a story. Go to www.tonyleng.com to review.

The ability to understand complexity can be roughly approximated with IQ, and we know that not all people have the same IQ. The difference, however, is that people mature in their ability to understand complexity (or use their cognitive capability) over time, and at differing rates. The yardstick that Elliott Jacques used to measure complexity is “time”- so using this construct, the complexity (time horizon) that a CEO deals with as she manages an organization is far higher than the complexity (time horizon) required of the person managing AR in the finance department.

Here is a useful diagram to understand Cognitive Complexity Levels (CCL) – set out below:

Blog 3 Levels of Complexity Diagram

This diagram shows that at CCL 1 – the individual is focused on a task that should take between one and 90 days to complete. We all start our careers here. We then move to CCL 2 where we typically supervise several people doing CCL 1 work and manage a process that requires coordination as we move toward a longer-term goal (3 months to a year).

From there, we then get promoted to CCL 3 where we manage the entire system. For example, this may be the Controller of your organization who is optimizing the system that comprises revenue, cost, and profit. The controller works within this “box” to optimize and institute best practices to achieve the goal. She is not thinking about innovation or going outside the box; the task is focused on optimizing the box. The time horizon complexity here is typically 1 to 2 years.

Some folks happily spend their careers here. In fact, some folks are at CCL 1 their entire career – think of a master carpenter – and there is nothing wrong with that. But for our purposes, I am discussing a framework that helps us understand complexity within an organizational setting, so that we can better understand our own career trajectory and determine the complexity of the organization where we work.

Innovation starts to occur at CCL 4, where the leader starts challenging existing frameworks and product/market fit to create differentiation. This mostly happens because the leader is scanning outside her paradigm, to discover technologies/trends/sentiment (and anything else), that will cause market disruption or product differentiation. To extend the example above, the CCL 4 leader redefines/differentiates/changes the “box”. This kind of thinking requires that the CCL 4 leader have a time horizon of approximately 2 to 5 years so that the market will be receptive to the new product/service when it is introduced. We see many Silicon Valley startups that have totally disrupted industries in this manner.

At CCL 5, we typically find the CEO of an organization. This leader needs to understand how the whole system works, what innovation needs to be put in place to keep the organization competitive, and is focused on the wider stakeholder community, reputation, purpose, and ambition of the organization. I will give you the classic example. Uber (CCL 4) used new technologies to disrupt a stable industry (Taxi) that was optimizing at CCL 3. The senior executives were extremely smart but were not yet thinking at CCL 5, which got them into trouble, so a new CEO came in and made it clear that he was focusing on reputation and purpose. Here is an example of a typical CCL 5 purpose/ambition from Airbnb – “to help create a world where you can belong anywhere, and where people can live in a place, instead of just traveling to it.” With technology, this is made possible without investing billions in real estate. They were not necessarily trying to disrupt so much as trying to create a new world/paradigm of their own. The timeframe at CCL 5 is typically 5 to 10 years.

At CCL 6, we find the “Captain of Industry.” This individual has multiple CCL 5 organizations/divisions that she oversees. This leader needs to understand which organizations will meet the evolving needs of the markets in which they operate and make trade-offs as to which businesses to invest in, which to use as cash cows or sell, etc. The added dimension that a CCL6 leader brings is that her organization must act in a way (or develop products) that are meaningful to people and contribute to the betterment of society. This is where Corporate Social Responsibility/Purpose starts to fit in. (Example – a food company at CCL 5 moving toward nutrition and healthy living in CCL 6). The time horizon here is 10 to 20 years.

At CCL 7, the leader is concerned with societal progress. This is what I call the “Davos crowd” – where leaders should be thinking about how to make society better through institutions, organization, or businesses that help citizens from every culture flourish for the global good. The time horizon for CCL 7 is 20+ years – as they are addressing how the value systems of different societies, ecosystems, countries, and cultures can be harmonized for a better world.

The President of a country should be thinking at this level. Here is what one great CCL 7 leader said; “For to be free is not merely to cast off one’s chains, but to live in a way that respects and enhances the freedom of others.” – Nelson Mandela.

 

We don’t all grow at the same pace.

The other significant point that Elliot Jacques made, is that not everyone’s cognitive capacity matures at the same rate. Certain individuals might get to CCL 4 at age 55 and stay there; others may get there at age 35 and continue up to CCL 7.

Jacques spent time assessing people, identifying high potential candidates, and then nurturing them upward. Some of this will be addressed when I write about Leadership Maturity, but there is definitely an element of IQ in the mix. It is not surprising that really smart, mature people get ahead if their personality/values are requisite. There is, however, a dark side to all this, and I have seen executives derailed by a lack of maturity, humility, or authenticity who could have gone on to great things if they had matured suitably. So, the question is – how do you mature suitably? I will cover this in a future blog.

 

Why is all this relevant/important?

It is important to understand where you are, where your organization is, and where you can get to. As a leader, your task may be to push your organization forward and embrace new technologies and business models (move up in complexity). Or if you are joining a company, make sure you are a fit; not only from a values perspective, but also from a complexity and maturity perspective.

The next few blogs will unpack Maturity. The whole person will then come into focus.

 

Blog 2 of The Leadership Series: Why are Leaders Successful? – Knowledge and Skills.

This blog should be read in conjunction with the previous blog – as they build on one another. Go to www.tonyleng.com to review.

In my last blog post, I spoke about Personality and Values. This post will focus on Knowledge and Skills, and also touch on Complexity. In subsequent blogs, I will unpack Complexity and Maturity in detail, as they are crucial.

Knowledge and Skills address our education and work experience – which are most easily captured in a resume. Qualifications (and experience) help us land our first job and are often the drivers of our early career, but seldom predict where we will end up. They launch our career, but it is how we use our Knowledge and Skills, our ability to connect the dots, to deal with complexity and lead that ultimately determine where that career may take us.

There is almost an inverse relationship between Knowledge and Skills and Complexity as we move up in our careers – this is best described in the diagram below:

Blog #2 Knowledge & Skill Diagram

What this diagram conveys is that as we move up in our careers, our ability to solve future problems depends less on what we know/learned in the past, and increasingly depends on how we understand and interpret complexity. Taking this thought to its logical conclusion, disruption occurs when we are able to synthesize multiple data points (technology, societal trends, consumer sentiment etc.) and create new insights and business models, which challenge the current set of products and services, or ways of doing things.

We’ll get to detailed examples of this later, but to illustrate: think of the taxi industry, add technology (smartphones and location services), unused capacity (cars and drivers) and you get Uber. Someone connected the dots.

I don’t want you to think that Knowledge and Skills are unimportant. Life is a journey — our Knowledge and Skills are crucial and should be continuously advanced. A learning proclivity and curious mind are as essential as our ability to connect the dots, and we should always be attempting to master something new. You must be aware of the dots if you want to connect them! Always try to be learning something new – keep your mind agile. After all, how will you change your company if you can’t change yourself?

In the next blog, I am going to focus on Complexity. The number of variables that need to be taken in to account by a strategy executive compared to an AP clerk are vast. There is a way to measure different levels of complexity, and in the next blog I am going suggest how to do it, and why it is important for senior executives to understand.

 

Blog 1: Why Are Leaders Successful? Understanding the Whole Person.

One of the most impactful things leaders do is build teams – hiring other leaders and enabling them to deliver to their potential. We so often get it wrong, and when we do, it is seriously disruptive.

I believe that most people want to create value and do the best that they can, but it doesn’t always work out. People excel in different roles and environments, and it is a leader’s job to maximize potential by getting their members into the right job, at the right time, and then leading them well.

Success in a role is dependent on several variables: the ability to handle complexity, knowledge and skill, personality, values, and maturity. I am going to spend the next few weeks/blogs unpacking these variables, which will hopefully give you a framework to better understand your own career trajectory, as well as enabling you to more effectively hire and develop your own team members.

I want to say right at the outset that nothing I’m about to convey is either original research or original thought. It is a synthesis of the thoughts of the following leadership thinkers: Elliott Jacques and Fabiaan van Vrekhem (Complexity and Cognitive Capability), Jean Piaget, Robert Kegan, Keith Eigel (Maturity and Adult Development), Hogan, Belbin, DISC, Schwartz, and many other leadership gurus on Values and Personality. All I’ve done is attempt to simplify their thinking into a model that I can understand. Hopefully, you will too!

People are value creators. I like to think in pictures and here is a simple illustration of this:Whole Person

This picture conveys the “whole person”, and in this series I am going to discuss each piece of this diagram so that you build up your understanding of what makes you, and others around you, effective.

In this first blog, I am going to talk about Personality and Values. They are important when it comes to “fit” for a role and integration into culture, but they don’t often predict long-term performance. Performance is more dependent on Knowledge and Skill, Cognitive Capability, and Maturity. Values and Personality can determine what kind of career or job is most suited to a candidate, but by the time they reached the executive ranks, they should be on a path that matches who they are as a person. For example, the typical accountant is introverted, analytical, detail-oriented vs. the typical salesperson who is extroverted, passionate, persuasive, etc. This doesn’t mean they are all like that, but personality, style, and values often tilt a career path in one direction or another.

Personality and Values:  There are a great many conventions/measures/tools to define these and I don’t want to debate the merits of one vs. another. I think you know the names: Hogan, Myers-Briggs, DISC, Value Preference Indicators, and Personal Value Assessments, etc. Take as many as you can.

My advice to any aspiring leader is to understand who you are as a person, play toward your strengths, work on remediating any weaknesses or derailleurs, and understand your impact. Be curious about yourself, constantly seek feedback and input.

Values are strongly tied to authenticity and trust. Higher order values can lead to success if combined with maturity and cognitive capability – which I unpack later. Here are some examples of higher order values: Openness, Honesty, Courage, Justice, Selflessness, Hard work, Service, Respect, Mercy, Kindness, Generosity, Authenticity, etc. I find it intriguing that the younger generations tend to index on these and I can’t wait for them to reach their full potential!

The more you know and understand yourself as a person, the more authentic you become, and authenticity is a key ingredient to success. If you want to read my blog on authenticity, please click here.

In the next blog, I will unpack the “Knowledge and Skill” aspect of the whole person.

Mobile Consumerism – The Center of Everything

It used to be that we, consumers, would have to figure the best way to deal with organizations from whom we wanted stuff – cars, insurance, clothes, groceries (gather those coupons!), doctors, hospitals, government agencies – but that has changed. The mobile consumer is now firmly in the driver’s seat.

I am a headhunter, and spend my time helping senior executives build teams that need to address a changing world. Most of the change is being driven by technology, and my passion is to get innovative technology leaders to advocate/enable/cajole organizations to transform themselves to meet these new challenges. The other side of what I do is to help build teams that address the new world where consumers are acknowledged to be the center – interacting with organizations that want their business. Please don’t be confused – EVERY organization is becoming a consumer driven, even organizations that think of themselves as B2B.

There is, however, an increasing demarcation. On the one hand – existing organizations are trying to meet the needs of the mobile enabled consumer, i.e. anyone with a smartphone. Let’s call the organizations wanting to serve the mobile enabled consumer “Outside In”, because the consumer is outside, figuring out how to “get in”. Conversely – new organizations are set up to place the consumer at the center, where the consumer decides who s/he wants to deal with, and on what terms (let’s call them “Inside Out”).

No industry is spared this new reality, but some are adapting quicker than others. Those “Outside In” organizations that sell to consumers already are ahead of the pack (e.g., clothing retailers). They are adept at understanding their customers by amassing large amounts of data internally and externally (Big Data) and targeting the consumer individually on his or her mobile device. The retailers who still have a large store presence (the magnet that drew in consumers with coupons in hand) are getting hurt by those who sell on line, mostly via mobile channels (they call it Omnichannel – but mobile increasingly dominates). For an example – compare Sears to Macys/Macys.com. The retailer that is really dominating is Amazon (an “Inside Out” business) where you can buy anything from your mobile device and have it delivered – wherever and whenever you want it. Who needs a store?

I have a particular interest in Healthcare as I believe technology will impact Healthcare more than any other industry in the next 10 years. Think of wearables, IoT (Internet of Things) data from hospitals/clinics/implants, electronic medical records (that are portable on your iPhone), telehealth (where you can consult a doctor via video conference), individualized healthcare based on your DNA, notifications (to ensure drug adherence) gamification, social media, 3D printing for med devices, and much more; it is truly mind boggling!

There are two basic ways that we, as consumers, can interface with healthcare. The traditional approach of employer provided insurance with the network of doctors and hospitals with whom we do our best to engage (Outside In). There are many variations to this theme, but there is another approach entirely; it is the “Inside Out” or the “Uberization” of healthcare. Uber lets you get a ride on your terms. There are providers/drivers, and when you want a service, Uber connects you with the driver, and also lets you select the quality of the ride (Share, UberX, Uber Limo, etc). You are at the center – and the service/product bids for your business; payment is known and automatic, quality is understood and there are quick feedback loops – open to the next consumer. Another example is AirBNB where similar parallels can be drawn. This “Inside out” trend, where the consumer sits in the middle and makes decisions is starting to happen in healthcare.

There will soon be a proliferation downloadable applications that will enable you to be at the center of your healthcare decision making – where doctors, hospitals, and anyone providing a health/wellness related service will bid for your business based on price and quality. We won’t get there overnight, as there are tremendous forces holding the status quo in place: regulation, reimbursement rules, government incentives, state regulations, sunk investments, tax incentives (why can an employer deduct the cost of healthcare and an individual cannot?), and many more.

The movement is inexorable; consumers with smartphones want to be in control of their lives. They are savvy, connected, inquisitive, and value driven. They don’t want to rely solely on a “system” they don’t understand, and are increasingly placing themselves at the center of things, and choosing with whom they wish to interact. Mobile, Big Data, Analytics, IoT, Social Networks, Secure Cloud-based Storage, an App for Everything – these are the technologies that will dominate the landscape for the next 5 – 10 years.

Mobile Consumerism is affecting every business. Are you an “Inside Out” or “Outside In” organization?

What are you doing? It’s your move!

The Most Important Leadership Quality

Is there one? There are innumerable books, masses of research, and a plethora of answers telling us about the hallmarks of successful leaders. I love Adam Bryant’s 5: passionate curiosity, battle-hardened confidence, team smarts, simple mindset and fearlessness.

Here are some other qualities you will see as you comb the web: honesty, communication, delegation, humor, confidence, commitment, creativity, intuition, inspirational, positive, motivational, persuasive, persistent, patient, organized, flexible, people oriented, IQ, EQ etc. there seems to be no end!

But is there something that underpins all this? Is there a single thing that provides a foundation for all the rest? Here is what I think. AUTHENTICITY.

To be authentic you must have grown as a person, made your own mistakes, had your own successes – and be open and candid with others about who you are. You must understand your own journey and be comfortable with your own strengths and weaknesses.

I am a head hunter and for me, determining if a leader is authentic, is the main thing. Testing for technical capability and particular skill can be relatively straight forward. You have done it, have the education, or work in a company with a reputation for being good at it; we can read it in your resume. But what about how you function – those qualities listed above – is that really you, or are you wearing a mask?

Getting a candidate to take off the mask and show who he or she really is – that is what all good head hunter’s strive to do. And mostly it’s about blood. Blood or scar tissue. I often ask candidates to talk about both successes and failures. Successes are great, but if you have never failed – you probably never took on big challenges where you really needed to step up and learn – not only about the task, but more importantly about yourself. I want someone to reflect on their own growth and development and to have an appreciation of self, such that they can be authentic with others. People get to know if you are genuine or authentic – either very quickly, or over time. And if you want to be able to exercise all those traits mentioned above I believe that you need to be authentic.

Advice: Take on all the challenges you can; stretch assignments, overseas gig’s, management tasks outside your specialty, the stuff others are scared of. Push to see who you are, be self-reflective and humble, and you will develop an authenticity that will set you apart.

Traits of Successful CIOs

There has been so much written on this topic that it’s hard to come up with anything “new”. Well, as far as leadership is concerned, there is not a lot of “new”. It’s about people, and leaders going back to Hannibal have exhibited many of the same traits – here is my view of those traits that set leaders apart. It is based on the search work I have done and leaders I have met, my experience over 10 years as a CEO, and some good stuff I have read. Great CIO’s typically:

  • Possess an Integrative mind. A CIO who can see and connect the dots.
  • Are Life-long learners. This factor is seen as the strongest predictor of success across any industry. These first two factors often accompany someone who has been successful in many environments and has a globally diverse experience base. The right candidate will understand the requirement of modifying behavior to achieve impact in differing market settings and cultures.
  • Create a compelling vision, focus the organization around that vision, and execute on it. Great communication skill goes hand in hand with this.
  • Build and motivate teams. Top CIOs are able to attract top talent and challenge them to perform at exceptional levels.  The most successful teams are often cross-functional and multi-cultural, and the leader is able to capture the collective intelligence of the organization in solving business problems. A buzz phrase here would be ‘encourage the heart’.
  • Drive a customer focused/game-changing project. Successful CIOs have typically been responsible for a major game changing corporate initiative. Sometimes they are lucky to be in the right place at the right time, but often the CIO has seen an opportunity to add value, and seized it. The Haas School of Business Renaissance CIO project identified a number of transformational CIOs who had enduring impact through key undertakings such as Dawn Lapore – online trading at Schwab; Max Hopper – Sabre online air reservation system; Rob Carter – online shipment tracking at FedEx. For current CIOs, opportunities exist to have big organizational impact with the emergence of technologies such as:
    • Cloud (SaaS, PaaS and IaaS).
    • Social (e.g., crowdsourcing for helpdesk and product development).
    • Mobile. Delivering organizational capability and products in a mobile world.
    • Big Data and Small Data (analytics for zero unplanned maintenance, product innovation, business performance improvement).
    • Consumerization and BYOD.  (Flexibility, customer satisfaction and cost management).
  • Develop a deep knowledge of the business.  This often drives candidate selection toward industry insiders.  However, there are notable successes where candidates from different industries have had enormous and enduring impact. I placed Phil Fasano at Kaiser Permanente. He came from Financial Services and brought organizational change skills and forward-thinking capability that have made him a standout leader. He has now been at Kaiser for six years, and not only has he revolutionized the way KP does business, but he is also having impact on a global scale. Phil recently published a book entitled “Transforming Healthcare, the Financial Impact of Technology, Electronic Tools and Data Mining”. Not bad for a guy who used to worry about your credit card balances!
  • Have strong influencing capability.   Top quality CIOs understand that they need to deliver a functional operating platform, but as important is their ability to work with business unit heads to help drive value.  A CIO must understand operational goals, and explain how technology can either enable or improve business outcomes. He or she can then push to the front of the bus and help with revenue generation activity.
  • Are trusting and trustworthy.  A capable CIO must develop strong relationships across the business.  We have found that leaders who have a strong EQ (emotional intelligence), and are principled in approach, have enduring impact.

Driving the Bottom Line

Tying into my “No Better Time” Blog (posted 5/14/13) addressing the top line, this Blog will focus on the bottom line.

How IT leaders drive the bottom line:

Another way to say this is how does the CIO get leverage from what he or she does? There is leverage from scale, and from being more efficient in the way the business is done (process harmonization).

Here are some thoughts on what to focus on as you leverage IT for bottom line management:

  • Keep the lights on. Sorry to start with this, but if you don’t offer a great service to the organization you won’t be taken seriously at the top. Your stuff has to work – all the time.
  • Get sourcing right. Negotiate effectively with vendors. I have seen a lot of contracts go wrong because CIOs were too hard on vendors. Vendors can really help. Let them make a fair buck.
  • Analyze IT demand and build a plan that delivers the capacity you need without getting trapped in technology dead ends. Cloud now offers amazing opportunities to manage this equation and deal with spike demand.
  • Get your IT standards in place. This is often about architecture and balancing control with innovation.
  • BYOD. May not save you as much as you expect, but the plain truth is that Consumerization is an opportunity that CIOs need to embrace. And let’s face it; the consumer-oriented products are way cooler than what the enterprise offers!
  • Harmonize process. There are great opportunities when a new platform is installed to harmonize business process and reap organizational efficiency. The CIO can be a major player in getting this right.
  • Embrace the Cloud. Cloud offerings in applications, infrastructure and platforms can have an enormous impact on an organization. Figure out what is suitable and make it happen; you can free up $ in base cost and offer some really cool stuff.
  • IT Governance. It is important, and will catch you out if not done right. Get the right level of business participation, have decent portfolio management – so the IT spend is understood and committed to, and then execute well.
  • Security. Increasingly important with Cloud, Consumerization, Social and Mobile. There are just so many more ways the bad guys can infiltrate. This keeps the CEO up at night, and if you get it wrong, you are out of a job!

There is, however, a balancing act that the CIO needs to understand that hinges around centralization vs. decentralization. Some IT shops want everything centralized for maximum security, cost management and control, but business users typically want IT decentralized for increased speed and flexibility. What’s a CIO to do? Sorry, there is no simple answer here. It all depends.

Randy Spratt at McKesson has a great perspective on this and here is what he is doing:

For the top line stuff – growing revenue – he has adopted a more decentralized strategy. So the new products and new markets initiatives that I referred to are very decentralized, then as those new products are adopted into the organization there is more control. This ensures that customer satisfaction and experience standards are met. When the products become more mainstream, they are standardized for process and operational efficiency and finally, when the products are commodities, the focus moves toward bottom line cost management. It’s a great way to think about lifecycles.

You probably don’t have Randy’s scale and scope so his example may not fit, but the positioning of your IT department on the continuum of “total control” to “anything goes” needs to be thought through carefully. The lesson to take from Randy is this – the centralization versus decentralization challenge is not uniform across an organization, its products and processes. You need to decide what approach makes the most strategic sense for your company right now.

Kim Stephenson of Intel has a really interesting quote around this – she says “there are no IT projects – only business projects”. This is a great mantra, and key to understanding your role as CIO. You are there to add business value.