Year-end reflections; leadership and transformation

23 Dec 2019

2020 could pose epic challenges for leaders managing transformation, predicts Xynteo’s Rick Wheatley.

After several years as a driving force of Xynteo’s Leadership Vanguard programme, Rick Wheatley is now leading Xynteo’s services for strategic transformation. We caught up with Rick to hear about what his journey with the Vanguard has taught him, and his views on the connections between leadership and strategic change.

Why does Xynteo focus so much on leadership?

It really goes to the connection between our mission and our theory of change. We're interested in trying to help companies and communities reinvent the way that they grow. In order to change large systems, regardless of whether we're talking about a system like the energy industry or a large corporation, we believe that the most effective way to try to catalyse that change is to work with leaders.

Xynteo has been investing time and effort into in developing a toolset that helps us do that. We’ve been experimenting and testing different approaches for nearly 10 years, building on each iteration, looking for the sweet spot for how to effectively stimulate change in organisations, through leadership.

And have you found that “sweet spot” for leadership?

It’s when organisations discover that the old models they’ve been operating in, aren’t working any longer - that’s a unique opportunity to help companies and leaders make significant change. At that moment, there's an openness for doing new things, which wasn’t there before: for considering completely new businesses; for testing and trying things that were not possible to test and try before.

So major shocks to systems make top leadership highly relevant?

Breaks in continuity are powerful spots. Otherwise the dominant mindset of the leadership community in the organisation will aggressively counter against any impulses for change, until there's some sort of unifying experience.

When companies are doing well within an established system, then leadership is quite a distributed activity, following a well-known set of organising principles. People follow them, and that happens in a very distributed fashion out across an organisation.

But when a previously well-functioning organisation is forced to admit that what's worked for a very long time - and led to a lot of success - is no longer working, then determining what to do about it is a very leadership-heavy activity. That sort of change really needs to be led from the top. Executives must define a “burning platform” and make sure that the next layers of leaders in the organisation can describe it well.

If they can’t crystalize and articulate it, then the company is going to stutter, oscillating between the future and the past - and that's unproductive. History shows many examples of successful firms that get stuck, don't manage to jump when they should - and it's very costly.

Are there more “sweet spots” for leadership development?

If the first sweet spot is for the company to be thrust into a position where the old model doesn't work anymore, the second sweet spot is collectively going through an aligning or a unifying experience where the broad leadership community of the company agrees that a turning point has been reached. When that happens, they are no longer likely to desperately seek ways to claw their way into the past and reinvigorate the old business model.

What's an example of a unifying leadership experience?

What we do, is to first dramatically increase the external orientation of the company’s leadership community. Typically, in most companies there is relatively small group that is focused on what’s happening externally. People get used to their current customers, products, and work processes and so on. And as a result, they become very insular.

To help companies move forward from that insularity, we take people out in the world. Out there, we help them learn from other companies that have experienced similar struggles and succeeded, and leaders who have experienced similar struggles and failed. We use a lot of stories of failure - to help people see the lessons: that trying to live in the past, when all signal lights were flashing and indicating something else, is a path that ends badly.

We also focus a lot on supporting a sort of sense-making among those leaders as well. Reflections on what they can take away from the experiences of credible external people and apply them to their own situations. That does a lot to move people. As a secondary effect, it builds networks and communities across these leadership communities and a sense of teaming together to win against the external challenges.

So, it's important to cross organisational boundaries?

Very much so, because there can be multiple types of insularity at play: not looking outside our company, not looking outside our verticals, departments, product lines or service lines, and so on. And this principle, of crossing boundaries, is very often skipped when companies try to do this type of leadership development themselves. It can be difficult for them to challenge themselves enough for the unlocking process to occur. So that’s really powerful.

What about impact? Is there value that companies would be able to detect from their leadership development efforts?

One can look at it this way: there are so many great examples right now of large industrial firms that are, in a way, doubling down on the past – sticking to what they’ve always done. And as a result, you see their stock prices decreasing, market capitalisations decreasing, their revenue flat, margins flat or decreasing. That’s what happens when you have status quo leadership in a rapidly changing environment.

So, when you look at those types of businesses and you say: “Show me, what else you're trying, that’s unexpected and that you haven't tried before?” What’s your commercial intent?” “How are you applying your skills and assets and market presence in ways that hasn't been done before?”, the test is what kind of answers they have.

Some companies do have good answers to those questions. Some of the work we’ve done in the past with Equinor is a good example of that.

Years ago, Equinor’s answer to that set of questions might have been: “Well, we're working to increase our efficiency in the industry that we're in today.”

But now, if you ask that question, they would say: “Well, we have. We have a new vertical that’s developing projects.” In this case: offshore wind - an area where they hadn’t been operating in a meaningful way before. There, you start to realise that something significant happening. A few years ago, no one would have expected that to come from that company. So nobody expects it in 2014 – and by 2019 they're investing in these areas - initiatives like the Dogger Bank wind projects, which will provide electricity to power 4 to 5 million homes in the UK.

One might ask: “Okay, that's interesting – is this about one project?” But they can now say: “No, we're talking about multiple projects in multiple markets. And the largest total capital investment is US $10 billion. And there’s more: we’re not just developing projects – it’s a two-pronged approach: we’re also developing new technology to revolutionise that industry, with floating windmills.”

Those sorts of new steps can happen when the company has gone through a large change in their leadership mindsets.

So, leadership development does deliver tangible results?

One practical outcome of these sorts of processes is strategic options that would not have been on paper before - and meaningful investment programmes to make them reality. That's what we're after.

So, if you were to break down what such a process looks. like when you're trying to help a company, it typically goes through three stages of these results.

The first stage has to do with delivering a unifying experience or an aligning experience that tackles the mindset problem.

The second stage of results is building a capability that allows that allows the leaders to focus on applying the capabilities and assets of their business in a new space.

And then the third stage of results is on paper with credible commercial, strategic options that a capital allocation committee, or an executive committee within the company, can evaluate and say “yes” or “no” to.

Those are, practically speaking, some examples of what companies can expect from the type of leadership transformation work that we do.

Turning our view forward to 2020, what do you see ahead? Do you expect to see leaders facing new types of challenges?

There are some suggestions from economists that we could face an economic discontinuity that rivals the ones from recent years. That would put us in a much different environment, where basic needs for survival come first. It would certainly challenge leaders. How will they get the resources to innovate, if their boards are are anxious, their employees are anxious, and their senior leaders are anxious – and focused on basic needs?

In the political sphere, we’re seeing growing unpredictability in the outcomes and in some of the stances taken by governments on trade and alliances. That certainly puts businesses facing interesting questions, given that our supply chains run across borders, based on previous expectations that we were operating in a predictable, rational and organized world.

A decade ago, it was possible to be more insular and focus more internally on your efficiency; your performance; and the interaction between your product or your service and your client. But now, business leaders need to be more and more intelligent about external dynamics that have very little to do with their companies and are potentially very far from them - just in order to protect their own interests.

Do leaders need to learn to influence those dynamics?

I'm not sure if a lot of business leaders are thinking about influencing those dynamics, but in some ways, it's going to be required.

There are other factors too. For example, climate agreements, and the ongoing war for resources around the world. And what’s the true impact of income inequality, or wealth inequality, going to be, in developed and developing economies? 

We sometimes refer to VUCA – volatile, unpredictable, complex and ambiguous circumstances. Well, it seems like 2020 is going to be that - and much more.

Does this mean collaboration becomes even more important?

Collaboration is certainly vitally important, but it’s not always an answer in and of itself. Collaboration needs to be used in a strategic and targeted manner. For example, collaborations are not always the best answer in cases where you to go fast. So, it comes into play when you’re seeking something beyond that.

Our experience with building collaborations is that it’s most important to expose the right sets of actors to each other. To get them to interact and find their way towards shaping value in an organic manner.

Any last reflections on leadership and the year ahead?

Yes - 2020 is going to be a huge year. We're going to learn a lot about what the next 10 years are going to be like. And I don't think there's any indication that the role that leaders play is becoming less significant. In fact, there's every indication that it's becoming more significant. There's going to be a need for leadership to be more courageous, more externally oriented, and rapidly able to convert insight about how the external word is changing, into action that is very unlike what many organisations have done before. And I think that means it's actually going to be a very exciting time!

Learn more about Xynteo’s work on leadership development.