A global pharmaceutical company was about to lose the strategic advantage of several blockbuster drugs coming off patent.
In five years, the revenue shortfall would be significant. The senior commercial and scientific directors formed a “circle of leaders” comprised of 23 senior managers who had no meaningful history of collaboration on strategic initiatives. The hope was that the diversity of brainpower and perspectives would yield imaginative ways to outgrow the shortfall.
An international media firm that successfully moved from print to internet nonetheless faced new competition from the likes of Google and Buzzfeed. Although its readership was at historic highs, the CEO was determined to double its subscription base over the next five years. So the chiefs of strategy and technology formed a unique circle of peers — 18 diverse members from across the organization whose task over the next six months was to ask and answer what they felt were the most pressing strategic questions facing the company.
This kind of approach to special challenges that companies face is new. But the problem of getting different parts of organizations to talk meaningfully with one another is old.
When Lee Iacocca became CEO of Chrysler, here’s what he found: “Chrysler didn’t really function like a company at all. Chrysler in 1978 was like Italy in the 1860’s — the company consisted of a cluster of little duchies, each one run by a prima donna. It was a bunch of mini empires, with nobody giving a damn about what anyone else was doing…. Everybody worked independently.”
Such extreme non-communication inside companies today is rare. However, equally rare is tapping into the minds of a group of imaginative, open-minded employees and managers to scope out potential strategic opportunities. That, in brief, is the concept of a leadership circle.
Many leaders turn to their direct reports for guidance. While a natural inclination, this group is (by design) representative of current operating units and functions, which often have a status quo to defend. Then, too, this group likely has deep expertise in today’s core skills and advantages, yet little or no knowledge of the novel opportunities outside their realm. Lastly, this group may be more attuned to individual interests (including performance metrics and compensation incentives) rather than the collective and longer-term needs of the firm. In short, today’s existing leadership structure, expertise and purpose are designed to address today’s challenges — not tomorrow’s.
Creating a leadership circle is a step toward addressing these shortfalls. To be clear about a few things up front: This is not a call for organizational restructuring, nor is it the adding of another layer of management or the establishment of a new committee per se. Instead, this is about bringing people together (regardless of their current roles and responsibilities) to focus explicitly on a future opportunity that is central to the long-term viability of the company. The mission of the circle of leaders is to think differently about the future, to be aspirational while intentionally challenging the status quo.
To start, create a diverse ad hoc team of 15–18 people from throughout the company to work together for about six months. There could be C-suite participation, but only as peers; the CEO and board members are excluded. The purpose of the circle is to share perspectives and explore possibilities on no more than three critically important questions facing the company. For example, a typical question might be around how the competitive landscape is morphing and who competitors might be in the future — and what the company will need to do to prepare for such an exigency. Or the circle might ask what new products or services the company could capably provide to maneuver into an entirely new marketplace. The only questions the circle should avoid are what to do about current operational problems.
Thus, the circle is more a “community of engagement” rather than a standing committee. Within the circle, each member holds equal status and should not feel that he or she is being asked to represent the point of view of accounting, sales, shipping, or whatever the home department. Moreover, its focus should not be on day-to-day operations; in fact, it should be quite the opposite. The only commonality to be stressed for this assignment is that all must be eager to think about the future of the company. The only contract between members is that they be open, honest, and committed to considering the ideas of others.
Second, adopt the rule that, for this assignment, conflict is encouraged. What should be encouraged is conflict, not warfare. Personal attacks, dismissive criticisms, harsh invectives, rolling eyes — all are unacceptable behaviors for the circle. What’s needed is a way to enhance, even exploit, the value of the diversity in the room. The best way to do that is to allow people to say, for example, that while they appreciate the views of others in the room, here’s another (and quite possibly, opposing) way to think about the question at hand. All should think of themselves as stewards of the company. Thus, the acceptance of disagreement as a natural (and desirable) consequence of a diverse set of perspectives on current affairs or future possibilities will provide positive fuel for constructive conflict.
A leadership circle is of little value to a business if people cannot openly disagree without being disagreeable. If the circle has been carefully assembled from a diverse group, it’s important to put that diversity to work as long as everyone agrees that it’s the future of the company, not this ad hoc circle, that unites everyone.
Lastly, since the circle has no formal authority and since it does not control any resources, its value depends on capturing what’s been learned and sharing it, especially upwards. While no leadership circle is designed to provide clear-cut, cogent strategic directions for the company, the chances are that it will generate some viewpoints that perhaps have never been heard, especially at the C-suite and board levels. Such viewpoints could, in turn, generate more fresh, innovative thinking — and from that, new corporate vistas might easily emerge.
One of the biggest mistakes the leadership of any company can make is to suppress imagination and creative thinking. Whatever ideas come out of a leadership circle should be handled in the same way they were generated: the ideas should be rigorously and systematically discussed, debated, and explored. Too often, structure and rank inside companies devolve into unhealthy deference to those at the top. C-suite players may be bright, talented, and hard-working; but they are also more than likely overworked and too invested in what’s happening today or what transpired last year. No senior executive can possibly have a monopoly on what might happen in the future that could affect the company’s survival.
A leadership circle is a unique engagement of members of the corporate family. It is a thinking-intensive forum created to expand horizons and raise new possibilities. One business unit director for the media company commented to me that, after the first few meetings of the leadership circle, discussions were happening that had been previously missing from all past strategic dialogues. “We simply had never had a forum for having such discussion among peers from across the organization,” he shared with me one day, “and once we got started, the benefits became evident to all of us.” With a universal need for companies to find new ways to either take existing corporate capabilities and move them in new directions or to start developing the capabilities required to keep the company moving forward, forming circles may be the best way to start solving that need.
Joseph Pistrui is Professor of Entrepreneurial Management at IE Business School in Madrid. He also leads the global Nextsensing Project.
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