"You can't manage the change if you don't have an idea about what's about to happen..."
After the success of our inaugural ‘Strat Fest’ event last year, it was time to roll out this evening of strategic thinking to an annual event! In the impressive surroundings of the Royal Geographical Society, we once again welcomed our network of senior strategy professionals to discuss the especially poignant topic of ‘Leadership in Uncertain Times’.
Joining us were four top speakers, each a leader in their own field; Clare Gordon a Partner at Bain & Company, Andrew Hill the Management Editor of the Financial Times, David Halpern, the Chief Executive of the Behavioural Insights Team, and lastly, Pippa Malmgren, best-selling author, Economic Advisor and ex-Special Advisor to the White House.
Each with their own varied experience and insights on the topic, they all spoke about different, yet complimentary perceptions.
We’ve put together a recap of the key thoughts from the evening as a recap- read more here.
Clare Gordon –Partner, Bain & Company
Clare kicked off the talks and focussed on Bain & Company’s most recent research on the cultural attributes required to sustain profitable growth through uncertain times. The research followed on from a decade-long research study of companies in more than forty countries. These recent findings, ‘The Founder’s Mentality’, were published in the Harvard Business Review this year.
In essence, the summary was that strategy needs culture otherwise it just doesn’t survive. She reiterated that winning in business is hard and that only 1 out of 9 businesses achieve sustained, profitable growth. Clare then discredited the idea of ‘the bad market’, stating that there is no such thing as there is always someone performing well regardless of industry.
Leadership in any given field, she went onto to discuss, starts with a competitive advantage and, therefore, scale is only about 50% of the reason behind market leadership; after this, it is all about focus and resilience.
“The ability to learn and adapt at speed, especially in uncertain times, is a source of advantage in its own right”
A recurring theme throughout the talks, which was also highlighted by Clare, was the need to be able to constantly and quickly learn and adapt. Another point reflective on the point of culture was that it is impossible to win on the outside if you’re losing on the inside of a business; when cycles increase and things change more and more rapidly we have to bear in mind the famous quote from Moltke:
“No strategy survives contact with the enemy”
She also elaborated upon what, in her mind, are three key factors a successful leader should bear in mind in the current climate. These were:
The ‘Founder’s Mentality’ – companies that maintain traits implemented by strong and successful leaders in the business’ early years are more likely to move and adapt faster, be more open minded, and anticipate and adapt to the future better than those that lose this mentality as they age.
Front Line Obsession – sometimes there is the need for quick decisions and not being afraid to invert the model.
Insurgency - using an element of disruptive thinking against traditional models to make sure the customer is getting the best possible outcome.
Andrew Hill –Management Editor, the Financial Times
Andrew opened up by quoting from a favourite book of his – Good Strategy : Bad Strategy, by Richard Rumelt – and stating that ‘winging it’ is not a strategy, immediately using the Government’s post-Brexit approach as an example!
“Agile strategy is key.”
So in his mind strategic leadership is about two main things;
1) Field testing and the perpetual pilot scheme – he reiterated Clare’s point that battlefield decisions need to be given to the people on the front line and that, for strategy to survive and evolve, you need to let it happen, rather than dictating from a high level.
2) ‘Sense of Future’ – this concept Andrew built upon using the example of Shell’s Scenarios planning team. Here, they work out as many ‘what if?’ forecasts as possible so that when they begin to get a sense of one of these situations taking effect, then they know to look to a particular planned model and thus gain a stronger sense of how the future will pan out. These ‘memories of the future’ as they were described, can help leaders stretch their thinking for an effective corporate strategy.
He made the point that strategy is not linear and you can’t say ‘we are at position A and need to draw a straight line to position B’, you can’t do this because when you approach position B it changes and morphs into something entirely different.
He rounded off his approach to strategy and leadership in uncertain times with his very own amusing but pertinent analogy:
“Strategy is like a mini roundabout; you can’t afford to accelerate straight past, but equally if you stall or dither at it you are lost as well!”
David Halpern – Chief Executive, the Behavioural Insights Team – known as the Nudge Unit
“Most if not all times are uncertain, and I can’t think of a period of complete certainty in the last 100 years.”
With a perpetual uncertainty in the markets by nature, David challenged the very notion of the topic. He then went on explain his background as Chief Analyst within the Government Strategy Unit and how this was fundamentally flawed in its approach. Namely, they would spend years coming up with a massive dossier on how to fix something, for example education, and hand this to the Prime Minister to implement. But things adapt and change within the time taken to put a plan together. In fact David said that this was all well and good but said dossier should then be put into a draw and ignored whilst you focus on the incremental and evolving steps needed to make something actually happen.
“It ain't what you don’t know that gets you into trouble. It's what you know for sure that just ain’t so.” (– Mark Twain)
David then went on to explain that the Nudge Unit is attempting with some significant success to make these incremental changes. How the Nudge Unit focuses on human behaviour rather than economics and politics and has an easy framework to apply to this with the acronym of EAST – Easy, Attractive, Social and Timely.
He emphasised that it is all about building in humility wherever possible, toy with lots of alternatives constantly, but make sure to throw in the occasional radical option to make sure that, much like Clare mentioned, you are being insurgent and disruptive for the power of good and better business.
Essentially, the learning was to embrace doubt and the things we don’t know as the opportunities that they really are.
Pippa Malmgren – Author, Economic Advisor and Co-Founder, H Robotics
Finally, Pippa’s focus on the topic was in the form of looking at the ‘Signals’ – things that are not in the data, but still remain very important to be aware of.
“You can do all the maths you want but if you can’t describe it in plain English it’s worth nothing”
Pippa opened by reminiscing on her mother berating her mathematician father in a method not dissimilar to Einstein’s famous quote, and set out her aim to describe economy ‘in plain English’.
The concept was summarised with a neat example she experienced in 2007 whilst one day walking past a bank, fully decorated with balloons around the door. These were there to entice people in to take out mortgages they couldn’t afford, but which were still offered without the need for documents or references. What could have been taken as a bad act of banking, Pippa saw as massive warning that something serious was about to happen in the world of mortgages and prompted her to get out of the market completely, making the bold decision to sell everything and move into rented property. This happened to be just prior to the global financial crisis.
Another example was something Pippa coined as ‘shrinkflation’ – when you see a wider aperture on a toothpaste tube, when there are less crisps in a crisp packet, or more air in a cereal box, these are these are signs that somewhere in the market margins are being squeezed, things are going wrong, and thus the consumer is directly affected – signals that things are going to change.
These sorts of signals, twinned with the fact that all data is by default backward looking, means that it’s important to keep a human element of imagination to equalise the maths, and encouraging people to instead be more forward-looking.
She left us with one visual example, showing the group a bottle of the most expensive bottle of perfume ever made, ‘Joy’, by Jean Patou. It was launched in 1929, in the middle of the stock market crash and subsequent economic depression which happened to wipe out most of Jean’s clientele. However, despite the circumstances, Jean took the bold decision to fully invest in this luxury product with the assumption that, no matter the state of the economy, someone will always find a way to be profitable. A bold leap of faith and, against all the odds and regardless of the price tag, ‘Joy’ remains as the second most successful perfume after Chanel N⁰5, bringing countless jobs to the perfume industry ever since. A calculated risk in a bottle and great summary to the discussions!
All in all a fascinating evening and the complimentary views of all four speakers built a very interesting platform for further conversation with guests after the talks.
With now two years of Strat Fest success, we are already looking forward to more of the same next year!
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