Critical leadership challenges: how to build a flexible and responsive organization

---

As organizations operate in an increasingly borderless world where work is performed across various cultures, geographies and time zones, modern strategies and approaches for effective, global leadership are a necessity.

Yet, IBM's Global Chief Human Officer (CHRO) study – to which more than 700 HR executives and workforce strategists around the world contributed – reveals that organizations continue to struggle to resolve a number of critical leadership challenges.

These include:

• Developing effective and agile leaders.
• Anticipating and nurturing the necessary workforce skills and capabilities.
• Connecting people and ideas to foster global collaboration and knowledge sharing.

Developing effective, agile leadership

Creative leaders who can easily adapt to a constantly changing environment are at the forefront of building flexible and responsive organizations. Today's leaders are constantly challenging existing business models to realize untapped opportunities and improve operational efficiency. They explore and follow through with innovative, often unconventional ideas to explore new markets. They leverage new collaboration and communication styles to motivate talent and reinvent relationships. Furthermore, they excel at negotiating through a maze of differing cultures and complex inter-generational dynamics and applying varied communication styles.

Case study: LAN Airlines' strong leaders

When Chilean flagship carrier LAN Airlines established an Argentinian subsidiary in 2005, it already had thriving operations in Ecuador and Peru. But moving into Argentina was to prove a much bigger challenge.

The Argentinian airline industry was underdeveloped because of high tariffs, heavy regulation and a history of bankruptcies. LAN Argentina also needed to integrate 650 employees from Argentina's state carrier, LAFSA, which it had agreed to acquire from the government. And the executive team, though enthusiastic, was relatively inexperienced. Even so, LAN Argentina set itself an ambitious goal of capturing 30 per cent of the domestic market within 18 months.

However, it soon began to struggle and, in May 2007, LAN decided to launch a leadership development programme. It began by asking all its Argentinian executives to define what they meant by leadership, given their personal beliefs and values, and identify role models within the organization. Then it clarified what it wanted from everyone, including what they were to do, and when and how they were to do it . This process ultimately produced a model of the competencies required of a "LAN leader." He or she must possess:

• integrity;
• aptitude;
• a results-oriented perspective, with the ability to set demanding targets and take the initiative;
• strong communication skills; and
• the expertise to spearhead change.

Cultivating a new generation of leaders has paid off. Today, LAN is the world's eighth largest airline, with a market capitalization of US$6.2 billion. It has also tripled employee satisfaction levels.

Synchronizing people, time and opportunity

This is the second essential capability highlighted by the CHROs, and it requires fast and adaptive workforce solutions as well as simplified processes and new leadership styles. As organizations balance efficiency and growth, we see a trend towards more flexible labour models.

Increasing organizational flexibility requires a number of important capabilities. Organizations need to be able to achieve the following:

• Predict fluctuations in demand for products and services and allocate resources to support those changes.
  
• Establish strong relationships with suppliers and partners that allow them to manage non-core activities and supplement their existing workforce to handle peak loads and demands.
  
• Invest limited learning resources to get individuals rapidly up to speed on new processes and technologies.

Unfortunately, companies are challenged across many of these dimensions and, without appropriate insight, organizations are placing themselves at risk for making poor decisions and reacting to market changes long after their competition.

Case study: leadership pipeline at Shell

Heading the downstream (manufacturing and marketing) operations of Shell, one of the world's largest petrochemicals companies, requires enormous expertise. But identifying those with the potential to become future leaders is difficult in an organization that employs 40,000 people.

In 2009, Shell decided to tackle this task systematically. The HR team began by collating the information it held on the 450 most senior executives to provide top management with a "talent book" of robust leadership pipeline data and to explore several questions, including:

• Was the coverage and diversity right?
• Did people have the right performance profiles, leadership qualities and experience?
• How were they flowing through the pipeline?

This involved analyzing all the candidates by tenure and performance to identify which ones were still learning new roles, which were performing well, which were seasoned professionals and which were performing less strongly. The HR team also examined the routes these executives had taken to see whether they were acquiring the skills required to run Shell's downstream business. Then the HR team studied the detailed histories of those who seemed to be advancing more slowly. It provided "stretch roles" for some executives, reviewed the potential of others and ascertained any "blockers" preventing people from rising up the ladder. It also identified "destination roles" for the executives with the greatest promise and created development paths to prepare them.

Shell's downstream leaders now have a clear picture of the calibre and coverage of the leadership pipeline, and how best to improve coverage in the future. They also have robust short- and medium-term succession plans, which are helping to ensure business continuity for critical leadership roles.

Fostering collaboration and knowledge sharing

This was the capability in which CHROs rated their organizations as least effective. Yet, the sum of an enterprise's resources, experiences and institutional knowledge is a critical element in driving efficiency and matching capabilities with opportunities. Collective intelligence enables companies to build on experience and avoid reinventing processes and procedures.

Intelligence creates the ability to adapt and apply innovations across new markets and opportunities. And it facilitates the discovery of new avenues of improvement through communicating with customers and other external sources, evaluating feedback and leveraging what they learn. Tapping into a broad base of institutional knowledge is critical to developing and maintaining an innovative culture.

Case study: creativity at Maxis Communications

Maxis Communications is Malaysia's leading mobile communications service provider. It has attracted over 12 million customers, thanks to a corporate ethos that combines simplicity, trustworthiness and creativity "in everything we do and everything we say".

But with the need to step up the game in the telecommunications industry, Maxis wanted to refresh its pioneering spirit. In December 2009, the company sent 18 of its senior personnel on a business trip to San Francisco, Silicon Valley and Los Angeles. The team interacted with entrepreneurs to obtain in-depth clarity on the culture of start-ups, visited Paramount for first-hand exposure to the latest technologies for distributing multimedia content – a major interest for Maxis, which is already the top music distributor in Malaysia – and attended lectures by management gurus.

Maxis had another smart idea up its sleeve. To further broaden the team's horizons on technological creativity, all 18 members used Twitter and Foursquare on their iPhones to share real-time experiences with their 8,300 colleagues in Malaysia and India. Employees could tweet back with questions, which the team then raised to the people they were meeting. The result? At the end of the tour, the 18 personnel had not only bonded, but they were also brimming with ideas for reinvigorating the corporate culture and their enthusiasm was shared by those who had participated virtually throughout their entire journey.

For Maxis, innovation has enabled collaboration and that, in turn, has triggered a new surge of creativity. The company's innovative approach to nurturing human talent has now earned it wider recognition, with a gold award at the 2010 Malaysia Human Resource Awards.

Creativity and collaboration are key to the future

Addressing efficiency and promoting growth are the two primary challenges CHROs indicated they will be facing in the years ahead, and they will require leaders to challenge the way they do things in order to make the most of an increasingly dispersed and diverse workforce. Successful leaders do the following:

• Look beyond headquarters to identify and cultivate talent. In an increasingly virtual work environment, traditional, location-centric mechanisms to find and develop the next generation leaders fail. Instead, people strategies need to be adjusted to allow talent to grow and be developed regardless of their location.
  
  
• Apply unconventional and innovative leadership styles. For example, they use social media or other emerging communication mechanisms for new ways of employee engagement and participation.
  
  
• Accelerate response to opportunity. For example, they leverage internal marketplaces where individuals and managers can get access to new opportunities and needed skills.
  
  
• Weave collaboration into the way their employees work. They encourage the formation and use of cross-organization communities on issues that tap into the passion of employees while at the same time serving a critical need of the organization.
  
  
• Raise the visibility of ideas and insights. For example, by sponsoring online collaborative events to source and refine ideas as well as providing funding and focus for the best ideas identified.

Instilling creativity, flexibility and speed within both the organization and the workforce will require creative leaders with the capabilities to solve old problems and capitalize on new possibilities. Rapid skill acquisition, on-target deployment of top talent and the ability to up- or downscale quickly will become critical to mobilizing the workforce for speed and flexibility.

Collective intelligence and the sharing of an organization's sum of knowledge and experience will be necessary to remain ahead of the competition in an increasingly changing business environment.

---

This is a shortened version of "Leading beyond borders: insights and case studies from IBM's Global Chief Human Resource Officer study", by Andi Britt and Nina Kreyer. It was originally published in Strategic HR Review, Volume 10 Number 4, 2011.

To find out more about the findings from the Global CHRO study, you can download the full report via: www.ibm.com/workingbeyondborders