#GPDFrapporteur11th Global Peter Drucker Forum

For legacy companies, new life comes from new voices
By Ron Carucci

Of the many forms of ecosystems facing disruption these days, fewer are reeling more than the large, global incumbent corporations struggling to adapt and grow. This year’s panel on “Transforming the Legacy Company” fueled a spirited debate about issues like digital disruption, shifting entrenched cultures, the role of hierarchy and command-and-control leadership, and surfacing voices of dissenting views to drive innovation and change.

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Chaired by Megan Reitz, Professor of Leadership and Dialogue at IBS, the panel of experts, all with first-hand experience changing large organizations, exchanged a wide range of perspectives on this issue. The panel’s opening poll of the audience asked what the primary obstacles were that prevented organizations not born digital from adapting to a world of ecosystems. By a large margin, 52% of the room said it was a stuck mindset and culture. Said Lisa Hershman, chief management officer of the U.S. Department of Defense, “The challenge is how to leverage and preserve aspects of the culture you need, but change policies, structures, processes to get behaviors to shift. One of the biggest traps is that we get confused by outputs, vs. outcomes, and we need to shift our views. We used to measure the success of a knee replacement surgery by the length of a suture, now we measure it by the number of days it takes to walk. If you automate bad processes, you just get bad results faster. Sometimes getting adoption means taking the old approach away from people.”

According to an Accenture survey, only 15% of the class of 2015 said they would “prefer” to work for large corporations. And what they want most in a job is interesting, challenging work (39%). More interesting than what future leaders want from work is what they want from leaders. In the 2016 Edelman Global Trust Barometer survey of more than 33,000 people around the world, only 27% of leaders were seen as behaving in open and transparent ways. More revealing, 82% of workers around the world did not trust their bosses to tell the truth.

The gap between what people want and what they are getting from legacy organizations is dangerously widening. Here’s what is blatantly clear: larger companies once considered pinnacles of career opportunity have become employers of last resort. Unless they make radical changes, people will continue exiting in droves, leaving behind only mediocre talent.

Asked Reitz, “During transformation, the intensity of change pulls our attention internally, and we take our eye off external realities and our customer. Habits about when we speak up and about what, what we stay silent about, whose voice we listen to and whose voice we discount all intensify. How do we raise contradictory voices to challenge the traditional ways legacy companies operate?”

Ralf Wintergerst, group CEO of Geisecke & Devrient, offered his view: “We now we have different forums that allow different voices to surface – quarterly reviews, innovation boards and moving the company forward, the executive team. The innovation board isn’t composed hierarchically – it’s based on who has something to say. I’m rather silent in those meetings – it’s good for me to observe and listen.”

The desire of future employees to have a voice, and to be told the truth, can’t be overstated. It’s astounding how routine deceit is in organizations. When people know they are part of a collusive environment where the truth is unwelcomed, they hide parts of themselves out of view. My 15-year longitudinal study of more than 3200 leaders revealed that large companies put in place systems that encourage withholding or distorting the truth.

Researchers Detert and Burris have found “when employees can voice their concerns freely, organizations see increased retention and stronger performance. At several financial services firms, for example, business units whose employees reported speaking up more had significantly better financial and operational results than others.” While truth telling is critical in any organization, larger organizations are perceived as more political and therefore less safe to be honest. Sheryl Sandberg, COO of Facebook and bestselling author of Lean In spoke at a conference where she said, “If you look at any company in Silicon Valley that is failing, everyone in the company knows it’s failing, knows why and how it’s failing, but no one is saying anything. If people felt safe to speak up, many organizational failures could be avoided.” One CEO client asked me to review his remarks to employees following a difficult analyst call announcing missed earnings. The remarks had been prepared by his PR department. The reasons for the missed earnings were clear and correctable. But the remarks were spun to dismiss the sting. He said to me, “I just don’t want to rub people’s noses in our failure.” I responded, “That your organization has failed is no secret. You have 36,000 people now watching to see how honest you are about it. If you minimize the significance of this, so will they. And any valuable learning to be had will be minimized along with the truth.”

Said panelist Reto Isenegger, global strategy services leader for EY Advisory, “It’s vital that we build cultures of authentic relationships and trust – true connectedness. In ecosystems, trust becomes a very important aspect of success.” That trust enables leaders to push past the culture of hoping people share their views, to making it an expectation that everyone, especially leaders, actually do.

The more light of day there is between any members of a department, or a leadership team, the more fragmented it becomes. A shared sense of collective success helps unite organizations and reinforces the expectation that “issues that affect others are my concern.” Leaders must let people know that when they have insights or concerns about challenges, they are expected to share them in a respectful and helpful way. When this doesn’t happen, the default mode for many groups becomes a “hub-and-spoke” model of operating, where the leader becomes the primary source of keeping things synchronized, and everyone else is excused to worry only about their own “spoke.” If leaders reinforce this too long, it conveys that the only issues you must be concerned with are your own.

Legacy companies don’t have to obscure into obsolete behemoths. To adapt, they must shift their cultures to be more inclusive, and inviting of differing voices and views. Ecosystems have great power, but they are fragile. The only way to ensure their strength and longevity is to strengthen the voices of all those participating in them, deepening ownership for everyone’s collective success.

About the Author:

Ron Carucci is managing partner of Navalent. He has written eight books, including the Amazon #1, Rising to Power – The Journey of Exceptional Executives and is a regular contributor to Harvard Business Review and Forbes.

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, which took place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems

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