February 2007 Archives

Interim Managers know only too well that they live or die by how effective they are at networking. We normally state to prospective Interim Managers that over an Interim career lifetime the Interim Provider community will generally only yield approximately 50% of an Interim Manager's assignments. This percentage is lower or higher depending upon sector.

A recent article in Harvard Business Review on the art of networking attracted my attention and is summarised below:

"One of the most difficult transitions that new leaders have to make is to devote more time to developing wide-ranging internal and external networks to provide critical feedback, resources, insight and information.

The study observed a number of leaders going through this transition and discovered that many of them preferred to focus on the task of getting their new job done, without realising that the information and resources gained through three key networks (operational, personal and strategic) had become a fundamental part of their new role.

In fact, failing to do so could result in serious mistakes being made. For example, one accounting manager made a crucial decision based only on a 'hint' from the company founder that his firm might go public. He decided to reorganise the accounts department to make it better able to withstand outside scrutiny. His failure to tap into a wider operational network meant that he did not realise that there was significant opposition to the move until the board made the decision not to go public.

It's important to build large networks. An over-reliance on the most obvious operational networks including key outsiders such as suppliers and distributors runs the danger that the manager will focus on getting the task done rather than asking the question, what should we be doing?

By building personal networks of kindred spirits from all walks of life (e.g. professional associations, alumni networks, personal interest communities), business managers gain important new perspectives that help them advance in their career. Such networks can provide a safe environment for people to develop their personal skills and make interesting and sometimes useful connections.

Effective leaders have to learn the art of strategic networking in which they leverage their connections to support wider business goals. In fact, the study shows that what differentiates a leader from a manager is 'the ability to figure out where to go and to enlist the people and groups necessary to get there'. The art of strategic networking is to 'marshal' the information, support and resources of one network to achieve results in another.

New leaders take some persuading that this kind of networking is worth so much of their time. But they are more likely to be convinced if they see a role model operating in this way. Once they are convinced, however, they will need to build in a great deal of time to carry out the work well.

Some inexperienced networkers think that all they need to do is get the people lined up, and ring them up when they need something. In fact, it only works if they respond to their networks generously and also help to link people up, whether it is of immediate use or not."

Thank you to World Business for the inspiration behind this posting

Source: How leaders create and use networks
By Herminia Ibarra and Mark Hunter
Harvard Business Review, January 2007
Review by Morice Mendoza

Interim Managers are renowned for being innovative when on an interim assignment. They come in with a fresh pair of eyes and are able to clearly see 'the wood for the trees' and then help guide 'the organisation' through the challenge they face. Innovation is now key to every organisations agenda. A recent study has looked at which countries are the most innovative.

So which nations and regions respond best to the challenge of innovation? In recent years, innovation has pushed itself to the very top of policy-making and senior executive agendas. What has put it there can be summed up in one word: globalisation. Now INSEAD and World Business have developed the Global Innovation Index (GII) to measure the shock of the new.

The top six are:
1 US 5.80
2 Germany 4.89
3 UK 4.81
4 Japan 4.48
5 France 4.32
6 Switzerland 4.16

Rank Country Score* The World Business/INSEAD Global Innovation Index 2007 in association with BT.

When all economies are interdependent and interconnected, the "waves of creative destruction" described by economist Joseph Schumpeter show no respect for national boundaries, rolling with impunity over the whole planet. And technological change is accelerating - US futurologist Ray Kurzweil has noted that "in the first 20 years of the 20th century, we saw more advancement than in all of the 19th century. And we won't experience 100 years of progress in the 21st century - it will be more like 20,000 years of progress at the current rate."

Simply doing the same as before - only more intensively - is a losing strategy; there is nowhere left to hide. Instead of trying to wring diminishing returns from today's array of goods, services and processes, prosperity urgently demands that companies quickly shift to creating fresh value from new ones.

A recent report from the US Council on Competitiveness declared: "Innovation will be the single most important factor in determining America's success in the 21st century. Where once we optimised our organisations for efficiency and quality, now we must optimise our entire society for innovation." In Europe, 2000's Lisbon Agenda challenged the EU to make itself "the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs, and greater social cohesion" by 2010.

The emerging economies are racing towards the same goal. Since the late 1990s, China has boosted its R&D spending by 50%. Now, led by president Hu Jintao, Beijing wants to raise it to 2.5% of GDP - $115 billion - annually. Even in Africa, governments are attempting to use technology as a springboard for innovation and development. Ethiopia, one of the poorest countries in the world, is committed to bringing a broadband connection within reach of all its 74 million population by 2007, and little more than a decade after the horrors of 1994, Rwanda is working to create a knowledge-intensive, technology-enabled business environment (see box).

Innovation is about much more than generating new ideas. Translating these ideas into value- adding products and services requires flexibility of attitude and willingness to adapt to, and welcome, unprecedented levels of change on the part of individuals, organisations and society as a whole. So who is doing it best? What are the conditions for doing so? Can we pin down the catch-all notion of innovation in ways that can be quantified and normalised to generate meaningful comparisons?

The results are revealing - and in some cases surprising. For example, while the presence of the US at the top of the table is predictable, the great extent of the lead is less so. Typically, differences between consecutively ranked nations are marginal (remember, these are relative scores). However, the US leads the second most innovative nation (Germany) by almost a full point, putting it in a league of its own as far as global innovation is concerned. This is confirmed by the top ranking that the country garners in both 'input' and 'output' sections of the model. The US is unique in being consistently among the top eight performers on all the measures used in the GII.

Nevertheless, for those wanting to know where the future lies, the direction is clear: look east. While Japan comes in at a highly creditable fourth overall - a rebirth of the Asian powerhouse after the doldrums of the 1990s - followed by Singapore (7th), Hong Kong (10th) and South Korea (19th), perhaps even more significant is the appearance of India and China at 23rd and 29th respectively. With the burgeoning and technology-hungry middle classes of these two countries adding to existing strengths, Asia is set to redefine many aspects of innovation. Already South Korea is the most advanced broadband society in the world; China has more than 300 research centres, second only to the US, and this number is steadily increasing. Perhaps the biggest global challenge for international firms will be to find ways to tap into and leverage these emerging Asian drivers of global innovation.

Another sign of the shifting tectonic plates of the world economy is the appearance of the United Arab Emirates at 14th in the global list. The brightest star in the Middle East - four places above Israel - UAE has benefited from government leadership that sets it apart from its neighbours through policies explicitly designed and implemented to attract skilled workers and technology-intensive companies. The result, particularly in Dubai, has been growing clusters of innovative companies.

On the other hand, another group of countries, with the Nordics to the fore, currently do relatively better on inputs than outputs, suggesting that they have the potential to move up the overall table as the results of their investments feed through. Finland, for example, has put most of the ingredients of the future networked society in place by focusing on innovation, education and IT. Unlike the rest of Europe, it scores very highly on human capacity. Finland was the first country in the world to conceive of the idea of a national innovation system to feed into policy formulation. Leadership comes from the very top, with the Finnish prime minister chairing the science and technology council, which also has seven other ministers among its members. Finland's investment in R&D, at 3.4% of GDP, is one of the highest in the world.

Another example is Israel, which has a sparkling economic story to tell in human capacity and technological sophistication inputs. Strong ties to Silicon Valley and US academic and research institutions are important advantages, and successive governments have invested heavily in education - reinforced by large-scale immigration - to build human capital. As part of a close collaboration with business, successive governments have also developed effective investment incentives, fostered the highest spending on R&D of any industrialised nation (4.6%) and overseen incubator and venture capital programmes to convert research into new businesses.

Thank you to 'World Business' for the inspiration behind this posting: The World's Top Innovators

Source: Soumitra Dutta, INSEAD, and Simon Caulkin, World Business

We have been working on some high profile Interim Management corporate communications roles recently, so it was interesting to read the Edelman Global Opinion Survey. There is clearly an opportunity for the corporate communications community to play a role in restoring some of the alleged tarnished images..

As the world's most powerful CEOs left Davos after this year's World Economic Forum, there is good and bad news for big business and CEOs, according to the survey.

The public displays of worry from various business leaders speaking at the Alpine gathering perhaps reflect the paradox that, while trust in business is on the rise again amid increasing global prosperity, trust in CEOs is at rock bottom.

Only 18% of those surveyed by Edelman in the UK, France and Germany trusted CEOs, a full 10% behind trust in the average company employee. In the US the figure was 22% for CEOs, and 36% for employees. The poll sample is drawn from the top quartile of earners in each country.

Fears about the squeeze on middle-class incomes alongside rising executive pay was the most pressing economic issue facing the world, according to Lawrence Summers of Harvard, speaking at Davos. The general mood of hostility toward CEO excesses has been picked up on by US President Bush. During his State of the Economy speech on February 1, Bush, who came to office on a pro-business platform, called on companies' boards of directors to "step up to their responsibilities" and pay executives based on a company's performance.

Meanwhile a coalition of institutional investors has called on companies and regulators in the US to curb excessive executive pay. The investors have sent a non-binding resolution on the matter to the boards of 44 companies accused of paying for failure, including Citigroup, Coca-Cola, Exxon Mobil, Home Depot, Merck, Pfizer, Time Warner, UnitedHealth and Wal-Mart.

While US corporate governance reform such as Sarbanes-Oxley has helped restore the tarnished image of business that resulted from scandals such as Worldcom and Enron, the perception of the excesses of CEOs has if anything intensified.

But it appears that change is now in the offing, in the US at least. New tax legislation, expected to become law in the next few months, will close loopholes for executive retirement nest eggs and is likely to add some $800 million to executive tax bills over the next decade. The proposed legislation will also halt the deduction of fines and legal settlements from tax bills, a practice popular with Wall Street banks.

Meanwhile Home Depot and Pfizer are belatedly responding to shareholder protests over the packages taken by recently retired chief executives by slashing the pay and benefits of their successors.

Contrast this situation, then, with the growing trust across many developing and OECD markets in business in general rather than individual CEOs. In the US 53% of respondents said they trusted business, an all-time high. In Europe trust in business was 34%, in Russia 39%, in Brazil and Mexico it was 68% and China 67%. Even where business was less trusted - Europe and Russia - it scored far better than the media or government, as was the case in nearly all markets. The only institutions that matched or did better than business were NGOs, whose position improved particularly in Asia.

Next to providing quality goods and services, respondents said undertaking socially responsible activities was the most important way an organisation could build trust.

Richard Edelman, president and CEO of Edelman, said there had been a rebound in trust as corporate malfeasance was tackled, growth continued and business was seen to be providing solutions to problems facing society. "Business has a clear opportunity to assume a leadership role on major issues, from climate change to privacy," he said.

David Brain, CEO of Edelman Europe, said: "CEOs should continue to talk with elites, such as investors and regulators, but also provide critical information to employees and enthusiastic consumers."

Thank you to our source for the inspiration behind this posting:
Edelman Trust Barometer 2007 and The Financial Times