Traditional governance inertia constrains nimble leadership

"The bigger your hammer, the more every problem looks like a nail" was a phrase used in a leadership article I read recently when I was pondering the complexities of what leaders have to balance in today’s fast changing environment (The best leaders are versatile ones, Harvard Business Review, by Robert Kaiser).

Recently, I have stepped out of my leadership role at AbacusBio, an established company, into the leadership of a company I have co-founded, Zestt Wellness.

I have been astounded at the different requirements needed of me. I have always thought myself reasonably comfortable with ambiguity, but a startup takes that ambiguity to a new level. For my new business, the need for agility in assessing different sales and production models has been vital until we find what fits, and even then, what fits may change overnight, and we will need to adapt accordingly. A startup doesn’t have the luxury of existing product sales to fall back on. An established company doesn’t have the luxury of having nothing to lose — there are pros and cons both ways.

In Robert Kaiser’s article, he describes the yin and yang of the skill set leaders need for versatility in today’s world:

1, “How you lead”, emphasising interpersonal behaviours for influencing and interacting with people.

2, “What you lead”, geared towards the organisational issues which require focus and implementation skills.

Generally, leaders will favour the “how” or the “what” according to their own strengths and when things go wrong, that is what they revert to, often at the expense of the other.

The key for any leader is to understand where their strength lies and make sure they balance that with someone in their team who swings the other way. I am better at the “how” than the “what”, so I try and recognise that and bring the “what” thinkers into my circle — sometimes this works more successfully than other times, hence the hammer analogy.

Also critical is understanding which issues need a more visionary leader and which need a more operational leader. A balance between vision and operations is needed across the wider governance and leadership team too. Increasingly, I think governance teams are weighed towards looking at the how, rather than the what — the operations, rather than the vision.

Many of our business and organisational structures are still traditional — a governance team, led by a chair, and a management team, led by a CEO.

Papers requiring decisions are put forward by the CEO and management team to the governance team, who might meet 6-12 times per year. The governance team will request additional data and the decision process for change is circular and slow, taking six months and more. If a decision is made at all!

Global crises, combined with the pace of technological change, means six months is too long to make important decisions. Companies keep circling, collecting more and more data, not making the critical changes they need to, to adopt new business models.

Contrast this with an agile company, like Animation Research, who were able to turn their business around literally overnight, in response to enormous Covid-19 disruption. The beauty of a lean decision-making team, willingness to make change (rather than just discuss change), is a sight to behold.

To add to the complexity, there is trade-off for directors around risk and innovation. Company directors who are more innovative and less focused on risk, tell me that they are increasingly attracted to “advisory boards” rather than taking on actual directorships because of the liability challenges. Liability drives boards towards operational matters, increasing time spent on risk and compliance. If this continues, we will see companies led by risk rather than opportunity in a time when we need companies to be brave and agile.

We are still using mainly traditional financial thinking in our decision-making too. Here is an example I heard recently. A company wanted to invest in solar panels to provide electricity for their manufacturing. They were doing this from a values position.

Their financial adviser asked: “Why would you do that when it will take you seven years to return your investment?” The company went ahead and did it anyway and were able to speak about it in their customer story, leading to an eight times increase in sales.

Versatile leadership and governance are critical for organisations and businesses.

Let’s ensure we have the yin and the yang at the leadership table, to ensure that we are brave enough to make the decisions we need to make — then we can be the disrupters, instead of the disrupted.

 - Anna Campbell is the co-founder of Zestt Wellness, a nutraceutical company and a partner of AbacusBio Ltd, an agri-technology company.

 

Comments

Ambiguity. Collaboration. Possibly more organic than directive. This is not men's work.

Oh, fair enough. Run the place.

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