Challenges to change in dynamic business world

Since writing my last article on how to influence change, I have had the privilege of listening to Costas Markides, a professor of strategy and entrepreneurship at the London Business School and author of several outstanding books on the subject — including his latest one, Organising for the New Normal.

He was a delight to be with online at the Davis & Shirtliff management conference in which I was participating, making his points in such a lively and humorous way. Don’t take my word for it though, listen to him on this podcast, ‘Resilience mindset and the new normal’ on YouTube. You won’t regret it.

Costas — which I am sure is how he’d like me to refer to him — is, like me, an economist by education, and again like me he migrated into strategy. As with anyone who works in this field these days he reflected deeply on how the strategy must incorporate innovativeness, agility and resilience, and concluded that so much of what differentiates those who succeed relates to influencing people’s behaviours. He, therefore, focuses on social psychology as a key ingredient in his mix.

Why do people behave as they do, he asks, and what is it about the organisations within which they work that makes them do so? For sure leaders cannot simply tell their people to be, say, resilient and innovative. You won’t be surprised to learn that Costas is a great storyteller, and one he loves to quote is from the Harvard Medical School, which carried out a study on patients being released from hospital following major heart surgery.

Each of them was told that on returning home they needed to stop leading dangerously unhealthy lives — no more smoking or drinking alcohol, healthy eating and plenty of exercises. All very logical and rational.

The group was followed for two years, and it was found that whereas all heeded their doctors’ advice in the first month after surgery, 90 percent of them reverted to their bad behaviours within six months of their operations.

In Change or Die, the book about this case by Alan Deutschman, the author describes what differentiated the 10 percent of outliers who held on to what was good for them, Costas relates. It was how the doctors went beyond instilling fear in their patients by identifying the consequences of bad behaviour to also talking about positive futures that would result from good behaviour — like envisaging playing with their grandchildren or walking their daughter down the aisle. So to encourage people we must make the need for the change positive, personal and emotional.

Another factor that influences how we behave is our environment, and Costas talks engagingly about how leaders must create one that supports the desired behaviours. So if you want your people to be proactive, question what’s happening, collaborate across silos, experiment and assume responsibility, you must generate an appropriate culture based on supportive values, devise measures and incentives that reward such behaviours, develop structures and processes aligned to what you are seeking and hire people who are likely to be responsive to your aspirations.

This doesn’t mean people in the field can do whatever they want.

There must be parameters that define their limits, beyond which they must consult with their bosses — like if what they are considering lies outside the defined strategy.

Above all, Costas tells us that we must “treat people as people”, not as “human resources” or robots. They must feel special, working to support an uplifting purpose with which they engage.

For Costas, the new normal involves frequent and unpredictable sources of disruption, with inadequate time in which to respond. He tells us we must see these disruptions as not just threats but opportunities too. But this requires going beyond simply asserting that.

Leaders must lift their people psychologically, emotionally, reaching both their heads and their hearts, so they can visualise the fulfilment of the opportunity. Then they will commit to fighting with you.

Let me conclude by mentioning that an extra reason why I so enjoyed interacting with Costas was that nearly 50 years ago I spent a year at the London Business School as a student in their Sloan Masters programme. It was a great experience for me, building both my competence and my confidence. His session reminded me of those uplifting days, taking me back to the stimulation that so characterised the place and showing me it to be as vibrant now as it was then.

Balancing the State and people power

Eight years ago I wrote a column about Why Nations Fail, the book by Daron Acemoglu and James Robinson, and more recently I acquired the subsequent one by these two economics professors, The Narrow Corridor.

It’s another global analysis of how liberty and wellbeing flourish in some states but degenerate to authoritarianism or anarchy in others.

New opportunities and threats emerge, as some successful societies continue to thrive while others falter.

In Why Nations Fail, Acemoglu and Robinson concluded that nations thrive when they develop “inclusive” political and economic institutions, and fail when those institutions become “extractive” and concentrate power and opportunity in the hands of only a few.

Inclusive economic institutions that enforce property rights, create a level playing field, and encourage investments in new technologies and skills are much more conducive to economic growth than extractive economic institutions that are structured to extract resources from the many by the few.

Inclusive economic institutions are in turn supported by, and support, inclusive political institutions, which distribute political power widely so as to establish law and order, the foundations of secure property rights, and an inclusive market economy.

Conversely, extractive political institutions that concentrate power in the hands of a few reinforce extractive economic institutions to hold on to power.

What are they telling us now, in The Narrow Corridor? In most places and at most times, the strong have dominated the weak, and human freedom has been suppressed – either by force or merely through customs and norms.

States have either been too weak to protect individuals from these threats or they have been too strong for people to protect themselves from despotism. Liberty emerges only when a delicate balance is struck between the state and society.

Which nations are more likely to succeed and to fail today? Which countries are becoming more inclusive in their economics and politics, and which ones will be leaving the narrow corridor of balanced liberty that requires adequate but not excessive state power?

With Covid having intensified inequality between rich and poor, between the digital and the non-digital, is the corridor narrowing further – including in countries like America?

And with ones like Hungary, India, Turkey and the Philippines having shifted to more autocratic styles, we have been confronted with the reality that political liberty is not such a steady or durable phenomenon.

Is Kenya within or beyond the narrow corridor? And either way, where are our ever-manoeuvring politicians taking us? Are we still just passive citizens waiting for our tribal princes to tell us for whom to vote?

Or will we at last select those who best understand what lies within the narrow corridor and how to have us inhabit this privileged space?

If America itself is finding it hard, with Republicans burying their heads in the Trumpian sands as they deny truth and sneer at science, and with us facing our elections in a year’s time, should this be cause for gloom and doom?

During our years since independence it could be argued that we have done better than many other countries – and not just in Africa – at surviving within the narrow corridor, balancing the power of the state and that of the people.

We should feel good about our evolution into multi-party politics and the devolution of power to the counties, about our reasonable freedom of speech and our relatively open economy.

Could we have done better? Of course. Will we? That’s a hard one. We have among us everything from Utopian optimists to self-flagellating pessimists.

What’s for sure is that, as everywhere, the struggle between state and society will continue. But it is not further constitutional tweaks, with yet more laws and regulations that will take us closer into the desired corridor or keep us there.

And it is not more duplication and fragmentation of state institutions.

No. It is all to do with values and how these are reflected in behaviour. How are we encouraging good behaviour, that promotes integrity and cohesion? And how are we penalising bad behaviour that prevents it?

We citizens must take seriously our responsibility for influencing the leaders of state institutions in ways that can see our vision of shared prosperity be actualised.

With all the talent and energy that exists in Kenya, surely this is doable.

Being responsible leader in the era of tech advances

In my last column I challenged readers with a series of questions on the meaning of responsible leadership in how leaders behave with their staff. I largely held back on answering those questions until today, and I hope that merely listing them was helpful. Here now are some responses from me.

Being responsible to those one leads revolves around fairness: actual fairness, and beyond that the perception of fairness. Do employees feel they are being treated respectfully, that they have opportunities to learn and to grow, that they are trusted and rewarded appropriately?

I see many organisations in Kenya where fair working conditions do exist, but I also witness others where leaders so distrust their people that they deliberately keep them in the dark about the context of their work. One can understand the logic of those who hoard information and hold back from delegating. It is because they don’t trust their people, concerned about their technical competence or their integrity or both.

They have presumably suffered from enough untrustworthy employees letting them down, as a result of which they feel they need to protect themselves from the risk of further disappointment.

What they fail to appreciate however is the impact on those same employees who, feeling distrusted, react appropriately. They will be less engaged and less motivated, and may well behave like sulking or rebellious teenagers do with over-stern parents or teachers.

So which risk is higher – trusting too much, or too little? And what can leaders do to attract the more trustworthy people in the first place, and then to retain them? No surprises: it is where fair working conditions exist that the best talent seeks employment. When staff are valued their employers help them fulfill their potential, of course in ways that are aligned to the interests of the organisation.

As they learn and grow they can take on more responsibilities, and hence contribute more – thereby earning the right to higher remuneration. In one company where I am a director, I love the way the chairman-owner explicitly states to his people that he pays them as much as the company can afford, not as little as he can get away with.

Millennials are more known for assessing the culture of an organisation before determining whether they wish to become part of it, and increasingly they look for their employer to be committed to an uplifting cause, pursuing “purpose beyond profit”, and so “doing well by doing good”. Safaricom have articulated their cause well, and others are also doing so.

Let me now turn to the challenge of employees whose skills have not kept up with contemporary trends – typically to do with the rapid advances in technology. Here employers are faced with the dilemma of whether to let go such staff or to explore ways of still benefitting from them, by offering them the opportunity to reskill and by allocating them responsibilities where they can remain relevant.

Should everyone be forced to retire at the age of sixty, so as not to block succeeding generations from finding opportunities? Surely not. While some may have seen their energy fade and should indeed be put out to pasture (nicely) others may still be found value-adding roles, perhaps as wise elders mentoring upcoming Young Turks.

Another question I raised in my last article was how to act responsibly when to remain competitive one is forced to adopt technologies that replace people, and this in an environment of high unemployment. The realities are there, and one cannot hide one’s head in the sand. What we know is that with each industrial revolution as many jobs are destroyed new ones are created.

But they require new skills, and we need active collaboration between government and private institutions to develop them – not least in the technical and vocational domains. Employers must play an active role in not only defining the needs but in participating in developing them.

Oh dear, I am once more reaching my word limit, and there’s so much more to write about. But I’d like to think that I have laid out enough aspects of leading people responsibly that you will now reflect on where you stand and on how to get to your next level.