VAL HAMMONDResearch Competition

WHY LEADERS AND HRD PROFESSIONALS SHOULD

FOCUS ON QUALITY OF INTERACTION WHEN

FORMULATION AND EXECUTING STRATEGY

Alison Reynolds and David Lewis

www.roffeypark.com

A Familiar Story

On the 20th June, the merger was announced. The news was greeted with enthusiasm by staff, customers and investors alike. With the promise of extensive synergies and new opportunities, the future looked bright. Two months later, while many were still basking in the afterglow of this strategic masterstroke, the first rumours of restructuring began. Not long after that, the process integration project was initiated, and shortly after that, selected demotions and new appointments were announced. Staff morale collapsed overnight - anxiety and anger took hold. As despondency grew, management communicated, with increased urgency, the need to stick to the plan. With each new missive mistrust grew.

This story is typical and applies not only to mergers but many other initiatives designed to deliver strategic advantage. The consequences go far beyond unhappy staff. The strategy is rejected, execution fails and performance plummets. This story is reflected in research that shows 70% of initiatives fail to deliver their intended benefits (Nohria & Beer, 2000).

In this article, we explore the human dynamics behind this alarming statistic. We report the findings from our study revealing that leaders shy away from engaging in quality interaction with people, in preference for making concrete organisational changes, even though they know they do not work.

We explain why interaction between people is central to successful strategy formulation and execution. We explore what drives managers to focus on changes to organisational structure, process and hierarchy, at the expense of engaging in quality interaction. We present a participative approach that puts interaction at the heart of strategy formulation and execution.

Our recommendation to HRD professionals is to invest in facilitating and supporting interaction focused on the strategic objectives at hand.

The Tyranny of the Tangible

In our natural desire to act, demonstrate our ability and make visible progress, we focus on the tangible. We start to redraw organisational boundaries, announce new appointments and create new teams. We use these tangible aspects of organisational life to signify change. This way we feel in control.

In so doing, we lose sight of the outcomes we need to deliver our strategy, i.e. new ways of thinking and behaving: better collaboration; greater innovation; enhanced customer focus; more effective management, etc. It is assumed that these will emerge if we can just get the structure right, the processes right and the right hierarchy in place. But just as “rearranging the deck chairs on the Titanic” did nothing to save the ship, neither, in themselves, do new structures, processes and hierarchies produce strategic value. In fact, by starting with these tangible levers of execution we actually make things worse.

• Changing structures, procedures and decision authorities before engaging in quality interaction has three major impacts:

• We cause anxiety, anger and mistrust

• We fail to capitalise on the transformational power of interaction

• We make expensive changes that may turn out to be unnecessary

Anxiety, Anger and Mistrust

The psychological effect of starting with changes to structure, hierarchy and process is devastating, as depicted in our opening scenario. Attachment theory, developed by John Bowlby (1982) in his research on children evacuated during the Second World War and the effect on them of separation from the parents, helps to explain why.

The theory explores how as humans we seek “safe attachment” within our environment. The theory has been expanded upon and applied in business by Peter Robertson (2004). In summary, each of us seeks safe attachment in order to function confidently and creatively in our environment. Some of us seek safe attachment through our relationships with others. Strong, trusting personal relationships provide the conditions for us to perform and contribute according to our strengths and to our potential. For others, beliefs, procedures, methods, content, task, systems etc. comprise the object of attachment. As long as our beliefs are intact or our methods and procedures are effective and reliable etc., we can contribute and perform to our potential.

Safe attachment is a very strong psychological need. In stable environments, most of us are able to establish safe attachment through our relationships or content focus according to our attachment needs. In this way, we are able to concentrate on performance and our contribution to the work of the organisation.

The problem comes as soon as there is the slightest rumour that restructuring, changes to hierarchy or changes to procedure are afoot. Instantly and naturally, energy is redirected from productive work to anxiety, as individuals speculate on the implications of these changes. For example, if I’m strongly people attached, how will restructuring, or changes in hierarchy, affect those I work with? If I’m strongly content attached, how will changes in procedure affect my ability to concentrate on content and do things the way I think they should be done?

This is the problem with starting strategic change by focusing on structure, hierarchy and procedure. It causes anxiety, distraction from productive work, mistrust and anger. Anyone who has been through a major change initiated in this way will recognise these feelings, in themselves and in others.

Capitising on the

Transformational Power of

Interaction

In addition to distraction from productive work, the focus on structure, hierarchy and procedure, at the expense of interaction between people, means we fail to capitalise on the transformational power of interaction.

Sense cannot be given to others. We make sense for ourselves through interaction. The problem is that the way we organise inherently erodes the quality of our interaction with others. The way we structure in silos erodes interaction; hierarchy erodes interaction, and procedure, in the name of efficiency, erodes interaction.

In the absence of real connection, people resort to stereotypes of others. The single narrative emerges. The trouble with IT is… The trouble with Finance is… The trouble with John is… The trouble with Valentina is….We allow ourselves to think in terms of others as having either the wrong values or, the wrong qualities or both.

But a single narrative bears little resemblance to the truth. Most of the time there is nothing wrong with people’s values and there are sufficient people with sufficient qualities to formulate and deliver a winning strategy.

It is not the fault of structure. Whether we organise in silos, matrices or a combination of both, barriers to interaction will appear. It is not the fault of hierarchy. There will always be hierarchy, formal or informal through which decisions and responsibilities are assigned. It is not the fault of procedures. Without procedures, inefficiency simply hastens inevitable decline.

It is the focus on structure, hierarchy and procedures at the expense of quality interaction that is at fault. For execution to work, those that need to execute need to shape the strategy and own the plan. They need to change what they think and what they do, and they do this through interaction and emotional connection with other people who they respect. When the quality of interaction is inhibited, understanding of and execution of strategy is undermined.

Expensive Mistakes

As we have seen, the decision to restructure, change processes and amend hierarchies can cause a lot of damage. Whilst an organisation can recover from such decisions, we know it takes time (cost) to regain safe attachment and regroup. Addressing the tangible first can prove an expensive decision. The truth is that the strategic outcome the organisation is looking for is best served by first creating shared context and momentum through quality of interaction. In this way, the expense of unnecessary changes and a demoralised work force can be avoided.

The Knowing – Doing Gap

In a recent study conducted by the authors, global senior executives from a cross-section of industries were asked two questions.

First, “In your experience, when executing strategy, where do organisations focus most attention?”

And second, ”How would you rank the barriers to strategy execution?”

Figure 1: Senior Executive Responses

Our study shows the gap between where leaders focus their energy and attention and where they see the main barriers to executing strategy. That is to say, as senior executives, we know that the biggest barrier to success is culture and the quality of interaction. Yet we persist in starting with and emphasising restructuring, changing decision authorities and adjusting processes. It is an example of what Jeffrey Pfeffer and Robert Sutton call the knowing-doing gap (Pfeffer & Sutton, 1999).

The answers to the second question above concur with the findings of a recent research report conducted by Development Dimensions International (DDI) examining how high quality interactions can drive workplace productivity. Over 50% of respondents from a global sample reported that their manager most of the time or always lacks effective interaction skills. These skills include soliciting ideas and clarifying understanding. This further indicates, that this is an area leaders need to focus on. Perhaps this partly explains why although leaders ‘know’ how important interaction is, they shy away from it – they simply don’t have the skills.

In our experience, when organisations do focus on the intangibles they frequently make the mistake of embarking on culture programmes insufficiently integrated with core strategic outcomes. They invest in developing new competency frameworks or creating posters listing the organisation’s values. Unfortunately, culture is not susceptible to planned change in this way. Culture emerges from the myriad interactions that takes place across the organisation. We believe the key to successful execution lies in the quality of interaction. Through interaction people change the way they think and behave and as they do the culture evolves in concert.

It is important at this point to be clear about what we mean by quality of interaction.

QUALITY OF INTERACTION

Executives are right when they say people are their most important asset. Human interaction is at the heart of value creation.

To establish high quality interaction we need to:

• Support people’s intrinsic interaction needs

• Enable people to deploy their strengths (establish safe attachment)

• Maintain shared focus

Quality of interaction is underpinned by five intrinsic human needs for:

• Esteem: through positive reinforcement of worth and value

• Empathy: through understanding different perspectives and emotions

• Involvement: through initiating and valuing contributions and being open to influence

• Connection: through sharing and building new ideas

• Autonomy: through demonstrating initiative, ownership and accountability

Our work on this with many organisations has informed the behaviours we consider as contributing to and cultivating quality interactions.

MAINTAINING A SHARED FOCUS

• Create a shared understanding of external issues and how these have a bearing on current activities

• Be clear about the negotiables and the non-negotiables. What can be influenced and what cannot. What decisions have already been made?

• Share all perspectives, assumptions and analysis around challenges, opportunities and changes

DEPLOYING PEOPLE’S STRENGTHS (ESTABLISHING SAFE ATTACHMENT)

• Respect the person, respect their expertise, confront the issues

• Share any uncertainty across the group and use it to generate ideas

• Seek different views and experiences

• Share assumptions, perspectives and analysis openly

• Avoid defensive responses

• Demonstrate that influence is two-way

FULFILLING INTERACTION NEEDS

• Balance advocacy and inquiry

• Connect with the intent, interests, intuition and emotions

• Suspend judgement and explore options

• Ask others for their ideas first

• Give people accountability and autonomy

• Connect people and teams to work on aspects of implementation together

As a starter, if you want to improve the quality of interaction in your organisation get out in the business, work in situ and embed processes to review and feedback on these behaviours. Keep at it until they become second nature. Most organisations are currently far from it.

SharedFocus

Play to Strengths

Interaction Needs

Reversing the Sequence

So the lesson is simple. Reverse the sequence and focus on facilitating quality interaction. But if it’s so simple and as indicated in our study, people know that the biggest barrier to successful execution is culture and interaction, why don’t leaders focus on them?

It is much easier to redraw the structure, to design new processes and appoint new managers. We know how to do it. It is what our predecessor did. You can see that it has been done. It is predictable controllable, deliverable within a specified time and budget. But unfortunately, as we have seen, on its own, not just ineffective, but damaging.

Engaging in genuine interaction around strategy and execution across the organisation can feel like walking a tightrope without a safety net. People get emotional, unpredictable, may not agree with you, and may not agree with each other - and then what? As leaders we have been promoted based on our expertise and ability to get things done - i.e. having the answers. Strong leaders drive change. Strong leaders display certainty and confidence. Strong leaders take no prisoners. Why would I risk entering this messy world?

If we are to expect leaders to change and take such risks we need to provide them with a toolkit. If they can construct the right environment and focus, this ‘messy’ dialogue is far more likely to lead to understanding and commitment than avoidance, manipulation, one-way communication or oppositional debate.

The Participative Approach

Jonathan Haidt, creator of the Social Intuitionist Model of interaction, observed the following. When people are presented with a new event, a new idea, an instruction to change, a request to change…they automatically and instantaneously filter the event through their personal biases, emotional disposition and past experience. This leads to an intuitive interpretation of what the event means and informs the attitude taken i.e. their judgement. At the end of this process, a rational argument ( justification) for what has been decided is developed.

Figure 2: Social Intuitionist model

When people react and work in isolation they inevitably develop different judgements and rationalisations. When their differences are confronted they attempt to persuade each other through rational argument. But as shown in the diagram, they are effectively talking to a brick wall.

Regardless of changes to structures or processes when the fundamental questions are ignored, or responded to in isolation, initiatives become bogged down by conflicts, confusion and disagreement. This happens when we fail to build a foundation through connection that enables us to explore different perspectives and emotional reactions. It is a given that not everyone will see things the same way. Effort needs to be put into building trust and consensus at the beginning.

Change is an emotional decision. What is needed is high quality interaction that builds mutual respect such that people can challenge their assumptions (biases), accept and respect their emotions and learn through shared experience.

The diagram below illustrates a framework for establishing high quality interaction. It can be applied in small groups or across entire organisations to create better solutions with genuine support.

Person One

Person Two

Intuition

Intuition

Judgment

Judgment

Reasoning

Reasoning

EmotionBias

Experience

EmotionBias

Experience

Event

Figure 3. Participative approach framework

Success depends on maintaining focus (enabling people to fully engage), providing safe attachment (enabling people to deploy their strengths) and fulfilling core interaction needs (enabling productivity and supporting well-being). When diverse perspectives, assumptions and analyses are explored, there is the best chance of confronting and resolving conflicts.

Attempts to short cut participative approaches run the risk of precipitating a destructive downward spiral, where each attempt of management to force the pace of change is met with greater resistance. When this happens:

• The core questions remain unanswered leaving people asking more of leaders in an attempt to seek clarity. People cite feeling unheard and not party to, or aware of decisions.

• Leaders act more as sense givers, providing answers, requiring action, giving ultimatums and becoming defensive of decisions.

• In their haste to engage and involve, leaders communicate but avoid the core questions for fear of going backwards. And in their frustration fail to clarify the negotiables and non-negotiables

• People begin to feel the ‘ask’ for their opinion is disingenuous, decisions are predetermined, their perspectives are not valued.

• Confusion and frustration turn to mistrust and resistance.

Why

What

How

Execute

Build consesnsus aroundthe compelling case for

change

Build consesnsus aroundthe desired target orperation model

Build consesnsus forthe actions that need to

be takenBuild consesnsus onaccountabilities and

responsibilities

Esteem Involvement Connection Autonomy Empathy

Focu

sD

eploy strengths

Interaction needs

Application

A simple and powerful way to apply this framework is through four integrated conversations. Each conversation focuses in turn on the focus areas for successful strategy formulation and execution:

• Why: the compelling case for change

• What: the target operating model (the solutions)

• How: the actions /changes that need to happen

• Execution: accountabilities and responsibilities

Each conversation takes place in mixed groups from all the stakeholder communities. The conversation is facilitated to model and coach behaviours to address people’s interaction needs for esteem, involvement, connection, autonomy and empathy. To surface diverse perspectives, connect with emotions and strengthen outcomes, three open questions are used to structure each conversation. They are:

1. What excites you about…?

2. What worries you about..?

3. What have we missed …?

The sequence of questions is important. The negative voices tend to be louder (but not necessarily the majority) when change is initiated. Starting with the positive makes sure these voices are heard and creates a more balanced conversation.

The output from each conversation is used to strengthen the strategy, the target operating model and the execution accountabilities.

It is a technique that can be used by leaders and managers in all their interactions regarding strategy formulation and execution from one-to-one meetings, management meetings, to large group interventions. By switching the default mode from telling to participating, leaders can transform their organisation’s capability for strategy formulation and execution.

An Opportunity for the HRD Professional

The authors recently worked with an organisation seeking to change the culture of their meetings. For ten years they had spent their annual training budget on generic meetings training for all managers. The training was well received and highly rated but it failed to make a difference. It had no impact in actual meetings. Meeting ineffectiveness remained the top frustration among managers. The culture remained the same.

Taking a different tact, we focused on specific meetings. We worked with the group live, joining the meetings, sharing observations and exploring the quality of the interactions. Groups demonstrated a high degree of passive behaviour. They often had no clear purpose, did not hold people to account on objectives and were even unclear on why certain members attended – not that anyone had raised this. Through focusing on and enhancing the quality of the interaction within the group the culture and effectiveness of the meetings changed. Outcomes were improved, the culture adjusted and new competences developed while executing business.

We use this story to illustrate the power of working in situ to support strategy execution. Having more effective meetings may seem like a minor achievement but the same principle applies to innovation, customer focus and all the other strategic initiatives organisations undertake. You get more return on your investment working in context than in a classroom.

Conclusion

For HRD Professionals who want to contribute to strategy formulation and execution the message from our work is simple. Take the training budget and invest it in facilitating high quality interaction in the business. Work live with the strategic objectives, focus on interactions, coach participative behaviour - and the desired outcomes, culture and competences will follow.

References

Beer, M. & Nohria, N. (2000). Cracking the Code of Change: Harvard Business Review

Bowlby, J. (1982). Attachment and Loss, Vol. 1: Attachment (2nd ed.) New York: Basic Books.

Haidt, J. (2012). The Righteous Mind: Why Good People Are Divided by Politics and Religion

Pfeffer, J. (1999). The Knowing-Doing Gap: How Smart Companies Turn Knowledge into Action

Robertson, P. (2004). Always Change a Winning Team

DDI Research Report (PDF): Driving Workforce Productivity through High Quality Interactions http://www.ddiworld.com/DDIWorldAU/media/research/drivingworkplaceroductivity_rp_ddi_au.pdf

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