Effective organizations recognize that managers' ability, not just to analyze and strategize, but to implement and execute, are crucial to success. JL
Simon Hayes reports in the McKinsey Quarterly:
The profits of 700 leading multinationals plunged by 25% over the past 10 years, with return on equity dropping from 18% to 11%. Multinationals need scale (but) many leaders are better at holding meetings than making changes. Business need leaders who can work across borders, markets and cultures, understand the commercial aspects of business, translate financial performance measures into value drivers, communicate complex concepts and challenge assumptions.
If you've ever wondered how anything ever gets done in a large global company, you're not the only one. The Economist recently warned multinationals were in danger of emulating ancient Rome by getting too big for their good, building complexity on complexity, losing touch with distant outposts, and frittering away shareholder's equity in the process. The profits of 700 leading multinationals plunged by 25% over the past 10 years, the newspaper reported, with return on equity dropping from 18% to 11% over the same period.
Too Big is a common theme: Too Big to act swiftly; Too Big to translate insights into action; Too Big to get the best value from talented people. Leadership teams that spend more time listening to sharemarket analysts than customers, sitting in splendid isolation in corporate headquarters, distant from the emerging market battlefields. Bureaucracy the order of the day, and teams worryingly disempowered.
That's one view. The other is this: It's not Too Big, just Big. Big is an unavoidable approach to doing business. At a time when multinationals are facing aggressive competition from smaller but fast-growing local players in many emerging markets, there's a 'get big, or get out' discussion that's being had in boardroom across North America and Europe. If we're serious about beating our emerging world competitors, we need to have scale.
So if Big is inevitable, what does that mean for those working in global companies? In short, multinationals need people who can cut through the complexity and get stuff done.
Multinationals need people who can persuade those who don't actually work for them to do things for them. They need those who can chivvy along the reluctant, who can sign up multiple stakeholders to a single cause, who can see through the mist of the matrix structure to understand what needs to be done, and who needs to do it. They need leaders - at all levels of the organisation - who can work across borders, markets and cultures.
The ability to 'get stuff done' could be the most underrated executive skill. It sounds so simple, but let's face it - so many leaders come undone because they're better at holding meetings than making changes.
Our research - focused on finance teams - underlines the value of leaders who understand the commercial aspects of the business, can translate pure financial performance measures into key value drivers, who clearly communicate complex concepts, challenge assumptions and foster buy-in. That is, people who get stuff done.
So, everyone wants a team that 'gets stuff done'. But what does that actually mean?
There's plenty of good work on the complexity of the modern global company and the skills needed to be successful in a complex, volatile environment. Here are a couple of references to get you started:
- They understand the problem, and the solution. They spend some time - not too much, though - understanding why things are the way they are. They talk to all stakeholders, and then form a view.
- They build consensus. This is the really tricky bit. We often joke that those executive who spend time building relationships are 'playing politics', but in fact, the ability to bring together often-conflicted parties is an essential skill of leadership. People who get stuff done spend time building relationships, getting to know people and winning their support before they need them.
- They act. They don't leave it too late, and they don't allow vested interests to bog them down in arguments and objections. If they've invested the time in understanding the problem and building support for your solution, action should be the easiest element.
- Our own Finance Pathfinder competencies research identifies the key skills that finance team members require to be successful in complex global companies. If you're interested in learning more, please contact me.
- Stephen Wilson and Andrei Perumal wrote the book (literally) on the cost of complexity, and their work - Waging War on Complexity Costs - should be required reading for all executives. They've been guests of the International CFO Forum on several occasions.