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FirstCuts
Framework Consulting Inc. November 2010: Issue 35
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Inside

Editorial Article Discussion

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Editorial

Article

FirstCuts - a source of provocative ideas for Caribbean businessthinkers

Time management and productivity in the era of smartphones. The audio podcast of this ezine is about 18 minutes long and can be found at fwconsulting.podomatic. com.

Editorial

Tips, Ads and Links

As we close out the year, and enter the holiday season, I have to look back with some gratitude. This was the year of dodging bullets, it seems. The recession settled in for the long haul, and in spite of it I am happy to be able to be here to publish another edition of FirstCuts. We just missed the full wrath of Hurricane Tomas, but were hit by Tropical Storm Nicole in addition to a drought. That's on top of a state of emergency that closed down commerce for about a month. And that was just Jamaica! Barbados lost its Prime Minister to cancer in a matter

of months 2 weeks ago. Trinidad and Tobago changed its government in the blink of an eye, long before elections were due. We are watching carefully for signs of cholera, now ravaging Haiti, and I guess that their earthquake was the first sign of trouble when it hit in January. Could it have been a more difficult year? It's certainly the toughest I have experienced as an adult, and I have learned the value of getting up each morning, and getting on with business. -- Francis
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3389 Sheridan Street #434 Hollywood FL 33021, USA PO Box 3109 Kingston 8, Jamaica phone: 954-323-2552 phone: 876-880-8653 fax: 509-272-7966 francis@fwconsulting.com www.fwconsulting.com

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Snow White and the Many Dwarves
The Idea in Brief Here in the Caribbean we have a number of companies that are initially successful but are unable to grow past a certain size, no matter what they do. In many cases, that size corresponds to a headcount of 150-200. which scientists tell us is the maximum number of people that can work together, and be managed closely by one person who doesn't delegate. When companies cannot scale up to the next level, they never exit the startup phase and achieve their full potential. The cause can sometimes be traced to a CEO who behaves as if he is special (Snow White) and is surrounded by a lack of talent (his many dwarves.)

To grow, regional companies need to ensure that they train leaders, not develop personalities, and push their CEO's to delegate differently while demanding higher skills from managers.

Many Caribbean companies are trapped in a bubble of their own making. They have arrived at a point at which the CEO or Managing Director is the brightest, most energetic and creative person in the company, and there is no possible successor. Their Vice Presidents, Directors and managers are faithful and loyal employees who are quite good at following directions, but none of them has what it takes to someday run the company they have served for so long. As I work with these companies, I have observed some behaviours that tend to keep the status quo in place.

However, over a period of months and years these habits coalesce into a kind of policy that results in the Snow White Effect -- a strong CEO, and a bunch of much weaker, undeveloped managers: the many dwarves. Once this effect takes root, it's difficult to dislodge even with the most enlightened executives at the helm.

often unaware of it. Things seem to be going well, and the key performance indicators might all be moving in the right direction, giving the board some confidence that the firm is operating on a sound foundation. However, it only takes the sudden departure of
the company's top executive to illuminate the cracks that have existed all along. They show that the CEO's energy, charisma and ability to motivate others were a function of his personality, and didn't truly reside in the institution. Results being produced came about because there was one exceptional leader, and lots of mediocre followers. Other indicators might be:

In many cases they originate with the CEO What is the Snow herself, but they appear to White Effect? produce positive results, so there is no pressing Companies that are reason to change.
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However, it's not impossible to change. Executives and boards must come to understand that their job is to bring up a new generation of leaders, not just ensure tomorrow's profits. To do so they must examine and confront the degree to which they have fallen prey to the Snow White Effect.

stuck in this mode are

1. Leadership that has

been in the same hands

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for a long time, perhaps that of the founder, a small group or family 2. High turnover of talented executives drafted in from other companies 3. Second-tier executives who show remarkable loyalty, but few other leadership skills 4. Exaggerated deference to the top executive when making key decisions 5. The need for the CEO to be included in every consequential decision, in order to avoid its subsequent reversal 6. The absence of a credible succession plan 7. A remarkable and growing gap between a CEO and her subordinates in terms of selfexpression, energy levels, ability to communicate and willingness to take risks

Therefore, they could not be having the issues that I was inquiring about. In another regional company, the CEO's second in command did her best to persuade me that the culture of the company didn't have an impact on the results. Instead, I needed to understand how successful they were, and that everything revolved around "Mr. Smith," who had no need to attend to

In one regional financial institution, I met a Senior Vice President whose voice took on a reverential tone when discussing his boss, "Marlon." He tried to convince me that the CEO (whose first name he used whenever he could) was a wise and brilliant man who was one of the richest persons in the world. (He quoted the magazine that listed his earnings, as proof.)

Many top employees across the region are quite satisfied to step back and allow their top executives to lead the way, thereby keeping themselves out of the public eye. They come to relate to the top executive as a parent who is in charge of their welfare, and they submit themselves to their superiors in ways that sound as if they could have come from Paul, the New Testament author, such things, simply who urged wives to preferring to fire nonsubmit themselves to performers at the first sign their husbands, and of trouble. slaves to do the same to their masters. What left me with a sick feeling in both cases were While this relationship the ways in which these may be a comfortable and executives used the familiar one for regional names of their bosses, as employees who were if their very sound infused taught these norms of them with confidence. behaviour in church, Incidentally, both school and at home, it

underlings lost their jobs, "Marlon" has experienced a steep loss in fortunes and "Mr. Smith" lost control of his company shortly before it failed.

What left me with a sick feeling... were the way in these executives used the names of their bosses.

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actually endangers the company's future.

Dangers to the Company's Future

take risks, that they often become stronger and more powerful over time, even as others around them stagnate. Snow White becomes more beautiful with each passing day, while the dwarves stay just as ugly as the day they first showed up.

A company that fails to actively develop CEO-like qualities within the ranks of its employees exposes itself to awesome risks. A CEO who resigns, becomes ill or needs to be replaced immediately can easily leave a vacuum that no-one else can fill.

In most of the companies I have observed in the region, boards tolerate this risk unknowingly, and don't do what it takes to ask uncomfortable questions before a tragedy strikes. They delude themselves into thinking that the considerable skills of the CEO will be available long enough for their replacement to be someone else' problem. Also, in some cases there is a danger to the CEO herself. She can get burned out as she accrues broader, deeper responsibilities in the company. When projects around her fail, she makes private decisions to do things herself in the future, and often she succeeds. One CEO I know taught herself both human resource and marketing functions, and in no time assumed both responsibilities. CEO's are so smart, and so willing to
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What can Caribbean companies do about the Snow White Effect once they realize that it exists? Our research has uncovered three strategies: they can hire brighter people, push the envelop on existing talent and delegate when failure is possible.

Snow White becomes more beautiful with each passing day, while the dwarves stay just as ugly as the day they first showed up

intervention from the board, or an objective outsider like a coach to point out the fact that the CEO is head and shoulders above their direct reports in too many ways. If the condition exists, they need to appreciate the fact that they have helped to create the imbalance with either their actions or inaction. For most, this area is truly a blind-spot, as they are unable to step outside their role and observe working relationships they have that might work in the short-term, but threaten the company in the longterm.

Enlightening the CEO

They often come to see that the very tools they use to produce results on a daily basis - their intelligence, quickwittedness and courage "blows away" others around them and inhibits them in developing these characteristics themselves. The fact is, a CEO is often paid to do just that, (blow others away) and was probably promoted to the top position in order to do it on behalf of the company, on a very public stage. This need to demonstrate a commanding presence has been backed up by studies that show that CEO's are, on average, 3 inches taller than the average adult male.

Oftentimes, CEO's must be confronted directly with the fact that they have created an internal monarchy, even when the evidence is staring them in the face. The situation might require an

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However, it's easy for a CEO to forget that once they attain the top position, they are no longer in competition with those who now report to them. Many continue to thrive on being the centre of attention, and the eye of every hurricane as they have always done: taking up more and more breathing room in executive teams, at the expense of their subordinates. After winning the prize, they can't stop the habit of promoting themselves while demoting others. Instead, to be successful, they must turn their former adversaries for the CEO position into the best possible candidates for succession. They need to see the future of the company as entirely dependent on the actions they take to develop their successors. As they see the future in these terms, they can develop some new practices that, if maintained, would reduce the gap between them and their hired dwarves.

what they can to prevent them from being selected, sometimes using excuses like "they are overqualified."

being seen as needy or incapable.

The truth is, it takes a great deal of confidence to hire people who are better, and only a handful of top executives I have worked with seem to be comfortable with this practice. Also, only a few encourage their subordinates to shine and seek their own spotlight. Of course, discouraging bright people from joining the company is a shortsighted practice, as shareholders, owners and staff all suffer when the best talent available is ignored in order to accommodate a brittle ego. The future of the company is compromised, and over time, executive team members only become known for their mediocrity, and bootlicking behaviours.

Practice #1: Hire Brighter People

Many CEO's hire executives who are neither as smart nor as well-qualified as they are. They feel threatened by others who they fear might be better, and do
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Others actually do hire these people, often to great fanfare, but then go about undermining them once they come on staff. Sometimes this is done consciously, but more often than not CEO's act reflexively to defend their turf as the smartest person in the room. In some extreme cases, I have seen top executives who can't stop themselves from having the last say in every public conversation. Each intelligent insight from another person is immediately "topped" by an attempt to make a smarter comment. These behaviours often come from feelings of insecurity, and a concern for looking good at all times, in order to avoid

Practice #2: Push the Envelope with Existing Talent
Many managers in our region's companies quietly shelve their ambitions over the years and come to believe that the greatest contribution they can make is "company loyalty." They give up the hope of ever attaining a significant promotion, and settle into terminal positions as they await retirement. They relax, knowing that their chances of being fired are

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slim to non-existent, and stop growing their skills, just like most people around them.

Top CEO's don't accept this kind of performance as given. Instead, they know that the executive team is always being seen by employees as the brightest and best, and as an example to be followed. When executives stop improving their skills and become stale, employees conclude that mediocrity is rewarded and that there is no need to push themselves to higher performance. In these recessionary times, employees spend more time worrying about their jobs than trying to improve their skills.

unusual, however as it's difficult to give "negative" feedback, which is why most performance review conversations in most companies keep getting delayed for so long.

Many CEO's only delegate roles or jobs to others when the risk of doing so is low. They pick small, inconsequential stuff, and parcel it out in bits and pieces, taking care to stay well within their comfort zones.

It's up to the CEO to ensure that this doesn't happen by focusing significant effort on refreshing the skills of his employees, especially those who are closest to him. Unfortunately, his best tool for making this happen is one of the hardest skills to develop: feedback.

I'm amazed at how little time regional executives spend developing this particular skill, given how important it is to fostering new talent. This isn't
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When a CEO systematically weakens his executive team by refusing to give quality feedback, and fails to hire talented outsiders who can upset the apple cart, they end up surrounded by mediocrity that never exposes them to higher standards. Like Snow White, they remain the "fairest of them all." This is the reason why so many executives at all levels believe that the fact they are in the job means that they are already capable, in little need of further learning and have stopped challenging themselves to continued growth.

The end-result is that their subordinates never truly come to appreciate what it's like to be in the hot seat, fully accountable for eveything that happens in an entire company. They don't have sleepless nights that CEO's often experience when they must make decisions with impartial information. Also, they never challenge the CEO to delegate more to them, as they also want to avoid getting in over their heads, in keeping with the proverb: "The more monkey climb, the more him expose'." A few CEO's I have worked with have developed the discipline to continually step outside their comfort zone when they delegate. In fact, they use the degree of discomfort they feel as a guide. When they don't feel any discomfort they know that they need to pick bigger challenges for their managers. Failure becomes a greater possibility, but these brave CEO's come to

Practice #3: Delegating to Avoid Failure

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understand the capabilities of those who work for them in a way that only comes through stretching them to their limits. They aren't content to let them stagnate into old, tired and outdated dwarves.

the executives in your company.

Summary

When these three practices are undertaken, it's possible to grow senior executives to the point where they are ready to run entire companies, and to grow out of the shadow of even the most talented CEO's. Jeffrey Immelt, Jack Welch's successor at GE, and the other CEO's who used to work at GE have made the transition successfully and so can

It won't happen by accident -- GE executives follow a rigorous development process over several years -- and many regional CEO's simply refuse to give up the glory that comes from being Snow White.

However, an enlightened minority work hard to transform their dwarves into leaders, and take care of their company and its future for many years to come.
FC

Discussion
Shortly after I completed this issue of FirstCuts, I noticed a similar article over at the Harvard Business Review. It's entitled "Bringing out the Best in Your People" from the May 2010 issue, and it describes three ways in which leaders accidentally diminish their team­members with their strengths: by being visionary, having the gift of the gab or being creative. It's quite a similar idea to the one I describe in this article. If you'd like to discuss this article, simply come over and visit the FirstCuts page on Facebook, or visit the page on my blog that covers this issue, Chronicles from a Caribbean Cubicle.

Podcasts
Remember, this issue of FirstCuts is available via podcast: www.fwconsulting.podomatic.com. Also, I'm going to be selling a compilation thumb­drive of all past issues in both voice and text formats. If you're interested in purchasing a copy, let me know as I'm planning a discount: http://ReplytoFrancis.info
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