As Advertising Week kicks off its 14th edition in New York today, our founder Kathleen discusses one of today’s most talked about leadership topics – transformation – a subject that extends into every facet of modern business.
The latest industry watchword, ‘transformation’ will undoubtedly be on the lips of many during this year’s Advertising Week and yet how many of us are guilty, yet perilous, optimists of confusing fundamental transformation with evolutionary change. Transformation is about true reinvention strategy – not just technology – and is a journey requiring an exceptional level of leadership.
A study from the Yale School of Management highlighted the average lifespan of an S&P company has plummeted from 67 years in the 1920s to 15 years today. The research also highlighted an S&P company is being replaced every two weeks and at this rate 75% of S&P 500 firms will have been replaced by new firms by 2027.
The only constant of this new business paradigm is one of constant flux. Change has always been critical for continued business success, yet this ongoing operational requirement should not be confused with the incredible vision, talent and – to be frank – sheer guts required to deliver true corporate transformation. Considering the success rates of such programmes has lingered around the 30% mark for years, it’s no surprise the demand for transformational leadership has never been more acute.
LEADING THE HERD
Transformer CEOs will be able to divide their organisation’s efforts between operational change and the need for true strategic reinvention. 2017’s need to ‘go digital’ simply represents an operational requirement for the vast majority and therefore should not be confused with genuine transformation. Take for example Amazon’s acquisition of Whole Foods – such a pivot into the grocery world represents a significant change to their retail operations and presents the company with both high risk and reward.
Secondly, the scale of the transformation ask should not be underestimated. These leaders have to delicately balance the innate psychology of the human race and our natural aversion to change. However, we do like to herd and we do like to be led and the most successful leaders will be those who can carefully, yet decisively, take their flock on a journey of reinvention.
Thirdly, the most successful transformational leaders will be able to manage and strategically pursue two separate journeys. Continuing with Amazon, they have created a $1 billion profit centre through their cloud computing business Amazon Web Services which bolsters the profitability of the core retail operations. Success comes from reinvigorating the existing franchise while driving a separate agenda for future growth.
Fourthly, these transformers will be able to create a heightened sense of urgency within their business and drive this across a sustained period of time. Transformations involving the maintenance of one business stream and creation of another can take years to complete and the transformer CEO will successfully manage this transition. Giving transformational leaders the space and time to deliver is critical; for example the reinvention of Verizon/AOL/Yahoo into Oath or WPP’s merger of MEC and Maxus are not simple rebranding exercises – they are fundamental reorganisations of great businesses – the reinvention won’t happen overnight. Yet the requirement for leadership urgency means the typical three year plan has given way to the need to demonstrate tangible change within the first year.
RECOGNISING THE TRANSFORMATIONAL LEADER
Exceptional leaders are a rare breed, exceptional leaders capable of true transformation even more so. This was clearly evidenced in the Lighthouse’s 2017 New World Talent Survey where the very traits deemed desirable for transforming – such as vision, courage and the capacity to connect – were the very same factors most lacking at the top of our industry. Successful transformers will demonstrate an exceptional sense of self, while being rock-solid and unwavering in their beliefs and direction of travel.
Harvard Business Review also highlights that many transformer CEOs who have been appointed by a board tend to be ‘Insider Outsiders’ with less corporate bind. These are individuals who have substantial relevant experience but have retained a critical distance from the core business operation allowing them to identify new paths for growth. To completely reinvent a business, there’s a need to step away from the traditional tried and tested. This lack of direct sector experience is evident in many visionary founders – such as Amazon’s Jeff Bezos and Netflix’s Reed Hastings – leading reinvention with open thinking unshackled from past legacy.
However, this visionary outlook alone is not enough. The transformational leader must also be the organisation’s chief storyteller and the driver of a culture able to deliver against future ambitions. This requires a depth of organisational leadership way beyond some nicely curated values stuck on the wall – ultimately these transformers must live and breathe the business they want to create from the top.
The value of these transformational leaders is fundamentally reflected in their scarcity and we know better than most at the Lighthouse as the search for them is a constant. For organisations lucky enough to have a transformer at the helm, fortune will no doubt favour the brave. For those businesses without, they must be ready for them. The transformer CEO will break some china, they may sacrifice a sacred cow or two – but ultimately their job is to pivot the business into a new world, where risk is high and the rewards even higher. Those that break the norm will be those who truly succeed.
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