In the mid-2000s, when Robert E. Siegel was running the video surveillance division of GE Security, he was worried about getting a jump on the coming shift to digital from analog. He needed to offer a high-end digital video-management system, which would require taking roughly $2.5-million of the $19-million quarterly profit and investing it for the next six quarters on preparing for the future.
His boss told him if he wanted to take that path he would need to come up with an extra $5-million in revenue each quarter to maintain the current profit level. Mr. Siegel replied that if there was an easy way to sell that much extra product they would already be doing so and this was an existential issue demanding dramatic action. The two danced around the issue for about an hour until his boss laid it on the line: "Rob, you're missing the point. In 18 months, you and I will both be in different jobs. And the way for you to get a better new job is to meet your targets this year."
He didn't connect the dots back then but now believes the situation is a prime example of a classic corporate cross-pressure. The top leaders talked about investing for the future but other parts of the company signalled that short-term financial targets were the true priority. "Another thing that I didn't realize at the time was that such cross-pressures were becoming both more common and more intense for all sorts of leaders around the world," he writes in The Systems Leader.
He highlights five key cross pressures leaders must master today:
He co-teaches a course at Stanford University with Jeff Immelt, the former chief executive officer of GE, and together they have developed an approach called systems leadership, a broad, interdisciplinary style that can serve as a third way between the traditional, hierarchical, slow-moving model of the corporate world and the disruptive style of start-ups.
A key element is what they call "operating at intersections," which involves pursuing two or more goals at the same time because you know that succeeding at each of them will deliver powerful synergies that you couldn't get pursuing each goal separately. He points to Align Technology, a global medical technology company, which blended cutting-edge technology - tooth aligners made via digital scanners and 3D printers - with an innovative business model of recruiting dentists to become partners in offering orthodonture to adults. "Align might have succeeded with its new technology alone, or with its new business model alone, but the synergy was more valuable by orders of magnitude," he says.
Today's leader must find synergies at the intersection where short-term results meet long-term innovation, as in the situation he faced at GE and many leaders face in today's tumultuous times with even a CEO's tenure usually quite short. Global strength must find a way to intersect with local expertise, he notes, citing Kering, which owns and manages luxury brands in fashion, leather goods, jewelry, eyewear and beauty products, juggling the local priorities for each in more than 35 counties. Another intersection lies between what your company is already good at and the new ways possible to apply those skills. Leaders must scan the horizon for connections between current competitive advantage and an opportunity to adapt that to a different field, as Samsung did when it took its proficiency in manufacturing semiconductors to pharmaceuticals.
He warns leaders in preparing for the future to be wary of the biases you have developed over your career. He was trained as a business unit operator and that focus on operations might differ from people trained in engineering, accounting, sales or law.
He likes to share with his class a simple equation from Mr. Immelt: Truth = Facts + Context. "Especially during times of great volatility, there can be broad agreement on the facts of what's happening but sharp disagreement about the context. The leader's responsibility is to define and explain context - to separate signal from noise - as situations evolve," Mr. Siegel says.
Financial theory advises that in times of exceptional volatility you should become extra cautious and adopt a "risk off" mindset, finding safe havens. But he encourages you to do the opposite. You need to embrace risk, confronting the source of the challenge rather than passively waiting to see how things play out. That means managing your anxiety - and that of your team.
It's easy to be cynical as he offers yet another new name for modern leadership and a call to bravely meet the future. But he brings it down to a tough question: Would you rehire yourself for your current job? Are you the best person for the role today, rather than when you first got the job? If not, what are you going to do about it?
He notes that crabs, like all crustaceans, periodically need to shed their shells in order to grow, through a process called molting. It's the same for humans. Repeatedly, through our lifetimes, we have to let go of roles and habits that once protected us and made us successful. It will place us in a vulnerable position - perhaps a terrifying position - but that is required to grow and meet the demands of an ever-changing world.
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