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Published: May 28, 2013
 / Summer 2013 / Issue 71

 
 

Captains in Disruption

“While there are many great things about Barclays,” Jenkins says, “the organization had had a cataclysmic experience. As a result, people were prepared to listen. The staff recognized that the environment had fundamentally changed and that we needed to respond. We could no longer focus exclusively on short-term profitability. We needed to think more broadly about the stakeholders we serve. The existential crisis helped me in this regard.”

Jenkins emphasizes the need to involve all stakeholders in asking the right questions and finding the right way forward. In managing the reaction to the LIBOR scandal, he spoke with politicians, the media, consumer groups, and regulators, in addition to bank employees. The day after the new strategy was made public, in February, he hosted a stakeholder breakfast. Some of the comments he heard were not easy to take, but it showed that he was willing to engage. “You have to meet stakeholders with humility, be prepared to listen, and then lay out a clear plan,” he notes. “And be willing to talk to those who do not necessarily agree with you.”

According to Jenkins, the precepts for leading a large company through a highly disruptive crisis are straightforward: Make sure you have a clearly defined objective and a compelling reason for it, develop a viable and credible plan for reaching that objective, and relentlessly and authentically pursue it. So far, so good: The day after the announcement of the new strategy, Barclays’ stock price rose 9 percent.

When planning a response to disruptive events, all chief executives should bear in mind several principles:

1. The CEO is the single most critical player in crafting and carrying out a response. The CEO must take immediate responsibility for the situation and be willing to hold him- or herself accountable for the ultimate success of the company’s response. For example, at Barclays, Jenkins knew he had to personally make clear his lack of tolerance for the kinds of activities that had led to the bank’s problems.

Whether the cause of the disruption is internal or external, foreseeable or entirely unpredictable, it is up to the CEO to set the pace of change. Sometimes it is necessary to short-circuit things; to force action, decisions, and transparency. After the first swift reaction, things may slow down a bit as decision makers deal with the long-term consequences of the disruption, but the company should still retain most of its momentum.

2. It is critical to begin breaking down human inertia. Complacency in the face of change comes naturally to any large organization. The chief executive must explain the situation and describe the new agenda in simple, clear terms. He or she must find simple but compelling messages to show that the old ways of being successful won’t work anymore. The changed nature of the game must be communicated to all stakeholders, both inside and outside the company, in a way that galvanizes this particular culture.

When Stephen Elop became CEO of the Nokia Corporation in 2010, he wrote a note, now famous within the company, in which he likened Nokia’s situation to standing on a blazing oil platform. The company faced not just a fairly new competitor with Apple’s iPhone, but a rapidly rising new product category, the smartphone, which Nokia had not found a way to counter. “We have to go faster, and harder, and more aggressively now than we’ve ever gone before,” he said. Employees, he added, have two choices: Either jump into the water, even if it’s 100 meters deep and freezing cold, or get burned. The note was controversial because some felt it pushed Nokia toward too much change, too quickly—but aggression was its point. It provided a clear statement that the company would be fearless in facing up to its dire competitive situation.

 
 
 
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Resources

  1. Amy Bernstein, “Yossi Sheffi: The Thought Leader Interview,” s+b, Spring 2006: MIT’s leading supply chain expert says business leaders have to figure out how to bounce back from the unthinkable.
  2. Christopher Dann, Matthew Le Merle, and Christopher Pencavel, “The Lesson of Lost Value,” s+b, Winter 2012: A study of companies with shrinking shareholder returns shows that strategic risk—self-induced disruption—is the number one cause.
  3. Ken Favaro, Per-Ola Karlsson, and Gary L. Neilson, “CEO Succession 2011: The New CEO’s First Year,” s+b, Summer 2012: Last year’s study focused on guidance for the incoming captain of the company.
  4. Art Kleiner, “The Discipline of Managing Disruption,” s+b [online only], Mar. 11, 2013: The interview with Clayton M. Christensen where the quotes in this article first appeared.
  5. Gary Neilson and Julie M. Wulf, “How Many Direct Reports?Harvard Business Review, Apr. 1, 2012: During the past 20 years, the CEO’s average span of control has doubled, giving fresh relevance to the question, How much should the chief executive take on?
  6. For more thought leadership on this topic, see the s+b website at: strategy-business.com/strategy_and_leadership.
 
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