We all no doubt have our favourite leader whether that be a historical character- Wellington; from politics-Mandela; from the caring services-Florence Nightingale; from sport-Alex Ferguson; etc. Getting behind the perception of any particular leader, particularly in today’s media dominated environment is quite difficult, and one wonders whether the characteristics, traits and behaviours of successful leaders have changed over time, or is there something timeless about leadership that we would do well to learn? After all the business world spends a lot of time debating the leadership question and investing in leaders and there is more and more evidence that investing in leadership development gives a return on business performance-see below as well.

Importantly leaders arise at all levels in a business, each making a leadership contribution aligned with the goals and objectives of the organisation. However how do those in a position of power and responsibility for leadership development such as CEO’s, senior leaders and HR professionals see the leadership challenge today?

A recent research report conducted by the Conference Board and published under ‘DNA of Leaders. Leadership Development Secrets’ by Rebecca Ray and David Learmond’ published in 2013 sheds some light on this question. The authors examine some interesting aspects of leadership detailed by engaging with seventeen global companies (including Siemens, BASF, Caterpillar, etc.)

Does Leadership Matter?

Few would argue that the leadership of organisations is not important. There is now clear evidence detailed in the above report that CEO’s of companies that have enduring and sustainable approaches to leadership, rank the ‘Development of Human Capital’ as their most important issue to manage, and that within that over-arching statement, leadership development figures very highly.

Interestingly, the authors also highlight from a variety of sources that the quality of leadership directly impacts company performance. This point brings the question of leadership and leadership development centre stage and is therefore of prime importance in any organisation.

Leadership Values

The global companies that participated in the report have consistently and sustainably invested in leadership development for the long term, and by engaging with Human Capital and Business-Line Executives the authors were able to distil out the underlying features of leadership development and values.
Some findings were:

• A global mind set is the critical attribute for global leaders to embrace the diversity of opportunities available
• Regional differences still matter despite globalisation and a sensitivity and willingness to adjust to these is important
• The operating model for leaders evolves to a ‘freedom in a framework’ rather than a direction from HQ
• Leadership development programmes and processes have been significantly simplified and streamlined to better meet needs
• Clear focus on providing support at significant leadership transitions
• A shift away from relying on standardised ‘off the shelf’ development initiatives towards customised and experiential initiatives
• ‘Leaders as Teachers’ – recognition that senior leader should play a key role in mentoring coaching and promulgating key values to the business

Twenty three leadership values were found to be part of the leadership development programmes in these companies:

Leadership Value

1. VISIONARY – Clarity and consistency about the kind of leaders to develop
2. PROCESS ORIENTED – Identify talent early on and develop
3. VALUES DRIVEN – Leadership development underpinned by company core values
4. OPERATIONALLY EXCELLENT- Relentless focus on continual improvement
5. DATA DRIVEN – Use data to determine succession planning
6. COLLABORATIVE – Internal and external collaboration
7. LEADER LED – Senior leaders own the leadership process
8. INTEGRATED – Embed and align leadership development
9. GLOBALLY FOCUSED – Global mind set
10. CROSS-FUNCTIONAL – Develop cross functional capability
11. DIVERSE – Develop diverse talent
12. INTENTIONAL – Activities to develop exposure, education, and experience
13. FUTURE FOCUSED – Relentless focus on the future
14. MOBILE – Exposure of leaders to different cultures and environments
15. ACTION ORIENTED – Use of customised rotations and action learning
16. FLEXIBLE – Customised approach to leadership development
17. ADAPTIVE – Adaptation of best practice
18. HOLISTIC – Link leadership development to business strategy
19. BIG – Scale useful to rotate leaders through developmental roles
20. MATURE -Try, fail, regroup and relaunch
21. SAVVY – Focus and target
22. BOLD – Willing to take risks
23. HUMBLE – Leadership development is a journey not a destination

 

Further the companies participating in the report recognised that there is a never ending quest to secure the above values in the leadership cadre they are developing.

Leadership Essentials

Learmond has taken this work further combining the above findings with previous findings from the Conference Board report published in late 2010 ‘Go Where There be Dragons. Leadership Essentials for 2020 and Beyond’ by Mitchell and Learmond and suggests that there are six key leadership essentials as shown below.

where developing a:

• Compelling Purpose
• Strong levels of Trust
• Effective Collaboration
• Embracing Diversity
• Distinctive Edge
• Resilience

become essential activities for leaders to operate successfully in an increasingly volatile, uncertain, changing and ambiguous world.

Consequences for Leaders and those responsible for Leadership Development

Development of leaders and leadership capabilities is important to the future success and performance of any organisation. It is now clear what leadership values some of the best in class companies are pursuing. Whilst different weights will be given to these values in any business at a point in time the list of leadership values above provides a useful check for companies to see how these values are being developed in their organisation.

How would your current leaders score against the above values and what steps could you take to bridge that gap in their development?

How Industry Forum can help

Industry Forum have a wealth of experience in assisting organisations in the development of their leaders which can take place either on a one to one, team or group basis. For more details please visit the Industry Forum Executive Coaching and Leadership Development web page.

Further information:

• enquires@if.wearecoal.work
• +44 (0)121 717 6600
• Download Article (pdf)

A major business survey published last year found that employers in the UK are reducing training on teamwork and problem solving and putting more pressure on individuals to work harder. Does this mean that the lean approach has been exhausted and no longer offers a competitive payoff to firms?

Powerful evidence to the contrary has just been published by McKinsey in a 140 page report, The Lean Management Enterprise. This is the third in a series of reports about how much lean transformation can achieve when it unleashes the potential of each individual, reinforcing management skills and unlocking employees’ problem-solving capabilities.

This general approach is termed “lean management.” Lean may start as a small, isolated success story but it can reach the entire enterprise, including functions that had hitherto seemed too difficult to transform, such as IT, product development, finance, marketing and sales, and communications. McKinsey suggest that the ability to develop lean management has the potential to be a differentiator between manufacturing firms in advanced economies and those in emerging economies.

There is a tendency to see lean as an approach which primarily pays off in manufacturing. McKinsey, on the other hand, have found that lean management has underpinned successful service organisations as well. For at least the last two decades productivity growth in manufacturing in the UK has been well ahead of the service sector. The more that value adding approaches can be spread throughout the service sector, the faster the productivity of the UK economy will recover from the dip that started in 2008.

Four disciplines make up lean management:

1. Delivering value efficiently to the customer
2. Enabling people to lead and contribute to their fullest potential
3. Discovering better ways of working
4. Connecting strategy, goals and meaningful purpose

Each of these is supported by a set of tools and techniques that shape day-to-day work for both managers and frontline employees throughout the organisation. By adapting and implementing the tools it is possible to introduce performance targets for transparent results, redesign processes to be more efficient from end to end and build organisational structures that encourage cooperation and capability building.

A related piece of evidence in favour of this kind of transformation comes from the private equity (PE) industry. PE investors came out of the recession with a renewed focus on organic revenue growth, applying a more entrepreneurial mindset to working with their portfolio companies. Building organisational value within their portfolio companies has meant putting the right top management into each company plus ensuring that the new team follows a strategy of increased operational excellence.

Private Equity International run a set of annual Operational Excellence Awards. In 2013 the winner of the Large Cap Award was Terra Firm Capital Partners and its involvement with Deutsche Annington (DAIG) which is now the largest privately owned residential landlord in Germany, housing around half a million customers.

Terra Firma Capital Partners started the project in 2001 when DAIG was a set of 10 German Federal Rail housing portfolios with a disparate collection of real estate assets – comprising 64,000 units. The first step was to intergrate the various IT systems and create a pan-German customer care centre. DAIG then sought to grow its asset base through acquisitions. In 2005, the company secured another 138,000 further properties by buying Viterra, and in 2009 it added another 4,500 through the acquisition of Prima.

This scale of operation allowed the firm to bring the caretaking and facilities management functions in-house, by hiring 370 facility managers across its sites, and set up two joint ventures with local services provider B&O. In 2012, 200,000 small repairs were completed and almost 4,500 vacant flats refurbished. DAIG also targeted greater energy efficiency – via extra insulation, window replacement and new heating systems, which reduced the company’s carbon footprint and its tenants’ energy bills.

Effort also went into making apartments more habitable for the elderly, through improvements to building infrastructure, such as adding elevators, as well as installing more accessible showers. Other initiatives were intended to make apartments more attractive to all tenants, like installing balconies to let in more light or partnering with Deutsche Telekom to equip flats with fibre optic technology.

DAIG teamed up with the German Foreigner Association to offer free German language courses, designed to provide tenants and non-tenants with basic language skills. While DAIG is primarily a housing company it invested heavily in developing additional services to provide value to customers.
“Terra Firma clearly did a lot of work here in professionalising what had previously been a quasi-state organisation,” said PEI Award judge David Currie. “They made some acquisitions along the way, but they also did quite a lot of work on improving management and the company’s service to clients.”

In July 2013 DAIG made its public market debut on the Frankfurt stock market floating 15.5 percent of its shares and raising €575 million in the process.

This case clearly shows that lean management and operational excellence are virtually identical. A third term which can add to confusion is High Performance Working (HPW), an approach which is advocated by the UK Commission on Employment and Skills.

An important part of accelerating the spread of lean thinking across the enterprise is to bring the HR department into the project as a partner in the early stages. It is almost always a mistake to start taking decisions that involve employees without getting HR involved. HPW effectively sets an agenda for HR involvement in this way.

For example, before launching a lean-management transformation, the enterprise must establish a central team to plan and coordinate the transformation and provide oversight for working-level change teams who will guide business and functional areas through the transformation. These teams will need top talent, both to meet the managerial demands inherent in a transformation, and to underscore the priority that leaders are giving to the transformation. High performing staff are always in demand across an organisation and HR usually has valuable experience in identifying the relevant staff and managing the conflicting claims for their deployment.

Pursuing operational excellence often means creating new roles and changing old ones significantly as the organisation breaks down internal walls and redesigns its operating patterns. This redeployment of both managers and employees will require extensive HR collaboration. The new way is likely to involve a new emphasis on coaching and feedback and these are skills that are probably best understood by some HR staff who will be major assets in spreading them across the organisation.

The required changes in leadership, team structure, and performance management can be deeply stressful for frontline employees and middle managers. HR’s expertise will be crucial in communicating the transformation, monitoring employee reactions to it and addressing concerns that will inevitably arise. The work on this must start at the earliest stages of a transformation, one through the development of a communications plan. Such plan has to be tailored to employee sensitivities and to contractual and statutory requirements, areas that HR professionals understand well.

Sustaining the lean-management knowledge base and transmitting the mind-sets to current and future workers will depend on HR’s talent systems for recruiting, training, people development, and compensation. Major adjustment to these systems may be needed as part of the progress towards operational excellence and if these adjustments are to achieve the desired results HR must be fully involved from the start in the redesign and roll-out.

Industry Forum has extensive experience of the design and implementation of cross organisational transformation and is always available to companies who want to take the next step to advise and help execute the changes needed.

Further information:

• enquires@if.wearecoal.work
• +44 (0)121 717 6600
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In 2014 the global aerospace manufacturing market is expected to maintain the overall 5% growth rate that has been seen in 2012 and 2013. The growth will be driven by the continued expansion of the civil aviation sector while the military sector is expected to continue its contraction.

Boeing forecast a long-term demand in global civil aviation for 35,280 new aeroplanes between 2013 and 2032, valued at $4.8 trillion. 14,350 of these new aeroplanes will replace older, less efficient aeroplanes.  The remaining 20,930 aeroplanes will be for fleet growth, stimulating expansion in emerging markets and innovative airline business models. Approximately 24,670 aeroplanes (70 percent of new deliveries) will be single-aisle aeroplanes, reflecting growth in emerging markets such as China, and the continued expansion of low-cost carriers throughout the world. Widebody share will also increase, from 23 percent of today’s fleet to 24 percent in 2032.

With these growth rates there is a possibility that a new major manufacturer may enter the civil aviation market based in one of the emerging economies. The anticipated rate of expansion in civil aviation will pose significant challenges for the supply chain across the global economy including in the UK.

In 2014 the recent rate of revenue contraction for defence contractors of around 2% p.a. may well be sustained.  European defence equipment manufacturers face particular problems – McKinsey has estimated that European governments could save over 30% by joint procurement of equipment and services.  Defence programmes have become extraordinarily expensive and affordability has become a major issue.  Next generation technologies must be developed and maintained in service at a much lower cost than hitherto.   According to Deloittes, the UK industry has utilised two major business model innovations to help fund new requirements in this challenging environment – public private financing initiatives and performance based logistics – which are making acquisitions more affordable.

Some defence companies have also been anticipating defence budget cuts by reducing staff, cutting overhead costs, and getting lean. Automation is being used to reduce labour costs. Digital product development and computer aided design are creating significant efficiencies in product development.  Lean manufacturing and Six Sigma have cut waste in the production process. Such initiatives will almost certainly accelerate in 2014 as companies in the defence sector seek to maintain margins and profitability.

The UK has the second largest aerospace industry in the world but faces fierce competition from across the world.  In a government/industry collaboration which started in 2013, 100 bursaries have been awarded to employees and graduates to study Masters level degrees in aerospace engineering to help the sector develop the high-level skills needed to compete globally.  Industry and government have each committed £3 million over three years to help recruit 500 talented people who want to build careers in aerospace, but need financial backing to study at Masters level.  The Royal Academy of Engineering and The Royal Aeronautical Society are overseeing the programme.

One aim of this initiative is that a more diverse range of people should reach Chartered Engineer status and to work in the aerospace sector. The scheme supports the up-skilling of current aerospace employees already qualified to graduate level, and BSc students currently studying at university. They will be encouraged to make direct links with aerospace businesses to undertake projects to address the challenges faced by industry and secure opportunities for work experience and future employment. The sponsor companies are BAE Systems, Bombardier Aerospace, EADS/Airbus, Finmeccanica UK, GKN, MBDA Missile Systems, Messier-Bugatti-Dowty, Rolls-Royce and Spirit AeroSystems.

The Headquarters of a new Aerospace Technology Institute (ATI) based at Cranfield Technology is now operational, with a core team of around thirty who are setting the strategy for the ATI-funded research and technology programmes to be carried out across the country by industrial and academic partners. These programmes will be jointly funded with £2 billion over seven years from government and industry to develop the technologies required for the next generation of aircraft.

The ATI will provide better alignment between early research supported by the Engineering and Physical Sciences Research Council and cross-sectoral R&D innovation delivered through the Technology Strategy Board. Larger scale projects are being delivered through the Technology Strategy Board by collaborative groups from industry and academia and some projects will be carried out in the High Value Manufacturing Catapult centres.

Sharing in Growth (SIG) is another ambitious programme to raise the capability of UK Aerospace and Civil Nuclear suppliers so they can share in the anticipated growth of global markets and win business in other associated high value manufacturing sectors. The programme provides concentrated training and development aimed at driving up competitive capability to tackle barriers to growth, boost exports and grow the number of high value jobs in the UK.  Finance is provided via the Regional Growth Fund. Companies will receive a four-year programme of business development and training  tailored to the specific needs of their business. This includes shopfloor manufacturing improvement, process improvement, leadership development and specific nuclear sector knowledge. Participating companies need to commit resources of a matching value.

Within the SIG programme SMMT Industry Forum’s expertise and experience in supply chain development has secured the prestigious position of ‘First Provider’ for Supplier Development Leaders and ‘Sole Provider’ for employee engagement in Business Improvement Techniques.  The SIG programme is sponsored by Rolls-Royce plc and there are a number of other providers in addition to SMMT Industry Forum.

In co-operation with the other selected delivery partners, SMMT Industry Forum will be involved in programmes with up to 55 UK suppliers. In each programme SMMT Industry Forum will support them through in improving their competitiveness via a structured programme with three main stages:

1. Engage – A comprehensive business diagnostic leading to a robust 4 year business case.

2. Develop – Tailored, high intensity training for Management and Staff including:

• Leadership
• Business Improvement Techniques
• Lean production
• Modern manufacturing
• Sub-tier management
• Cost management

3. Sustain – Ongoing support to ensure that the business case is realised and improvements sustained.

A range of effective programmes will be needed if the UK is to maintain its leading position in the aerospace sector. Several emerging economies are funding ambitious programmes through organisations such as the Indian Space Research Organisation, RKA in Russia , SUPARCO in Pakistan,  the Iranian Space Agency and the Korea Aerospace Research Institute .

China is the world’s second largest national air travel market and around 200 new passenger jets are bought every year, about one-eighth the world’s total demand. This constitutes a huge domestic market for an emerging civil aviation manufacturing sector to build on.  The A320 final assembly line in Tianjin began operations during September 2008 as a joint venture between Airbus and a Chinese consortium of Tianjin Free Trade Zone (TJFTZ) and China Aviation Industry Corporation (AVIC).  It has delivered more than 125 aircraft as of mid-2013.  AVIC  has  a high-level research network including 33 research institutes.

In a discussion paper published by the Royal Aeronautical Society in 2013, the head of research, Professor Keith Hayward concluded that China has several important deficiencies in key aerospace technologies which are major impediments in mounting a global challenge in the civil sector although these might be mitigated through collaboration.  Haywood suggests that some Western companies may also be reluctant to invest so heavily in China in case of unleashing a competitor.

Nonetheless, building up the aerospace sector remains a major goal for China and several Chinese firms in various sectors have a strong record in absorbing and applying technologies developed elsewhere to become global majors. The strategic programmes being developed in the UK represent a sensible investment in the face of this and other potential competitive threats.

Further information:

• enquires@if.wearecoal.work
• +44 (0)121 717 6600
• Download Article (pdf)