COMMUNITY UPDATE

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The financial crisis has brought with it a more constrained business environment. Costs have been cut, theoretically making organisations more efficient. However, there are continued risks from, for example, suppliers that are under strain themselves and the presence of unmotivated, uneasy staff that may be looking for greener pastures (that may or may not exist).

Criticaleye, in association with American Express, spoke to business leaders about the changing environment in which organisations are having to function and the leadership style needed to navigate these waters. Specifically we asked them if they believe that anything has changed and, if so, will the ‘new’ environment be here to stay. Essentially we posed the question: is there a ‘new normal’?

The series of films ‘Living the New Normal’ offers extensive interviews with Andreas Berger, Pascal Colombani, Marc Engel, Ian Stewart and Patrick Thomas. The films can be found on the Criticaleye TV page.

The following offers a selection of answers from the films:

Has the downturn impacted your leadership style?

Patrick Thomas, Chairman & CEO at Bayer MaterialScience AG says: “It means that I have to be prepared to learn much faster than ever before. You have to be much more flexible, much more adaptable and much more willing to listen and learn. I now do a lot of talking about how people deliver rather than just what they deliver.

“I think what that means for leadership is that leaders must be much more open and honest in giving very immediate and direct feedback. I think that’s probably the most important thing. You can do a lot of listening and you can do a lot of understanding but, at the end of the day, if people are not going to embrace the nature of the change that is happening then they become obstructers in the organisation.

“Confronting the resisters becomes a real theme in terms of how leadership is so necessary now and what I mean by that is that leaders must confront those behaviours that are preventing people from embracing change.”

How has the downturn changed the way organisations develop their people?

Andreas Berger, CEO, London Regional Unit at Allianz Global Corporate & Specialty says: “The economic downturn shows a problem that was an underlying issue for quite some time. I believe the insurance industry, for example, has not paid enough attention to talent management for almost ten years. How does that translate into what we see in our real life? We see a lack of skills and experience in certain fields of the business.

“We obviously need to invest into those areas, but the next component that we have to look at is the demographical aspect of it, so talent management was definitely underrepresented on the agenda of senior management and now suddenly it’s becoming the flavour of the year.

“The attractiveness of employers is becoming more important so we, at Allianz, realise, particularly in times of economic uncertainty, that the importance of a strong brand and of a healthy organisation and the permanent health check of an organisation are key drivers for how attractive an employer is.”

Is a particular organisational structure better suited to a negative market than a positive one?

Ian Stewart, CEO, UK & Germany at Veolia Water Solutions & Technologies says: “I think that the recent economic climate has reinforced my view about what constitutes a successful organisational structure and business model. In this environment, flexibility, responsiveness and speed of motion are particularly important. For me, confederations of senior people with some flexibility, the classic pushing the decision-making down, is the way to be agile in this current climate.

“The old command and control style no longer works. I like to make the analogy for this with hunting herds of buffalo in the old Wild West - once the head buffalo had been shot, the rest of the herd didn’t know what to do. I prefer the model that geese employ when flying south - it’s impossible for them to make it on their own because of the wing shadow: they must take it in turns to take the lead. That is the model of the future.

“Now, am I saying everybody is going to get a turn of having my job? Probably not, but actually it’s about who’s taking the lead in any given situation. And I think these kinds of concepts are going to become increasingly important.”

Has the downturn changed that way that companies deal with suppliers?

Marc Engel, Chief Procurement Officer at Unilever says: “The big plus for us is that there have not been major volume drops that would harm the relationship. We have a very long standing relationship with suppliers in Unilever; it's a bit like a marriage, you have the good times and the bad times allowed us to have very tough discussions with suppliers around sharing the pain.

“I think executives have used the downturn as a burning platform with suppliers to drive through changes, and so have we - it’s been a tough journey.”

When is the right time to look to grow again?

Patrick says: “We are seeing very strong growth at the moment. We are back to pre-crisis levels and, interestingly, it’s in very different places to where it was before the crisis.

“I always look at our business like a three horse race. We have three major territories in the world - the German economies (Germany, Austria and Switzerland) as one major base. Second is the USA, which was roughly the same size as the former and the third is Greater China, which used to be by far the smallest in terms of size for us. Post-crisis, all three are the same size – and this is due to a disproportionate growth in China.

“Now, what does that mean in terms of growth? If you go back to the quarter pre-crisis, then compare it to the third and fourth quarters in 2008, Europe is about 5 per cent behind, the US is still about 10 per cent behind and Asia is about 35 per cent ahead. So, that’s the nature of the redistribution of economic growth around the world.”

Did innovation cease? When should it start again?

Pascal Colombani, Chairman of Valeo says: “I think innovation should never stop. It may have in some areas, but in the areas that I am involved with, we never stopped thinking about innovation and how to develop innovative products and services.

“It’s a key for success when growth comes back and, in any case, it’s a key for competition versus new entrants in your markets and these new entrants actually are not only the ‘usual suspect’ competitors. They are the new competitors that you see coming especially from Asia (at least in the areas that I know well: energy, automotive and so on).

“These are also countries that support and develop innovation. There are some companies that have never felt the crisis and there are those that have felt it very deeply. If you look at China and India, they have barely slowed down and those would of course be the markets of tomorrow. This is where we have to be competitive when the growth comes back.”

For more answers to these questions please go to the Criticaleye TV page.

Please get in touch if you have any comments about the issues in today's update.

I hope to see you soon,

Matthew