Of all the lateral relationships that need to operate successfully, those within the executive team are the most critical. When they work well, the top team is a powerful force for change. When the top team is dysfunctional, the whole organisation can be paralysed. Further, in these days of fast-growing businesses, and constant mergers and acquisitions, the power dynamics in the top team often need to change. How can we manage the inevitable power battles that ensue so that synergy is achieved across the business? Gary Ashton investigates.

Openness and dialogue are often cited as prerequisites for an effective team, but how often is this the case, particularly in the top team? ¹

Occasionally we are called in to work with top teams that are operating in a dysfunctional manner. Often our initial observation is that frustration, followed by ineffectiveness originate from a mismatch of unvoiced expectations, fueled by the non-communication between board members. This is perhaps not surprising: most directors achieve board status through leading a specific function or business; and being a good team player does not necessarily come naturally to these leaders.

These team leaders can be helped to work together synergistically, but we have found that the first step is to take into account the different life stages of the organisation. In our work, we strive towards creating a balance of different capabilities of the team, and relating this to the particular life stage at which the organisation finds itself. In so doing, we also aim to build in the capacity for changing this balance when necessary, as an organisation inevitably moves on from one stage to another – a capacity which is crucial in the constantly changing business environment.

So building team effectiveness requires an awareness of these different stages, and what will be required of the MD–team relationship. So let’s have a look at these different life stages.

Maintaining a positive dynamic and balance through the different organisational life stages

As a business grows, the capabilities of the executive board that made the organisation so successful in the first place can become redundant and need to adapt. Because of the nature of the change process, this adaptation takes place as a step change, rather than in a smooth continuous manner (see Figure 1). During this step change, a phase of potential turmoil can arise. The trick is to minimise that turmoil as you cross over to the next stage.

FIGURE 1

 
Adolescent growing pains: the transition from product innovation to market development

In the early phase of a successful organisation’s life, its leader is often portrayed as the entrepreneur, the owner, the action-(wo)man, the autocrat. However, there comes a point when this singular approach no longer is applicable. To achieve the next growth phase, the organisation needs to become more market focused. It is during this transition that growing pains are felt. Here the old patterns of relating and behaving are severely challenged, and significant changes are required.

Mid-life crisis: the transition from market focus to productivity

There comes a point when the business may need to accept that the market is flat or declining, and so needs to refocus its profit–growth efforts through productivity gains and cost control. This requires a shift in decision-making primacy from revenue growth to cost savings, and this may lead to a significant shift in power within the board room. In my experience, this can come as a shock, and often a team can go into denial. For one business I know, this lasted for several months before a takeover bid shook it out of its complacency.

Regeneration: balancing market growth with operational efficiency

Here the business realises that it has the potential to accomplish both vigorous revenue growth whilst also delivering continuous cost savings. Consequently the executive team requires great maturity to manage the tension that this creates. The art of managing trade-offs, which requires great vision and subtlety, becomes of particular importance.

These transitions are all very easy to write about, but in practice they can be painful, requiring an enormous shift in the power balances within the executive team. This means both an emotional and structural shift in the patterns of relating to each other. An objective awareness of what is happening, which can only really be provided by an outside agent is invaluable at these moments.

The business context is ever-changing, and as businesses move through their life stages, the top team needs constantly to adapt its power balance and behaviours. The route to success of yesterday can potentially mean failure tomorrow. An explicit developmental programme, can build in this capacity to change at both an emotional and structural level. Whilst this can be a painful experience, it is this capacity to change that will bear fruit on the bottom line, both now and in the future.

CASE STUDY 1 - Adolescent growing pains

A retailer had grown fast, building on its distinctive product proposition in the marketplace. The MD had been the driving force, having direct control over all aspects of the business. Over a period of two years however, the business was undergoing growth pains, as it acquired businesses in adjacent markets. The MD could no longer maintain the same degree of control of the business; he was becoming a constraining factor on its future growth and success. The skills needed now were moving from the reactive and intuitive, to requiring a more considered understanding and proactive development of their markets.

To build up this capability, a bigger board was built to oversee the business. However the MD’s management style did not change, with his natural inclination for making all decisions, and dealing with his senior team on a one-to-one basis. ER Consultants worked with its top team to restructure the accountabilities and devolve the decision-making authorities. This went hand-in-hand with building a new management style for the business through coaching and board development. During this change, the atmosphere was one of pent-up frustration. This required diplomatic and objective management of the transition to a better balance of accountability and inter-personal behaviour.

CASE STUDY 3 - Regeneration through globalisation

As the global marketplace had created intense pressures to reduce development time and costs, this hi-tech company had been driven to become a truely global organisation.

All of this meant the top team of its product development division needed to completely change its mindset and behaviour. Ironically however, as the MD demanded ever more change, the business had been spiraling into a vicious circle of nondelivery (see Figure 2).

ER Consultants worked with the MD to create and develop a smaller top team, and then to change their mindset to working in the new world requiring faster decision making and shifting their primary focus on quality to also taking on board the new pressures of cost and speed to market.

Through getting them to work on business dilemmas together and experience how it might feel to work in this new way, they began to understand that old rules needed to be broken, and a fresh start was needed in leading the business in this new global world.

FIGURE 2

CASE STUDY 2 - Regeneration – focus versus integration

Following an acquisition, this newly formed manufacturing group had to deliver synergies, as expected by the City. ER Consultants assisted in setting up a new management framework, that pushed the power into the hands of the brands. The tension they had to manage was the need to maintain absolute focus on both of these businesses and their brands, that had distinct differences, whilst delivering synergies. Whilst working on the more transactional business processes, we recognised that the middle management was prevented from living the new framework owing to the fact that the critical performance management goals of the operating company MDs and their top teams had remained unchanged. There was still an operating company focus which meant that synergy was lost. It was only through challenging the group board on its non-delivery of its strategy that a re-evaluation of its goals took place.

¹ Higgs,D (2003) Independent Review of Non-Executive Directors, Chapter 8, p.33, DTI. www.dti.gov.uk/cld/non_exec_review

For further information, please contact Gary Ashton:
T 44(0) 1223 31594
E gary.ashton@erconsultants.co.uk