It seemingly comes from nowhere and is one of the most frequent symptoms that lead to firms reaching out for help.
The call usually goes something like this: “We have a leader who has served extraordinarily well in [insert previous significant role]. We recently gave them responsibility in this new area, and it’s not going well.”
The more we talk, the more I find out that “not going well” is an understatement. By this point, the issue has frequently bled through from the leader’s performance to employee engagement and customer impact. It also often leads to negative financial impacts on the firm as a whole.
Before they reach out for help, I usually hear that the firm has tried a course of traditional executive coaching that has not moved them in the right direction.
And on top of it all? The subject matter expertise of this leader is critical to the firm.
It’s Easiest to See in Sports
How does a great firm get here? I find it easiest to explain using an analogy from competitive sports – specifically, basketball and football, where we’ve seen many dynasty teams over the years. For example, think about the Chicago Bulls, who won 6 world basketball championships in 8 years in the 1990’s and the Pittsburgh Steelers who won 4 Super Bowls in 6 years in the 1970’s. Each of these journeys was marked by significant executive leadership (Chuck Noll for the Steelers and Phil Jackson for the Bulls).
Commercial firms have these runs, too. Think of General Electric (under Welch) and Hewlett Packard (under Bill and Dave), for example.
The bottom line? Mastery in an era does not mean you’ll be able to master a new domain when the game shifts.
What is the Cost?
Every great run eventually comes to an end – and usually in a way that’s not at all pretty (links here, here and here). If you study these cases and others carefully, you’ll find those leaders that led through the dynasty also guided the organization into the downturn.
And in each of the above business and sports team examples, these organizations fell from the top tier for decades. In the case of the commercial ventures, they lost billions in market cap and slid from the top tier of “must hold” equities.
For the average firm, it means this: It is very easy, with the best of intentions, to move a high-performing leader in the core business to a “challenging new assignment” and have them struggle.
So, that’s interesting for the big guys, but what about for smaller firms? I have been asked to help teams who have seen 20% of their top line impacted by a game-changing move in the market that the team had not identified. This kind of move impacts your client reputation, key employee retention and your credibility with investors.
How Does This Happen?
I have centered on leadership in this article because, in many cases, it’s the first symptom that is identified. The truth is that in many cases we need to go deeper to find out there are several mechanisms at work which subtly combine to anesthetize the organization to the root causes.
If you find yourself in this dilemma, and classic performance improvement is not working, it is highly likely you have the more complex case that involves a shifting of your business case, organizational alignment, and leadership.
Let me offer a few insights to help you unpack the challenge.
When business cases shift, it means the underlying demand for the firm’s products and services has changed. Initially, this will present as a “bad quarter” or perhaps a larger customer that just “doesn’t get it.” This quickly morphs into several bad quarters if not acted on quickly. This is the challenge, as the firm will resist any changes very strongly.
When under pressure, firms revert back to their last successful operation model. Firms develop deep organizational memory for what worked well in the past and will try with all their might to restore that framework. The insidious part of this is that these deep memories are held in the “commons” with their colleagues. This is why leadership is critical.
The challenge is that past success sets the firm up for missing the shift because it is focused on actions, insight, and measurements that worked very, very well in the older model.
This creates strong inertia to “stay the course.”
The organization is aligned to deliver to the previously successful model, and this means that when challenged, everyone works harder and the firm produces more of the same – even faster. This effect creates a numbing of the firm that goes like this: we have measurements that have worked in the past, therefore if we attend to those same actions, even more vigorously, we are going to win.
Similarly, when under pressure, a leader, who has gained deep experience in the firm, goes back to their last successful operation model (pro tip: that’s why it’s so important during executive interviews to deeply explore the last successful model an executive has been part of).
These three layers (business model, org alignment and leadership muscle) create the perfect storm.
And that is precisely why these firms drop from the top tier.
The map has shifted underneath them and they have a very hard time seeing it until the dominant competition has passed them by.
What Does the Work Plan Look Like?
To go to work on complex, layered problems like this, we need to take them apart and work on each piece to find the new alignment of business model, organization and leadership behavior.
Work on any one of these separately from the others, and the system will overcome any temporary benefit you might gain. The system is very resilient and will resist the usual remedies of offsite work, training, and coaching.
The high-level plan is to start with the client and walk back to the firm, noting key shifts that are needed. Once each layer is worked out, then coaching and deployment support allows us to work into the new model and not “snap back” to the older model.
At a high level, it looks something like this:
- Deep-dive diagnostic to detect how the client needs shifted
- Working out the implications to the business model
- Assessing the organizational changes needed
- Assessing the “fit” of leadership skills needed to deliver the new value
A Solution vs. a BandAid
This may all seem like a bit much (and perhaps a bit abstract) when all you thought you needed was some leadership coaching. If there have been no big shifts to the business model, then, by all means, traditional business coaching may be exactly what you need.
However, in this time of transformation (digital, global, services) and massive shifts in client expectation and business model, it is highly likely that there are some larger strategic pressures afoot that are providing the pressure on your previously high-performing leader. By getting at the root cause early, you may well avoid the very painful remedial business restructuring that so many of your peers will need to do.
If you’d like help doing this deeper work, please reach out to me at 847-651-1014 or use this link to put a short call directly on my schedule.
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