Description
The company has been expanding its portfolio beyond iron ore into nickel, copper and coal, and has acquired assets in Australia, Canada and China to bolster its competitive position. In late 2007, Vale's CEO, Roger Agnelli, announced that the company planned to invest $11 billion in 2008 in projects to increase its output of iron ore and other metals. One of the reasons: demand in China, where imports of iron ore were up 17 percent last year.
1
Outlook 2008
Number 3
The journal of
high-performance business
This article originally appeared
in the September 2008 issue of
Talent & Organization Performance
Leading and managing change
in a multi-polar world
By Peter Cheese, Walter G. Gossage and Yaarit Silverstone
Today’s global business environment requires bold new programs to
drive high performance along three dimensions: change management,
leadership and culture.
How do senior executives effectively execute
their company’s global business strategy at a
time when all the familiar assumptions about
economic power—all the preconceived notions
about how value flows in a global economy—
are changing before their very eyes?
Here’s just one example of how very differ-
ent today’s business world is from the one
where a few industrialized powers called all
the shots.
Vale (formerly Companhia Vale do Rio
Doce), headquartered in Brazil, is the world’s
largest producer of iron ore. Brazil has tradi-
tionally been referred to as a “developing
country,” but five of the 70 emerging-market
companies in the Fortune Global 500 are
headquartered there.
The company has been expanding its portfolio
beyond iron ore into nickel, copper and coal,
and has acquired assets in Australia, Canada
and China to bolster its competitive position.
In late 2007, Vale’s CEO, Roger Agnelli,
announced that the company planned to invest
$11 billion in 2008 in projects to increase its
output of iron ore and other metals. One of the
reasons: demand in China, where imports of
iron ore were up 17 percent last year.
The stunning emergence of a developing market
multinational like Vale is possible only in a
multi-polar world—one in which the flow of
innovation, talent and capital is truly global
and no respecter of political boundaries. It’s
a world with astounding possibilities, to be
sure, but astounding risks and pitfalls as well.
Executive leadership will be challenged more
than ever to manage the elements
of organizational change now that
companies can reach further, bring
together more people and cultures,
and serve more customers at almost
every point of the compass.
The key programs needed to help an
organization operate effectively in
a multi-polar world all sound familiar,
even generic: change management,
leadership development, cultural trans-
formation. Yet the very familiarity
of these interventions may mask the
profound differences of operating in
this new global environment.
Change strategies, for example,
must be developed in a manner that
acknowledges the new value flows
of a multi-polar world. Leadership
transformation must focus on more
layers of management and different
leadership behaviors. Cultural
change programs must balance the
desire for global commonality with
local relevance and authenticity.
Here are some examples of how
today’s change leaders are driving
high performance in new ways along
the three dimensions of change
management, leadership and culture.
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Number 3
In a global environment,
managers can seldom
simply walk down the
hall and steer every
node of their far-flung
organizations in person.
The ability to execute a visionary
global acquisition and operating
strategy, particularly when a com-
pany grows so large so quickly,
depends on how well you manage
the elements of organizational
change. The head of corporate risk
management for one emerging mar-
ket multinational puts it this way:
“One of our greatest challenges is
maintaining clear accountability
for processes in the face of rapid
change. When we acquire new busi-
nesses, whose processes are going
to be adopted where? Are we going
to decentralize, or should we con-
solidate some regions?” These are
critical decisions to generating the
value from new acquisitions, says
this executive, and they require
“strong, concerted effort in terms
of managing the change and then
putting in place the governance
structures that support a new way
of doing business.”
Even the most successful methods and
frameworks, those that have histori-
cally been used to manage and enable
change, are proving to be inadequate
when dealing with the size, scale and
complexities of global, cross-cultural,
cross-generational change.
Based on our experience, companies
that succeed in this new world will
master new kinds of change manage-
ment disciplines—starting with being
able to define an appropriate change
strategy. Next they will introduce the
practices that most effectively enable
the necessary changes. Finally, they
will embed these capabilities within
the business to successfully manage
change on an ongoing basis.
New change strategies
An effective change strategy must
consider a much wider range of
implications in a multi-polar world.
One increasingly important element is
managing talent in a global environ-
ment, where the lines of communica-
tion and control are more and more
thinly stretched. Effective change
strategies must focus on cultural,
operational and legal dimensions.
From a cultural perspective, execu-
tive leadership must develop commu-
nication strategies and reporting
structures that take into account the
often different presumptions and
norms of the company’s various
organizational groups, nationalities
and levels of seniority. Like the lines
of communication, the spans of con-
1. Managing and enabling change
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Number 3
Source: Based on Edgar H. Schein’s model in Organizational Culture and Leadership, San Francisco: John Wiley & Sons Inc., 2004.
Culture shock
As companies in a multi-polar world increasingly bring together people from different organizations, nationalities
and regions, leaders must proactively work to establish common cultural ground. Effective culture change requires
interventions designed to influence structures, values and behaviors—as well as people's underlying and unconscious
assumptions, which can be extremely resistant to change.
Observable and manageable
• Structures
• Processes
• Strategies
• Leadership values
• Metrics
• Behaviors
Hidden and hard to influence
• Unwritten rules
• Beliefs and feelings
• Collective memory
Structures
Processes, tools,
organization designs
Espoused
organizational values
Strategies, goals, measurements, rewards
Underlying assumptions
Unconscious beliefs, perceptions, thoughts, feelings
Behaviors
Observable actions of groups and individuals
Easiest
Most
difficult
Ability to
influence
trol and influence in a global, often
virtual organization are more thinly
stretched than ever before.
Companies cannot succeed in a
multi-polar world simply by having
management push change to the rest
of the organization. Employees must
truly believe in the change and want
to work in new ways. They must
experience the connection between
their personal success and the success
of the entire organization.
Managers face major operational
challenges in a global environment in
which they can seldom simply walk
down the hall and steer every node
of their far-flung organizations in
person, or take a quick temperature
check of how a team working under
a stressful deadline is performing.
More and more communications and
business processes must take place
through virtual structures—teleconfer-
ences, e-mails, videoconferencing,
electronic workflows and the like.
These new ways of working must be
explicitly detailed and incorporated
into management processes and struc-
tures, and in the ways work is moved
around, checked and handed off (see
“A bold new look for global sourcing,”
Outlook, September 2007).
From a legal perspective, a crazy
quilt of regulatory guidelines must
be attended to as well. The failure
to plan for different national laws
and regulations can undo an other-
wise carefully orchestrated change
program. Some countries, for example,
have restrictions on where an indi-
vidual’s supervisor must reside.
That can be a deal breaker for a
company looking to have a team in
one country reporting to a manager
in another.
Enabling organizational change
“Change enablement” refers to the
specific methods and tactics used to
transform the behaviors of people at
all levels of the organization and
to support those new behaviors so
that an organization does not regress
back to old ways of operating. The
threat of regression is intensified
in a multinational company, since
there are many different nodes of
the organization to be monitored and,
therefore, more potential pockets
of resistance.
Take the case of one global resources
company in the midst of dramatic
change targeted at developing the
organizational capabilities to drive
competitive advantage in a challeng-
ing energy environment. As the
company looks to take maximum
advantage of global talent pools,
its information technology group is
leading the way with a lean, special-
ized, virtual organization charged
with providing enterprise application
support to tens of thousands of the
company’s internal customers.
The company’s IT function intends
to seamlessly deliver service to its
customers through this virtual organi-
zation, leveraging people and skills
across hubs in major locations within
Asia, Africa and the United States.
Helping the company’s IT executives
help everyone else manage the change
was a significant challenge. The com-
pany’s executive in charge of IT service
delivery, who oversaw the creation
of the new organization, began by
constructing a leadership team from
a pool of highly qualified candidates.
She then built the next layer of man-
agers reporting to those leads.
“What I found at that point, however,”
recalls this executive, “is that as
good as these leads were, this chal-
lenge of creating a global, virtual
organization was something they had
never done before. So we then
backed up and asked, ‘What do we
need to do to make this happen?
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% of respondents who said the statement is true
Concern in the C-suite
According to Accenture research, a significant number of C-suite executives have concerns
about culture, leadership and managing change in today’s global business environment.
Source: Accenture research
An inability to attract and retain the best talent is one of the
top five threats to our business success
67%
We are somewhat concerned/very concerned about the
ability to maintain a common corporate culture in today's
global business environment
54
Our workforce has become more global 61
We are somewhat concerned/very concerned about managing
remote staff efficiently in today's global business environment
47
Instability of senior leadership is one of the top 10 threats to
our business success
40
Is this team diverse enough? Does
it have the skills needed?’ ”
Interventions that enable change
in a multi-polar world must be more
sweeping and executed with more pre-
cision than traditional change inter-
ventions. Simplicity and consistency
are key. Interventions must occur
both at a surface level of awareness
and on a deeper, structural level.
Awareness training is certainly
essential, helping leaders and
employees at all levels understand
differences among cultures—their
ways of seeing the world, their values
and preconceptions, and their ways
of communicating. Enablement must
also take place at a structural level,
however, which often requires the
development of new governance
models. Successful change leaders
alter business processes so that
work reflects the new business and
operational reality. They also put
in place elements such as revised
reporting and rewards structures to
ensure that people display the new
kinds of behaviors needed.
Metrics are important to assess the
success of a change program, but
only if one understands that metrics
doesn’t have to mean numbers.
Effective change leaders will look
at behaviors, results and outcomes,
some of which will be reported as
numbers and others through different
kinds of assessments.
Shell, for example, is currently
implementing a new enterprise
information system that affects
some 40,000 employees in about
40 countries. As part of the change
program developed to help these
employees understand and embrace
the changes caused by the new
system, Shell used a diagnostic
assessment of progress made in
different geographies—how employ-
ees in various regions were support-
ing the change and performing in
new ways. The results were made
available in a dashboard report
summary across all geographies and
lines of business to help executives
understand the current situation and
respond quickly.
New organizational designs for a
multi-polar world need to simplify,
as much as possible, the interactions
among business units and geogra-
phies. This is, in a sense, counterin-
tuitive. One might think that a
successful global company, as part
of the decentralizing process, would
have more units and functions.
In fact, companies that take that
approach end up with a complexity
in their reporting and metrics that
they find almost impossible to
manage. In a multi-polar world,
you’re managing not only the units
and businesses but the “white
spaces” between them. The more
you can keep your structures clear
and simple, the better.
Perhaps the key message when it
comes to change enablement is that
companies that are successful in
changing globally have programs
that are both driven from the center
and embedded locally. Companies
that still rely only on local efforts
or, on the other hand, try to force
change only from the center, are
being outperformed.
Developing a change
management capability
Because change in a multi-polar world
is now both more constant and
more far-reaching in its implications,
organizations are likely to find that
the ability to manage change inter-
nally is a critical, ongoing need, and
something essential for all levels of
change initiatives. This also means
that the ability to manage change
must become part of every manager’s
and leader’s skill set.
The global resources company
referred to earlier is a good example
of using one specific change program
as a means of introducing more
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Companies that are
successful in changing
globally have programs
that are both driven
from the center and
embedded locally.
generalized change capabilities
throughout a global organization.
Says the company’s IT executive:
“I really have at least two critical
jobs. The first is running IT delivery
for the company from an opera-
tionally excellent perspective. The
second job is working with my
colleagues to transform IT so the
organization is better able to meet
its future, global challenges. So we
are using this pilot as an incubator
of change for the entire company.”
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Number 3
2. Transforming leadership capabilities
Companies that are successfully
negotiating the journey toward
high performance in a multi-polar
world are doing more than imple-
menting general leadership develop-
ment programs. They are focusing
specifically on two important
elements in the particular kind of
leadership needed for success in
a global environment:
• Alignment of leadership across
functions and geographies toward
the common goals of the global
organization
• Explicit specification of the
leadership behaviors necessary
to implement the vision
Alignment
The need for engaged, committed
and aligned executive leadership
is intensified in a multi-polar
operating environment. As organi-
zations become more geographically
dispersed, they require multiple
teams at the top of the organization
working in concert so that leader-
ship is not weakened or diluted by
being spread too thin. That means
that leadership development pro-
grams, and ultimately the monitor-
ing of leadership effectiveness,
move from a focus on the top 10
or top 50 leaders to perhaps the top
500 or 1,000 or even more in a
large, decentralized organization.
In this operating environment, it
is vital that leadership throughout
the organization is aligned and
in lockstep with the company’s
particular vision for operating in
a multi-polar world. It is also essen-
tial that leaders are committed to
creating connections and synergies
across traditional silos and breaking
down organizational boundaries
and constraints. Effective leadership
today must be a collective phenom-
enon—more than the sum of its
parts—to inspire innovation, ener-
gize an organization and ensure it
operates effectively. The action of
aligned leaders accelerates change
and moves the organization in the
desired direction.
High-performance businesses are
pursuing some innovative ways to
make sure that this alignment moves
beyond rhetoric to reality. At one
major US-based company, for exam-
ple, which is currently diversifying
its portfolio of businesses, senior
executives have taken explicit steps
to ensure alignment of their top
leadership groups across different
functions and boundaries.
The leaders of each of the company’s
eight lines of business, representing
different geographies, were brought
together to redesign the major
processes that crossed the individual
units. This forced them to work
together, to forge new and deeper
kinds of relationships with their peer
groups—communicating, making
trade-offs and coming to compromise
positions—so that a vision for operat-
ing globally was backed up by new
processes to support those operations.
This demonstrated to the organization
a real commitment to teaming that
went beyond rhetoric to something
enacted from the top.
Behaviors
The alignment and collective agree-
ment—from the top team all the way
to frontline management—must also
be apparent to the entire organiza-
tion. And that means that an execu-
tive vision for change must be
backed up by executive behaviors
demonstrating and modeling how
the company operates in a multi-
polar world and how people are
expected to perform. Leaders show
what matters by how they act and
how they use their time. Every
action of a senior corporate leader
becomes symbolic—a daunting fact,
perhaps, but a fact nonetheless.
At Procter & Gamble, for example,
CEO A.G. Lafley has won well-
deserved praise for reenergizing this
consumer products giant by articu-
lating a simpler sense of purpose
and bringing core values into
sharper focus, especially a deep
understanding of the consumer. The
key to P&G’s recent success, Lafley
has noted, is not just communicating
the centrality of the consumer (“The
boss is not P&G,” Lafley has said,
“the boss is the consumer”) but also
demonstrating that commitment and
modeling it from the highest level of
the company on down.
A leader has to show the organization
and its people how to behave in new
ways. This has also been clear in the
way Lafley has extended P&G’s repu-
tation for innovation. Going against
the grain of the company’s culture,
Lafley began insisting on using ideas
and technologies of outside partners
as part of the innovation process.
Overcoming internal resistance to
make that happen, Lafley’s leadership
has driven impressive results: 6 per-
cent organic growth in an industry
that’s growing in general only at 2
percent to 3 percent.
1
Selecting and developing leaders
must also be based on behaviors,
not just seniority. A person can be a
terrific performer and a great leader
in a traditional operating environ-
ment but still lack the specific skills
and behaviors needed in a world
where, for example, innovation
may be most active and fruitful in
previously overlooked developing
nations. Managers must be extremely
comfortable in a less hierarchical
environment, one where command
and control does not flow in only
one direction. They need to be capa-
ble of working across time zones,
national boundaries and cultures.
How does an organization know
who can be effective working in
an environment that is so new that
the star performers—those with the
capabilities to succeed in a multi-
polar world—have not yet risen to
the top?
An approach being pursued by
several companies today is to estab-
lish peer-to-peer leadership evalua-
tion processes. This enables top
management to assess the leader-
ship capabilities of the various unit
heads—specifying openly what their
strengths and weaknesses are from
the perspective of a multi-polar
operating model. In this way, some
of the best minds in the business
can speak together not only to
define what the new environment
might look like but also to consider
which leaders might perform best
in that environment. The key is to
redefine the success criteria—to be
clear about expectations with the
current organization, and then to
build these expectations into devel-
opment and metrics as well as into
the recruiting process.
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Outlook 2008
Number 3
Selecting and devel-
oping leaders must
be based on behaviors
as well as seniority.
1
“A Conversation with Procter & Gamble CEO A.G. Lafley,” by Tony Friscia, April 18, 2008,
AMR Research. www.amrresearch.com
The cultural implications of operat-
ing successfully in the multi-polar
world are profound. Companies
have been global for many years,
of course, so the fact that senior
executives oversee far-flung opera-
tions and business in multiple geo-
graphies is nothing new.
The cultural challenges of a multi-
polar world are nonetheless differ-
ent in at least a couple of ways.
One is the simple pervasiveness of
everyday, anytime interactions
among people from different
national and ethnic backgrounds.
Another is the non-hierarchical
nature of those interactions.
This last issue must be delicately
approached, but it is nonetheless
a reality for many companies: It is
no longer necessarily the case that
management is located in a tradi-
tional developed nation, with some
operations located in low-cost,
emerging nations. A mining com-
pany’s employees in Switzerland
might report to senior executives
in Brazil; the business-unit lead for
a team in London could be located
in Bangalore; a team working at
a development and delivery center
in Topeka, Kansas, might be waiting
for work coming from colleagues
in Warsaw, Poland. (For a related
article, see “M&A: Handle with
care,” Outlook, September 2008.)
Being successful in this new kind
of global environment takes us back
to the behavioral dimensions of
leadership. That is, culture “aware-
ness” is important but will be effec-
tive only to the extent that leaders
serve as exemplars—demonstrating
and modeling new behaviors toward
all cultures and peoples in their
organizations.
In some cases, effectively managing
change in a multi-polar world will
mean creating a new, more common
culture that brings together and har-
monizes characteristics of different
groups. In other cases, subcultures
or nuances of the common culture
can or must continue to exist. A
unified culture can be an ideal, but
it may be unrealistic; trying to force-
fit different peoples together into
a perfectly harmonious whole may
inadvertently alienate the workforce
and undermine the entire change
program. Nevertheless, common
ground can and must be created.
What do effective leaders do to
plan and execute complex cultural
change programs in a multi-polar
world?
First, continuing a general theme
here, when it comes to building
a new culture, it is essential to
focus on behaviors rather than just
attitudes or “sensitivities.” Culture
is more than a concept; culture
change must be converted into
specific behaviors that are defined,
enacted, reinforced and measured.
Second, a related point: Understand
and articulate the cultural compo-
nents that are “above the line” versus
“below the line” (see chart, page 3).
By above the line, we refer to cultural
indicators that can be seen and
experienced: symbols, slogans, ways
of communicating and so on. Those
are explicit levers that an executive
can actually pull. But below-the-line
components are deeper, more sub-
stantive things—values, morals, pre-
conceptions—that cannot be directly
manipulated. A good change leader
is always aware that, ultimately, it’s
the values that must be changed—
but this cannot be accomplished by
direct “assault.”
Finally, put measures in place that
are aligned with the behaviors you
need. If you want people to be more
effective collaborators in a multi-
polar environment, more capable of
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Outlook 2008
Number 3
A good change
leader is always aware
that, ultimately, it’s
the values that must
be changed.
3. Creating the right corporate culture
9
Outlook 2008
Number 3
innovating, then you cannot have
all of your metrics focused solely on
individual performance or on driving
out costs. If you put mutually com-
peting measures in place, be clear
about priorities and trade-offs; if
this doesn’t happen, unintended and
undesired outcomes will surface.
The most effective change leaders
we know have a relative handful
of critical metrics that they look at
on a weekly, monthly or quarterly
basis. They are relentless in tracking
those behaviors, outcomes and
results, and they correct course at
the right times to hit their marks.
Educate, measure, inspire
Several dominant themes emerge
when we look at what’s needed to
successfully manage change in a
multi-polar world, creating the right
leadership behaviors and cultural
mindsets to drive high performance:
educate, measure and inspire.
First, real leaders aren’t good merely
at decision making. In a multi-polar
world, “CEO” also stands for “chief
education officer.” A stumbling
point for many organizations on
a major change journey is that the
top level of management has often
moved on emotionally toward the
new destination before many others
have even started on the journey.
An effective CEO needs to step back
and bring people along, to educate
them, even if doing so is a distrac-
tion, or even boring. The new world
is not one where an executive can
simply say, “Do this.” There is a
critical educational component that
must be exercised first. Leaders
must be both learners and teachers.
Second, effective change leaders put
metrics programs in place to measure
progress—especially in areas, such as
leadership and culture, that are often
perceived to be more art than science.
Yes, leadership effectiveness can be
measured; so can cultural mindsets.
Take a baseline measurement, conduct
frequent reassessments and then be
prepared to correct your course.
Finally, there is an inspirational
component to effective change
leadership. Yet true inspiration
must go beyond mere rhetoric. In
a multi-polar world, inspiration
and charisma are, as our colleague
Bob Thomas, head of the Accenture
Institute for High Performance
Business, has written, really a
matter of what he calls “neoteny”—
the capability of remaining forever
young, and therefore more capable
of riding the changes in store in
a multi-polar world. Every day,
Thomas writes, these kinds of leaders
“wake up and fall in love with the
world all over again.”
2
That’s the kind of leader needed
to successfully navigate change in
a multi-polar world.
2
Warren G. Bennis and Robert J. Thomas, Geeks and Geezers: How Era, Values, and Defining Moments
Shape Leaders (Boston, Massachusetts: Harvard Business School Press, 2002), page 155
Yaarit Silverstone is the managing
director responsible for organization
effectiveness offerings and capabilities
within the Accenture Talent &
Organization Performance service line.
With more than 24 years of experience
in consulting, Ms. Silverstone has
extensive in-depth experience in diag-
nosing complex organizational perfor-
mance issues and designing, implement-
ing and sustaining large-scale journey
management, human capital strategy,
talent management solutions as well as
leadership development programs.
Originally from South Africa, Ms.
Silverstone is based in Atlanta.
[email protected]
Outlook is published by Accenture.
©
2008 Accenture.
All rights reserved.
The views and opinions in this article should
not be viewed as professional advice with
respect to your business.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
The use herein of trademarks that may
be owned by others is not an assertion of
ownership of such trademarks by Accenture
nor intended to imply an association between
Accenture and the lawful owners of such
trademarks.
For more information about Accenture,
please visit www.accenture.com
About the authors
Peter Cheese is the managing director
responsible for the Accenture Talent &
Organization Performance service line,
which focuses on talent management,
the HR function, and organization and
change management. Mr. Cheese, who
has more than 25 years of experience in
consulting, works around the world
with clients in all industry sectors. He
speaks at a wide range of conferences
and events, and is coauthor of The Talent
Powered Organization: Strategies for
Globalization, Talent Management and
High Performance (Kogan Page, 2007).
He was recently named one of
Consulting magazine's “Top 25
Consultants” for 2008. Mr. Cheese is
based in London.
[email protected]
Walter G. Gossage is the executive
director responsible for change man-
agement offerings and capabilities
within the Accenture Talent &
Organization Performance service line.
Over the course of his 21-year career,
Mr. Gossage has focused primarily on
complex, global business transformation
initiatives with clients in the energy,
chemicals, industrial products and con-
sumer products industries. He has
extensive experience in shared-services
design and implementation, post-merg-
er integration, regional and global
enterprise resource planning initiatives,
and performance-driven transformation
of IT and finance groups. Mr. Gossage is
based in Dallas.
[email protected]
doc_720157965.pdf
The company has been expanding its portfolio beyond iron ore into nickel, copper and coal, and has acquired assets in Australia, Canada and China to bolster its competitive position. In late 2007, Vale's CEO, Roger Agnelli, announced that the company planned to invest $11 billion in 2008 in projects to increase its output of iron ore and other metals. One of the reasons: demand in China, where imports of iron ore were up 17 percent last year.
1
Outlook 2008
Number 3
The journal of
high-performance business
This article originally appeared
in the September 2008 issue of
Talent & Organization Performance
Leading and managing change
in a multi-polar world
By Peter Cheese, Walter G. Gossage and Yaarit Silverstone
Today’s global business environment requires bold new programs to
drive high performance along three dimensions: change management,
leadership and culture.
How do senior executives effectively execute
their company’s global business strategy at a
time when all the familiar assumptions about
economic power—all the preconceived notions
about how value flows in a global economy—
are changing before their very eyes?
Here’s just one example of how very differ-
ent today’s business world is from the one
where a few industrialized powers called all
the shots.
Vale (formerly Companhia Vale do Rio
Doce), headquartered in Brazil, is the world’s
largest producer of iron ore. Brazil has tradi-
tionally been referred to as a “developing
country,” but five of the 70 emerging-market
companies in the Fortune Global 500 are
headquartered there.
The company has been expanding its portfolio
beyond iron ore into nickel, copper and coal,
and has acquired assets in Australia, Canada
and China to bolster its competitive position.
In late 2007, Vale’s CEO, Roger Agnelli,
announced that the company planned to invest
$11 billion in 2008 in projects to increase its
output of iron ore and other metals. One of the
reasons: demand in China, where imports of
iron ore were up 17 percent last year.
The stunning emergence of a developing market
multinational like Vale is possible only in a
multi-polar world—one in which the flow of
innovation, talent and capital is truly global
and no respecter of political boundaries. It’s
a world with astounding possibilities, to be
sure, but astounding risks and pitfalls as well.
Executive leadership will be challenged more
than ever to manage the elements
of organizational change now that
companies can reach further, bring
together more people and cultures,
and serve more customers at almost
every point of the compass.
The key programs needed to help an
organization operate effectively in
a multi-polar world all sound familiar,
even generic: change management,
leadership development, cultural trans-
formation. Yet the very familiarity
of these interventions may mask the
profound differences of operating in
this new global environment.
Change strategies, for example,
must be developed in a manner that
acknowledges the new value flows
of a multi-polar world. Leadership
transformation must focus on more
layers of management and different
leadership behaviors. Cultural
change programs must balance the
desire for global commonality with
local relevance and authenticity.
Here are some examples of how
today’s change leaders are driving
high performance in new ways along
the three dimensions of change
management, leadership and culture.
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Number 3
In a global environment,
managers can seldom
simply walk down the
hall and steer every
node of their far-flung
organizations in person.
The ability to execute a visionary
global acquisition and operating
strategy, particularly when a com-
pany grows so large so quickly,
depends on how well you manage
the elements of organizational
change. The head of corporate risk
management for one emerging mar-
ket multinational puts it this way:
“One of our greatest challenges is
maintaining clear accountability
for processes in the face of rapid
change. When we acquire new busi-
nesses, whose processes are going
to be adopted where? Are we going
to decentralize, or should we con-
solidate some regions?” These are
critical decisions to generating the
value from new acquisitions, says
this executive, and they require
“strong, concerted effort in terms
of managing the change and then
putting in place the governance
structures that support a new way
of doing business.”
Even the most successful methods and
frameworks, those that have histori-
cally been used to manage and enable
change, are proving to be inadequate
when dealing with the size, scale and
complexities of global, cross-cultural,
cross-generational change.
Based on our experience, companies
that succeed in this new world will
master new kinds of change manage-
ment disciplines—starting with being
able to define an appropriate change
strategy. Next they will introduce the
practices that most effectively enable
the necessary changes. Finally, they
will embed these capabilities within
the business to successfully manage
change on an ongoing basis.
New change strategies
An effective change strategy must
consider a much wider range of
implications in a multi-polar world.
One increasingly important element is
managing talent in a global environ-
ment, where the lines of communica-
tion and control are more and more
thinly stretched. Effective change
strategies must focus on cultural,
operational and legal dimensions.
From a cultural perspective, execu-
tive leadership must develop commu-
nication strategies and reporting
structures that take into account the
often different presumptions and
norms of the company’s various
organizational groups, nationalities
and levels of seniority. Like the lines
of communication, the spans of con-
1. Managing and enabling change
3
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Number 3
Source: Based on Edgar H. Schein’s model in Organizational Culture and Leadership, San Francisco: John Wiley & Sons Inc., 2004.
Culture shock
As companies in a multi-polar world increasingly bring together people from different organizations, nationalities
and regions, leaders must proactively work to establish common cultural ground. Effective culture change requires
interventions designed to influence structures, values and behaviors—as well as people's underlying and unconscious
assumptions, which can be extremely resistant to change.
Observable and manageable
• Structures
• Processes
• Strategies
• Leadership values
• Metrics
• Behaviors
Hidden and hard to influence
• Unwritten rules
• Beliefs and feelings
• Collective memory
Structures
Processes, tools,
organization designs
Espoused
organizational values
Strategies, goals, measurements, rewards
Underlying assumptions
Unconscious beliefs, perceptions, thoughts, feelings
Behaviors
Observable actions of groups and individuals
Easiest
Most
difficult
Ability to
influence
trol and influence in a global, often
virtual organization are more thinly
stretched than ever before.
Companies cannot succeed in a
multi-polar world simply by having
management push change to the rest
of the organization. Employees must
truly believe in the change and want
to work in new ways. They must
experience the connection between
their personal success and the success
of the entire organization.
Managers face major operational
challenges in a global environment in
which they can seldom simply walk
down the hall and steer every node
of their far-flung organizations in
person, or take a quick temperature
check of how a team working under
a stressful deadline is performing.
More and more communications and
business processes must take place
through virtual structures—teleconfer-
ences, e-mails, videoconferencing,
electronic workflows and the like.
These new ways of working must be
explicitly detailed and incorporated
into management processes and struc-
tures, and in the ways work is moved
around, checked and handed off (see
“A bold new look for global sourcing,”
Outlook, September 2007).
From a legal perspective, a crazy
quilt of regulatory guidelines must
be attended to as well. The failure
to plan for different national laws
and regulations can undo an other-
wise carefully orchestrated change
program. Some countries, for example,
have restrictions on where an indi-
vidual’s supervisor must reside.
That can be a deal breaker for a
company looking to have a team in
one country reporting to a manager
in another.
Enabling organizational change
“Change enablement” refers to the
specific methods and tactics used to
transform the behaviors of people at
all levels of the organization and
to support those new behaviors so
that an organization does not regress
back to old ways of operating. The
threat of regression is intensified
in a multinational company, since
there are many different nodes of
the organization to be monitored and,
therefore, more potential pockets
of resistance.
Take the case of one global resources
company in the midst of dramatic
change targeted at developing the
organizational capabilities to drive
competitive advantage in a challeng-
ing energy environment. As the
company looks to take maximum
advantage of global talent pools,
its information technology group is
leading the way with a lean, special-
ized, virtual organization charged
with providing enterprise application
support to tens of thousands of the
company’s internal customers.
The company’s IT function intends
to seamlessly deliver service to its
customers through this virtual organi-
zation, leveraging people and skills
across hubs in major locations within
Asia, Africa and the United States.
Helping the company’s IT executives
help everyone else manage the change
was a significant challenge. The com-
pany’s executive in charge of IT service
delivery, who oversaw the creation
of the new organization, began by
constructing a leadership team from
a pool of highly qualified candidates.
She then built the next layer of man-
agers reporting to those leads.
“What I found at that point, however,”
recalls this executive, “is that as
good as these leads were, this chal-
lenge of creating a global, virtual
organization was something they had
never done before. So we then
backed up and asked, ‘What do we
need to do to make this happen?
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% of respondents who said the statement is true
Concern in the C-suite
According to Accenture research, a significant number of C-suite executives have concerns
about culture, leadership and managing change in today’s global business environment.
Source: Accenture research
An inability to attract and retain the best talent is one of the
top five threats to our business success
67%
We are somewhat concerned/very concerned about the
ability to maintain a common corporate culture in today's
global business environment
54
Our workforce has become more global 61
We are somewhat concerned/very concerned about managing
remote staff efficiently in today's global business environment
47
Instability of senior leadership is one of the top 10 threats to
our business success
40
Is this team diverse enough? Does
it have the skills needed?’ ”
Interventions that enable change
in a multi-polar world must be more
sweeping and executed with more pre-
cision than traditional change inter-
ventions. Simplicity and consistency
are key. Interventions must occur
both at a surface level of awareness
and on a deeper, structural level.
Awareness training is certainly
essential, helping leaders and
employees at all levels understand
differences among cultures—their
ways of seeing the world, their values
and preconceptions, and their ways
of communicating. Enablement must
also take place at a structural level,
however, which often requires the
development of new governance
models. Successful change leaders
alter business processes so that
work reflects the new business and
operational reality. They also put
in place elements such as revised
reporting and rewards structures to
ensure that people display the new
kinds of behaviors needed.
Metrics are important to assess the
success of a change program, but
only if one understands that metrics
doesn’t have to mean numbers.
Effective change leaders will look
at behaviors, results and outcomes,
some of which will be reported as
numbers and others through different
kinds of assessments.
Shell, for example, is currently
implementing a new enterprise
information system that affects
some 40,000 employees in about
40 countries. As part of the change
program developed to help these
employees understand and embrace
the changes caused by the new
system, Shell used a diagnostic
assessment of progress made in
different geographies—how employ-
ees in various regions were support-
ing the change and performing in
new ways. The results were made
available in a dashboard report
summary across all geographies and
lines of business to help executives
understand the current situation and
respond quickly.
New organizational designs for a
multi-polar world need to simplify,
as much as possible, the interactions
among business units and geogra-
phies. This is, in a sense, counterin-
tuitive. One might think that a
successful global company, as part
of the decentralizing process, would
have more units and functions.
In fact, companies that take that
approach end up with a complexity
in their reporting and metrics that
they find almost impossible to
manage. In a multi-polar world,
you’re managing not only the units
and businesses but the “white
spaces” between them. The more
you can keep your structures clear
and simple, the better.
Perhaps the key message when it
comes to change enablement is that
companies that are successful in
changing globally have programs
that are both driven from the center
and embedded locally. Companies
that still rely only on local efforts
or, on the other hand, try to force
change only from the center, are
being outperformed.
Developing a change
management capability
Because change in a multi-polar world
is now both more constant and
more far-reaching in its implications,
organizations are likely to find that
the ability to manage change inter-
nally is a critical, ongoing need, and
something essential for all levels of
change initiatives. This also means
that the ability to manage change
must become part of every manager’s
and leader’s skill set.
The global resources company
referred to earlier is a good example
of using one specific change program
as a means of introducing more
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Outlook 2008
Number 3
Companies that are
successful in changing
globally have programs
that are both driven
from the center and
embedded locally.
generalized change capabilities
throughout a global organization.
Says the company’s IT executive:
“I really have at least two critical
jobs. The first is running IT delivery
for the company from an opera-
tionally excellent perspective. The
second job is working with my
colleagues to transform IT so the
organization is better able to meet
its future, global challenges. So we
are using this pilot as an incubator
of change for the entire company.”
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Number 3
2. Transforming leadership capabilities
Companies that are successfully
negotiating the journey toward
high performance in a multi-polar
world are doing more than imple-
menting general leadership develop-
ment programs. They are focusing
specifically on two important
elements in the particular kind of
leadership needed for success in
a global environment:
• Alignment of leadership across
functions and geographies toward
the common goals of the global
organization
• Explicit specification of the
leadership behaviors necessary
to implement the vision
Alignment
The need for engaged, committed
and aligned executive leadership
is intensified in a multi-polar
operating environment. As organi-
zations become more geographically
dispersed, they require multiple
teams at the top of the organization
working in concert so that leader-
ship is not weakened or diluted by
being spread too thin. That means
that leadership development pro-
grams, and ultimately the monitor-
ing of leadership effectiveness,
move from a focus on the top 10
or top 50 leaders to perhaps the top
500 or 1,000 or even more in a
large, decentralized organization.
In this operating environment, it
is vital that leadership throughout
the organization is aligned and
in lockstep with the company’s
particular vision for operating in
a multi-polar world. It is also essen-
tial that leaders are committed to
creating connections and synergies
across traditional silos and breaking
down organizational boundaries
and constraints. Effective leadership
today must be a collective phenom-
enon—more than the sum of its
parts—to inspire innovation, ener-
gize an organization and ensure it
operates effectively. The action of
aligned leaders accelerates change
and moves the organization in the
desired direction.
High-performance businesses are
pursuing some innovative ways to
make sure that this alignment moves
beyond rhetoric to reality. At one
major US-based company, for exam-
ple, which is currently diversifying
its portfolio of businesses, senior
executives have taken explicit steps
to ensure alignment of their top
leadership groups across different
functions and boundaries.
The leaders of each of the company’s
eight lines of business, representing
different geographies, were brought
together to redesign the major
processes that crossed the individual
units. This forced them to work
together, to forge new and deeper
kinds of relationships with their peer
groups—communicating, making
trade-offs and coming to compromise
positions—so that a vision for operat-
ing globally was backed up by new
processes to support those operations.
This demonstrated to the organization
a real commitment to teaming that
went beyond rhetoric to something
enacted from the top.
Behaviors
The alignment and collective agree-
ment—from the top team all the way
to frontline management—must also
be apparent to the entire organiza-
tion. And that means that an execu-
tive vision for change must be
backed up by executive behaviors
demonstrating and modeling how
the company operates in a multi-
polar world and how people are
expected to perform. Leaders show
what matters by how they act and
how they use their time. Every
action of a senior corporate leader
becomes symbolic—a daunting fact,
perhaps, but a fact nonetheless.
At Procter & Gamble, for example,
CEO A.G. Lafley has won well-
deserved praise for reenergizing this
consumer products giant by articu-
lating a simpler sense of purpose
and bringing core values into
sharper focus, especially a deep
understanding of the consumer. The
key to P&G’s recent success, Lafley
has noted, is not just communicating
the centrality of the consumer (“The
boss is not P&G,” Lafley has said,
“the boss is the consumer”) but also
demonstrating that commitment and
modeling it from the highest level of
the company on down.
A leader has to show the organization
and its people how to behave in new
ways. This has also been clear in the
way Lafley has extended P&G’s repu-
tation for innovation. Going against
the grain of the company’s culture,
Lafley began insisting on using ideas
and technologies of outside partners
as part of the innovation process.
Overcoming internal resistance to
make that happen, Lafley’s leadership
has driven impressive results: 6 per-
cent organic growth in an industry
that’s growing in general only at 2
percent to 3 percent.
1
Selecting and developing leaders
must also be based on behaviors,
not just seniority. A person can be a
terrific performer and a great leader
in a traditional operating environ-
ment but still lack the specific skills
and behaviors needed in a world
where, for example, innovation
may be most active and fruitful in
previously overlooked developing
nations. Managers must be extremely
comfortable in a less hierarchical
environment, one where command
and control does not flow in only
one direction. They need to be capa-
ble of working across time zones,
national boundaries and cultures.
How does an organization know
who can be effective working in
an environment that is so new that
the star performers—those with the
capabilities to succeed in a multi-
polar world—have not yet risen to
the top?
An approach being pursued by
several companies today is to estab-
lish peer-to-peer leadership evalua-
tion processes. This enables top
management to assess the leader-
ship capabilities of the various unit
heads—specifying openly what their
strengths and weaknesses are from
the perspective of a multi-polar
operating model. In this way, some
of the best minds in the business
can speak together not only to
define what the new environment
might look like but also to consider
which leaders might perform best
in that environment. The key is to
redefine the success criteria—to be
clear about expectations with the
current organization, and then to
build these expectations into devel-
opment and metrics as well as into
the recruiting process.
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Outlook 2008
Number 3
Selecting and devel-
oping leaders must
be based on behaviors
as well as seniority.
1
“A Conversation with Procter & Gamble CEO A.G. Lafley,” by Tony Friscia, April 18, 2008,
AMR Research. www.amrresearch.com
The cultural implications of operat-
ing successfully in the multi-polar
world are profound. Companies
have been global for many years,
of course, so the fact that senior
executives oversee far-flung opera-
tions and business in multiple geo-
graphies is nothing new.
The cultural challenges of a multi-
polar world are nonetheless differ-
ent in at least a couple of ways.
One is the simple pervasiveness of
everyday, anytime interactions
among people from different
national and ethnic backgrounds.
Another is the non-hierarchical
nature of those interactions.
This last issue must be delicately
approached, but it is nonetheless
a reality for many companies: It is
no longer necessarily the case that
management is located in a tradi-
tional developed nation, with some
operations located in low-cost,
emerging nations. A mining com-
pany’s employees in Switzerland
might report to senior executives
in Brazil; the business-unit lead for
a team in London could be located
in Bangalore; a team working at
a development and delivery center
in Topeka, Kansas, might be waiting
for work coming from colleagues
in Warsaw, Poland. (For a related
article, see “M&A: Handle with
care,” Outlook, September 2008.)
Being successful in this new kind
of global environment takes us back
to the behavioral dimensions of
leadership. That is, culture “aware-
ness” is important but will be effec-
tive only to the extent that leaders
serve as exemplars—demonstrating
and modeling new behaviors toward
all cultures and peoples in their
organizations.
In some cases, effectively managing
change in a multi-polar world will
mean creating a new, more common
culture that brings together and har-
monizes characteristics of different
groups. In other cases, subcultures
or nuances of the common culture
can or must continue to exist. A
unified culture can be an ideal, but
it may be unrealistic; trying to force-
fit different peoples together into
a perfectly harmonious whole may
inadvertently alienate the workforce
and undermine the entire change
program. Nevertheless, common
ground can and must be created.
What do effective leaders do to
plan and execute complex cultural
change programs in a multi-polar
world?
First, continuing a general theme
here, when it comes to building
a new culture, it is essential to
focus on behaviors rather than just
attitudes or “sensitivities.” Culture
is more than a concept; culture
change must be converted into
specific behaviors that are defined,
enacted, reinforced and measured.
Second, a related point: Understand
and articulate the cultural compo-
nents that are “above the line” versus
“below the line” (see chart, page 3).
By above the line, we refer to cultural
indicators that can be seen and
experienced: symbols, slogans, ways
of communicating and so on. Those
are explicit levers that an executive
can actually pull. But below-the-line
components are deeper, more sub-
stantive things—values, morals, pre-
conceptions—that cannot be directly
manipulated. A good change leader
is always aware that, ultimately, it’s
the values that must be changed—
but this cannot be accomplished by
direct “assault.”
Finally, put measures in place that
are aligned with the behaviors you
need. If you want people to be more
effective collaborators in a multi-
polar environment, more capable of
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Outlook 2008
Number 3
A good change
leader is always aware
that, ultimately, it’s
the values that must
be changed.
3. Creating the right corporate culture
9
Outlook 2008
Number 3
innovating, then you cannot have
all of your metrics focused solely on
individual performance or on driving
out costs. If you put mutually com-
peting measures in place, be clear
about priorities and trade-offs; if
this doesn’t happen, unintended and
undesired outcomes will surface.
The most effective change leaders
we know have a relative handful
of critical metrics that they look at
on a weekly, monthly or quarterly
basis. They are relentless in tracking
those behaviors, outcomes and
results, and they correct course at
the right times to hit their marks.
Educate, measure, inspire
Several dominant themes emerge
when we look at what’s needed to
successfully manage change in a
multi-polar world, creating the right
leadership behaviors and cultural
mindsets to drive high performance:
educate, measure and inspire.
First, real leaders aren’t good merely
at decision making. In a multi-polar
world, “CEO” also stands for “chief
education officer.” A stumbling
point for many organizations on
a major change journey is that the
top level of management has often
moved on emotionally toward the
new destination before many others
have even started on the journey.
An effective CEO needs to step back
and bring people along, to educate
them, even if doing so is a distrac-
tion, or even boring. The new world
is not one where an executive can
simply say, “Do this.” There is a
critical educational component that
must be exercised first. Leaders
must be both learners and teachers.
Second, effective change leaders put
metrics programs in place to measure
progress—especially in areas, such as
leadership and culture, that are often
perceived to be more art than science.
Yes, leadership effectiveness can be
measured; so can cultural mindsets.
Take a baseline measurement, conduct
frequent reassessments and then be
prepared to correct your course.
Finally, there is an inspirational
component to effective change
leadership. Yet true inspiration
must go beyond mere rhetoric. In
a multi-polar world, inspiration
and charisma are, as our colleague
Bob Thomas, head of the Accenture
Institute for High Performance
Business, has written, really a
matter of what he calls “neoteny”—
the capability of remaining forever
young, and therefore more capable
of riding the changes in store in
a multi-polar world. Every day,
Thomas writes, these kinds of leaders
“wake up and fall in love with the
world all over again.”
2
That’s the kind of leader needed
to successfully navigate change in
a multi-polar world.
2
Warren G. Bennis and Robert J. Thomas, Geeks and Geezers: How Era, Values, and Defining Moments
Shape Leaders (Boston, Massachusetts: Harvard Business School Press, 2002), page 155
Yaarit Silverstone is the managing
director responsible for organization
effectiveness offerings and capabilities
within the Accenture Talent &
Organization Performance service line.
With more than 24 years of experience
in consulting, Ms. Silverstone has
extensive in-depth experience in diag-
nosing complex organizational perfor-
mance issues and designing, implement-
ing and sustaining large-scale journey
management, human capital strategy,
talent management solutions as well as
leadership development programs.
Originally from South Africa, Ms.
Silverstone is based in Atlanta.
[email protected]
Outlook is published by Accenture.
©
2008 Accenture.
All rights reserved.
The views and opinions in this article should
not be viewed as professional advice with
respect to your business.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
The use herein of trademarks that may
be owned by others is not an assertion of
ownership of such trademarks by Accenture
nor intended to imply an association between
Accenture and the lawful owners of such
trademarks.
For more information about Accenture,
please visit www.accenture.com
About the authors
Peter Cheese is the managing director
responsible for the Accenture Talent &
Organization Performance service line,
which focuses on talent management,
the HR function, and organization and
change management. Mr. Cheese, who
has more than 25 years of experience in
consulting, works around the world
with clients in all industry sectors. He
speaks at a wide range of conferences
and events, and is coauthor of The Talent
Powered Organization: Strategies for
Globalization, Talent Management and
High Performance (Kogan Page, 2007).
He was recently named one of
Consulting magazine's “Top 25
Consultants” for 2008. Mr. Cheese is
based in London.
[email protected]
Walter G. Gossage is the executive
director responsible for change man-
agement offerings and capabilities
within the Accenture Talent &
Organization Performance service line.
Over the course of his 21-year career,
Mr. Gossage has focused primarily on
complex, global business transformation
initiatives with clients in the energy,
chemicals, industrial products and con-
sumer products industries. He has
extensive experience in shared-services
design and implementation, post-merg-
er integration, regional and global
enterprise resource planning initiatives,
and performance-driven transformation
of IT and finance groups. Mr. Gossage is
based in Dallas.
[email protected]
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