“THERE HAS ALWAYS BEEN DISRUPTION, BUT THE PACE HAS ... · ‘Disruption is by far the most important topic – we are a disruptor, but we are always in danger of being disrupted

“THERE HAS ALWAYS BEEN DISRUPTION, BUT THE PACE HAS CHANGED. DISRUPTION IS THE OPPORTUNITY”

DISRUPTION: HOW 70 LEADERS IN ASIA PACIFIC ARE RESPONDING

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MARK BRAITHWAITE

Mark Braithwaite is the Asia Pacific Managing Director of global executive search firm Odgers Berndtson.

Author

As the accelerating pace of technology-driven change overtakes our ability to adapt, some companies are riding the wave of disruption, while others are sinking fast. We interviewed leaders of 70 Western multi-nationals in Asia to find out how they’re being disrupted and what they’re doing about it.

The pace of change is accelerating, and we are living through a period of disruption that will be an extinction event for companies that are slow or unwilling to adapt. Mark is generous in sharing his observations without being opinionated or being overtly prescriptive; one feels like a member of an audience in a series of candid fireside chats with business leaders about their approach. Very practical and insightful read

Benjamin Tan Senior Vice President, Asia, Qantas Airways Limited

A practical guide with real insight into what leaders in Asia are thinking about disruption, how they are dealing with it and getting ready to be disruptive themselves

Raj Narayanan President, Asia, Alcon

Like the best news reports, Leadership Disrupted graphically captures the experiences of CEOs as they confront a wave of disruption to Asia’s markets. As Mark Braithwaite demonstrates, that wave is moving faster than in the West, placing Asia CEOs at the front of a global battle. That makes this short book a timely guide for CEOs on how to frame the strategic challenges in this latest wave of disruption. As is often the case during turmoil, success comes down to the teams that are built and how they are led. Leadership Disrupted provides a concise guide to meeting those challenges Richard Martin Managing Director, IMA Asia

Mark captures clearly, concisely and in their own words the views and experiences of senior executives driving change, transforming and thriving across the Asia Pacific region

John Lombard CEO, Dimension Data

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LEADERSHIPDISRUPTED

Disruption:How 70 Leaders In Asia Pacific

Are Responding

Mark Braithwaite

Contents

Foreword 1. Introduction - Disruption: How 70 Leaders In Asia Pacific Are Responding 1

Strategy2. How The Customer Is Dictating Change 83. Competition Today – Faster, Cheaper, Better 144. Trapped By Past Success 195. Changing Business Models 266. Redefining Innovation 337. Looking East For Innovation 38

Talent8. Understanding The Expectations Of Millennial Talent 459. Proven Ways To Attract And Hire Top Talent 5110. Engaging Talent For The Long Term 58

Leadership11. Culture 6512. Humility 7213. Communication 7814. Mindset 84

15. Conclusion 91 About the Author 94 About Odgers Berndtson 95 Acknowledgements 96

Foreword

This is a book of the moment.

Every business leader is wrestling with the implications of technology-led change and its impact on their environment, industry and business. Leadership Disrupted makes sense of the current pace of change – one that yields extraordinary opportunity but can overwhelm even the most experienced of leaders. The book provides insight into the nature of the challenges, the massive strategy shifts required, the leadership attributes that correlate with success, and the changing face of talent in the digital age.

Using the extraordinary reach of the Odgers Berndtson network across the crucible of innovation that is Asia, the book identifies what marks out successful leaders. The analysis is built on 70 interviews with leaders of successful multi-nationals with a combined revenue of over a trillion dollars. This mass of data, opinions and insight from across industries and businesses has been sifted, analysed and organised, so that what you get is direct, authentic and currently relevant. Mark concludes with startling simplicity that mindset, rather than skill-set, is the necessary focus of leadership today, and concisely extracts the essentials of both.

In a world of international opportunity and competition, where business models can be turned on their head and where leaders must constantly distinguish the fads from the reality, this book is an important read for all.

Kester ScropeCEO, Odgers Berndtson4 January 2019

1 Introduction

Disruption: How 70 Leadersin Asia Pacific are Responding

As the accelerating pace of technology-driven change overtakes our ability to adapt, some companies are taking advantage of the building wave of disruption, while others are being overwhelmed and fast heading for extinction. It has been predicted that 40% of current Fortune 500 companies will cease to exist within the next ten years.

Disruption in the business world is nothing new. Much of it is just the ongoing evolution of particular business environments and markets that CEOs have always had to plan for.

A real disruptor, however, universally impacting every organisation, is the exponential acceleration of pace, driven by new technologies. Innovative technologies have replaced older technologies for centuries, but this new pace has become the biggest disruptor of all. It is demanding, in many cases, a complete reinvention of business models.

In his 2016 book, Thank You for Being Late, Thomas Friedman argues that the accelerating pace of technology-driven change has now overtaken our ability, as humans, to adapt. The acceleration continues.

Leadership Disrupted2

The speed, prevalence and force of disruptive change is overwhelming even the most successful companies. Imagine driving your car around a race track at a constant 30kph. Anyone can do this. No stress at all.

Then, every lap, you increase the speed by 5kph. On each new lap, the complexity of your world increases. At some point, your ability to process the faster pace and keep control of the car will fail you.

This is how change is currently experienced by business leaders globally. The pace of technological advancement is creating a level of complexity that is overtaking our ability to process and make effective decisions.

How are companies responding?

We interviewed 63 APAC leaders of global companies and 7 CEOs of Western MNCs with their HQ based in Asia to find out how they are being disrupted, and what they’re doing differently to ensure success in the future.

This book is not about technology. In fact, we barely touch on the subject. It’s about how leaders are working to remain effective in a world where the pace of change is unprecedented.

Two important questions

We spoke in depth with these 70 leaders, face to face; all of them lead big-name, highly successful global companies, across multiple industry sectors.

To open the discussion, we asked them two big questions: • Are you talking about disruption, and, if so, what are you talking about? • How are you responding to this disruption as a leader?


Three stages of disruption

Most of our interviewees easily articulated the threats and opportunities they face due to the accelerating pace of change and the complexity this brings.

Many, not all, are fully engaged in transforming their organisations for the future. Interviewees fell into three groups: • The disruptors: Those who are initiating disruption in their markets – mostly technology companies, but also some in other, long-established sectors. They’re aggressively investing in technology and innovative business models to disrupt their competition. • The reactors: Those who are reacting to disruptive forces rather than initiating. This group represents more than 60% of companies. • The hesitators: Those who are not being disrupted … yet. They know they will be disrupted at some point, but see nothing imminent and are adopting a ‘wait and see’ approach. Very few companies fell into this group.

Both disruptors and reactors are experimenting with new business models and setting sail into uncharted waters. They are all wrestling with the complexity and the pace, and all see this as the most serious challenge they have ever faced. Three common themes – Strategy, Talent and Leadership

Every company and industry has its own unique challenges, but by half-way through the interviews, three clear areas of concern had emerged – Strategy, Talent and Leadership. The remaining interviews brought greater clarity and depth to these themes.

These are the areas where disruption is felt and demands are most pressing for transformation and adaptation. Complexity arises

Introduction 3


because all three areas are multi-faceted and interconnected.

‘I have been in this industry since 1988. There are now more things coming at us, faster and all at once.’

Strategy has become fluid for many companies, as the business environment changes at an ever faster pace. Customers, employees and the competition are driving tech adoption, often faster than companies can absorb. As a result, the five-year plan is obsolete, and mature companies are really struggling with this.

‘We built a structure five years ago that was right, but today it is not. Our business plan from 2016 is not worth the paper it is written on.’

‘Our customer base is changing faster than we can see.’

Moving away from successful legacy business models and structures is tough for leaders, especially when they still seem to be working. The signs are clear though; adapt or sink fast.

‘We have changed to meet a changing market. We understand conceptually what this means, but we have not worked out how to articulate this to mobilise the organisation. The incumbent is its own worst enemy in a transformation.’

‘By the time something becomes a visible trend, it’s too late!’

‘Disruption is by far the most important topic – we are a disruptor, but we are always in danger of being disrupted by others.’

Talent is expecting more from employers: • They seek a more personal and direct connection with leadership. • They look for organisations that have a sense of purpose and play a positive role in society.

• They expect investment in their professional development; they want to move ahead faster than traditional business models can cater for.

‘The skills we need are very new. We have work to do and we need to do it fast.’

Attracting and engaging talent in APAC for multi-national companies is getting tougher.

‘The war for talent has escalated. Our traditional competitors are still there, but now we are competing with well-funded start-ups that don’t have constraints.’

‘Young people have high expectations of me as a leader. If I don’t agree with them, they may walk away from the company rather than their idea.’

‘Diversity of thought is a big issue for us. The people we need don’t want to come to the office.’

Leadership now demands a new mindset. APAC has great potential for most multi-nationals, but reaching that potential is a complex game compared to operating in the relatively homogenous European and North American markets. Add changing business models, demanding, flighty talent, the need to stimulate local innovation, and the complexity begins to seem insurmountable.

‘We are not able to react to the pace of change of our customers.’

‘As a leader, I now need to be curious about the wider business community as opposed to just the competition. This has shown me the shackled, restrained thinking of our industry.’

‘Sometimes it is hard to re-imagine how we do things. It’s easier to create new.’

Introduction 5


Beyond smart

Smart people thrive on complexity. Unlike the car on the race track, we’re not directing familiar machinery through a stable environment; rather, it’s as if we’re flying a helicopter for the first time through unfamiliar terrain, with nothing but a good guess at which buttons to press and levers to pull.

In this new scenario, being smart is no longer enough.

‘The biggest challenge is the mindset change. People are comfortable when things are defined. You need to set up separate cells, so they can find new ways of doing things.’

‘Traditional thinking will not work.’

Welcome to Monday morning

Plenty of books define disruption, but definitions are of little practical use to leaders who need to turn up at the office on Monday morning and make decisions that affect their future, the future of their company and the lives of thousands of people.

The principles of good leadership are timeless and are the same now as they were a century ago. However, the leaders of 100 years ago thought and operated in an environment that was more or less static compared to today. The business environment of today is changing so fast that the challenge for leaders to adapt and bring their people along on the journey requires something new.

The smartest business leaders in the region are rapidly adjusting to a shifting landscape, transforming their companies and themselves, and riding the wave of change. In the chapters that follow, we explore how these leaders are addressing their strategy, talent and leadership challenges.

Strategy

How the Customer is Dictating Change•

Competition Today – Faster, Cheaper, Better•

Trapped by Past Success•

Changing Business Models•

Redefining Innovation•

Looking East for Innovation

2

How the Customer is DictatingChange

Customer behaviour has changed beyond recognition and this is challenging business models. Many of the 70 leaders we interviewed say that their customers are demanding a new way of engaging with suppliers, and have become more sophisticated in how and what they buy. This is causing real turmoil for many leaders as they work to respond quickly enough.

These comments from five successful B2B companies show a high level of awareness of changing customer behaviour and some insight regarding what customers want.

‘The way our customers think about things keeps shifting – we’re trying to stay aligned with a moving target!’

‘The world of our customer keeps accelerating, because they are part of a wave of technology that is changing everything for their customers.’

‘The customer is no longer willing to pay the way we want them to. Our revenue is no longer predictable. Customer intimacy is the need now, rather than product. There is not enough debate within our company about the demands of the changing market.’


‘Our board picked up that our clients in Asia are moving faster at becoming digital. I told them that these are the slow ones – they’re the big companies! Most are faster.’

‘Customers are now more sophisticated in their buying processes and this impacts margin, forcing a focus on operating efficiency that has moved the dial on our positioning from a technology sale to an efficiency solution.’

Where have our customers gone?

Some B2B companies are seeing their traditional customers disappear, or become less relevant, while new ones enter the scene at a much faster pace.

‘Long-term, key customers have gone out of business and new ones are coming in. Our customer base is changing faster than we can see.’

‘The percentage of our revenue from the top ten customers is shrinking, while our business is growing. This comes from the disruptive SMEs.’

Predicting customer behaviour just got tougher

Several B2C leaders explained that data from their internal and external analysts was becoming less relevant to them. They are forced to use new ways to get closer to the market.

‘Being present at the moment of truth with consumers and our people at the front line is more important than ever. There is no market analysis that is timely enough now. Right now my kids are giving me better market intelligence than the analysts.’

Some have worked this into an advantage.

‘Technology has fundamentally changed consumer research. This is a positive disruption and we can now do it ourselves – real

time. Statistically designed repertoires of consumption – observed consumer behaviour – this was impossible in the past.’

Many of the biggest global B2B companies, by their own admission, are not very adept at understanding the customer.

‘We have huge analysis of sales, but not of the customer.’

This lack is giving rise to a fascinating new trend, where B2B companies are now working harder to understand the ‘customer of their customer’. Previously, interest mostly stopped at the stated needs of the business they dealt with. Where end-customer needs were researched, information was often too vague and broad to be of much use. Not so any more.

‘We call it B2B2C. Our customers are companies like Coca Cola and Unilever. We need to understand their customers ourselves. There’s this big change in consumer behaviour because of technology, and those changes are accelerating, so our challenge is to adapt quickly.’

We found evidence of this trend over and over again. B2B companies see that timely innovation means that they need to be way ahead of their own customers’ thinking. This is not new, but today, their customer is moving faster than yesterday.

Less friction, more business

The ease of doing business with suppliers is more important than ever. Customers expect sales, services and other interactions to be simple and fast, and will vote with their feet when a competitor makes it easier to buy from them.

‘The disruption in our industry is not directly from technology, but from customer behaviour. The consumer attitudes and beliefs create an immediate need for prices and information.’

Strategy 10


Social media – a strategy challenge

Consumer companies have become very serious about monitoring social media and responding quickly when negative comments appear about their brand. Sometimes, it takes a real crisis before the lesson is learned.

‘Today we are in dialogue with the consumer through social media. Social listening is vital, so we know what is being said about our brand. What we do about this is reactive. As an example, our brand was displayed at a sports event in Asia that had some negative press. We had not even sponsored this event. The branding was still there from a prior event. Through social media this caused a crisis that even affected our business in the US. It was a local crisis that overnight became a global crisis and it keeps coming back.’

There is a clear need for social media management, with a response needed immediately when things go wrong.

‘In the consumer food industry, one missed step today requires an immediate response, as just about every consumer hears about the issue immediately through social media. This could mean a huge, costly product recall, but we have seen that the speed of response is just as important as the response itself. There is no time for delay. We need to show commitment to the consumer.’

Social media can be a great ally – if you know what to do with it, that is. Ideally, it acts as a vehicle for the personal interface that customers expect; a great social media manager can make a huge difference to how a company is perceived. One swift, helpful response can go viral and boost public perception of the company; one disastrously managed complaint can do the same, in the opposite direction. It’s often the anecdotal evidence that defines a company in the minds of consumers.

‘The disruption in our industry is not directly from technology, but from customer behaviour.’

There are a myriad innovative ways a shrewd social media manager can use various platforms to create informed and engaged communities of users. Generally, B2C companies are well ahead in this area, while B2B companies are mostly scratching the surface.

‘Technology is changing what our customers respond to and this is changing our business. Communication with consumers is now much more of a dialogue. The brand has to stand for something and the communication is not one way. The peer group that social media has brought has changed the way people decide what to buy. Decisions have become independent of brand and its advertising – they look for other research.’

More and more B2B companies are using social media to interact with the consumer who is two or more steps away in the supply chain. At this stage, much of this is innovative ‘play’, but successful companies know it is invaluable.

Disruptive expectations

‘The true disruptor is consumer expectations.’

Smartphones have made speed and convenience the norm – consider, for instance, how Uber has changed customer mindsets about moving around a city. We’ve all come to expect more, faster. We don’t expect to wait, and when we’re made to, we experience it as a failure in service.

B2B leaders recognise changing customer expectations, but getting their staff to change behaviour is the big challenge. Previously successful business models are no longer working, and many employees are struggling with the mindset required.

‘We are a disruptor of our market and try to see the world through the lens of our customer. But the biggest disruptor of our business is the needs of account management, as the needs of our customers change.’

Strategy 12


‘Our customers are now much less focused on our salespeople. They are much more tuned into the new channels. We are not yet prepared to address the digital behaviours of our clients.’

‘What used to take three years to design and develop is now being demanded in three months.’

It’s who you are

As companies build a greater level of social and environmental responsibility into their work, their identities are taking shape, and customers are responding. It’s no longer just the sales team that closes deals, as one commentator pointed out; it’s the entire company ethos, or what the company stands for. Customers demand more conscious sourcing and manufacturing, and companies are, in turn, looking up through the supply chain at their suppliers for evidence of the same.

‘In the past, environmental commitment from companies was window dressing. Today, the consumer looks for value beyond style and function.’

3

Competition Today - Faster,Cheaper, Better

The rise of fierce local competition for multinationals in Asia is progressing at breakneck speed. It seems the accepted rules of competition haven’t just changed, they have disappeared completely.

European and US HQs typically fail to grasp the impact of local competition, according to our interviews in APAC.

‘The preference of the Asian consumer is for local. The pace of change is much faster in this region and our competition is driving that change faster. Entrepreneurial businesses we compete with are run by their founders – it’s both their strength and their weakness. In the EU we compete with six companies. In China, it’s 32.’

‘Six years ago, I saw the first Chinese MRI machine. This year, that supplier became the biggest player. Ten years ago, we owned the market in APAC. Today we have fifteen competitors.’

In some Asian countries, the speed at which competitors copy and take products to market is astounding.


‘We launched a new product in Japan and our competitor knew everything about our launch and launched their product at the same time and killed us. We had no idea they would be so well prepared. They beat us and our product has flat-lined.’

‘In China, a state-owned competitor went from zero to 50% global market share in 20 years! We have solutions, but we don’t have a financial model to compete with the Chinese.’

‘The speed of copying our products in Asia is amazing. We can introduce a new product in the US and it has been copied in China before we launch there.’

Growing aggression

Deep-pocketed Asian competitors take market share through aggressive pricing models that make it impossible for some MNCs to respond.

‘We used to be the dominant player, but in the last two years, new competitors have appeared. One of these is a Chinese company and they are not playing the same game. Their chairman is a government appointment and they are playing a short-term game that has cut prices in our market by 30 to 40%.’

‘Some of our competitors have adopted a business and pricing model that will not be competitive in the future. It discounts pricing in a way that will lose their sales network. This will kill the business.’

General Data Protection Regulation (GDPR) has created new limitations for the marketing teams of MNCs, and many Asian companies are taking advantage.

‘The privacy of data through call centres in Asia is hardly affected by compliance to Western privacy practices.’

Get big quick

Technology has enabled new companies to scale much quicker. This is a real issue for established players who are heavily invested in existing structures and business models.

‘Today, smaller companies can scale quicker than in the past. This is the biggest disruptor for big companies.’

‘Digital has changed the cost of entry. We now have competition that could not afford to compete with us in the past.’

‘Being global was only for big global companies. Now a small entrepreneur can go global. The barriers to entry have decreased significantly.’

Some companies are really feeling the pain of fast-growing start-ups.

‘There is a low barrier to entry in our market, with technology speeding up the entry of new competitors. There are unidentified players that are coming from nowhere. The analysts have no visibility. We no longer have any idea of what is coming at us tomorrow, but what we do know is that it will be at a low price point.’

‘You used to need a TV ad and a retail outlet to be in our market. Today, companies are being kick-started on a few thousand dollars. By the time something becomes a visible trend, it’s too late.’

Differentiation at speed

Some MNCs seem quite unconcerned about local competition.

‘The value proposition gap for us compared to the local competition is such that we have not been affected – we have always been one step ahead.’

Strategy 16


‘None of our competition is playing the game like we do and we are growing at double the pace of our nearest competitor.’

‘I don’t see a difference between local and MNC competition. We can replicate what local competition does.’

However, this is hardly the norm. Where barriers to entry for local competitors are low, most MNCs are feeling vulnerable.

‘My biggest worry is our ability to differentiate. The only way to win is to be the disruptor.’

‘For us, disruption comes from competitors who have a better operating model.’

There is no room for complacency. In China, local players have abundant advantages – government invests heavily in research and development, encourages indigenous innovation and squeezes MNCs with complex regulatory barriers that do not apply in the same way to domestic companies. In addition, Asian entrepreneurs speak the language of an emerging market, where price is an important selling point. They are fast and responsive.

‘Our competition in Asia can implement and execute before we have made a decision. Many of our other global markets face the same challenges, but local competition in Asia is stronger.’

‘Competition in China is very aggressive. Their speed of innovation and execution is faster than MNCs. We are working to find out how they are doing this. We talk about it a lot.’

‘There are no secrets any more. Digital has made everything transparent. This affects the way we compete.’

MNCs are responding to these challenges in a variety of ways: • offering a ‘light’ version of their service model to tap into middle and low-end markets;

• going the other way; keeping their niche products with good brand reputation and positioning themselves as the premium alternative; • engaging local partners to leverage their distribution networks; and • developing (or acquiring) brands that appeal to the low- end market, and clearly differentiating from their premium brands.

Blurred lines

Technology has been driving industry consolidation for years, but innovation is now accelerating at such a pace that companies are constantly having to re-define themselves and their business models.

‘Our traditional partners have become competitors enabled by digital. Like Microsoft, for example. We are being disrupted by the blurring of lines between industries.’

‘One of our clients is a clothing company who created an online health community. They now see themselves as a technology company who deliver clothes.’

‘We see ourselves as a tech company with a banking licence, rather than a bank that is good at tech.’

Some of the concepts raised above are not new; it is the pace at which they’re occurring that is entirely new. Most of the leaders we interviewed see a constant acceleration of competitive pace, fuelled by technology. Responding to this is tough.

Strategy 18

4

Trapped by Past Success

Companies do not become global without a solid track record of success. However, the accelerating speed of change brought about by technology is quickly rendering many proven business models obsolete. In the midst of transformation, past success can become a hindrance.

Amongst the leaders we interviewed, a great deal was said about business models and the challenge of adaptation. In this chapter, we focus on the challenges, which are plentiful; in the next we delve into a variety of possible solutions.

Internal struggle

For most large and successful companies, the internal challenge is greater than the external one. Getting employees, including middle managers, to accept change is difficult, because leadership and employees see change differently.

Top-level managers see change as an opportunity to strengthen the business, align strategy with external realities and advance their careers, while employees usually see it as disruptive, intrusive and unwelcome – especially when ‘everything is working fine’.


Some interviewees were blunt.

‘Our challenge is internal. We need to get our act together.’

Part of the problem is that leaders frequently have to institute change when the business appears to be doing well. They struggle to convince employees that the current model is no longer appropriate.

‘We have changed our thinking to meet a changing market. We understand conceptually what this means, but we have not worked out how to articulate this to mobilise the organisation. There is no way we can succeed with our current set of competencies. I took over a business that was doing well. Getting agreement to accept change is tough. The incumbent is its own worst enemy in a transformation.’

Change is often resisted, and can be the undoing of even the best.

‘People like silos because they’re easier to work in. This way of working just does not work anymore. Globally, we are not a lean, agile company today.’

‘Our people were used to being the market leader. As a market leader, it’s easy to become arrogant. I am working to change that mindset. It’s hard.’

What is at the root of the problem?

We underestimate how difficult it is to change, even for those at the top.

‘Leaders are good at doing what they know faster and better, but not many are good at doing something new.’

‘I am not thinking with the mindset of being digital.’

Resistance to change can permeate an entire culture, and is often an unconscious condition amongst those at the top. One leader was scathing about her board.

‘We are 15 years behind a first-class MNC in systems and there is a huge reluctance to change. Global leadership sees the problems, but don’t know how to fix them. There is a fear of making wrong decisions by our board. They don’t have the relevant experience to make the tough decisions. We have two wheels missing from our race car – how can we win?’

Another accomplished leader explained that he had the mandate, but no authority.

‘Working on change has revealed the truth of who we are. A company can have a change-focused leader and then not allow him or her to make the changes.’

Short-term thinking

Many companies are so short term in their profit needs that their executives have no incentive to focus on change. Company culture can prove a formidable obstacle, torpedoing every attempt to evolve, adapt and compete in a dramatically changed environment.

‘We are our own worst enemy. Why disrupt our success?’

‘We were siloed and not able to respond fast enough.’

‘There are baby boomer executives who think they can ride to their retirement before technology disrupts them.’

‘Asian competitors have not got the legacy to write off – it’s a blank piece of paper.’

Letting go of success

Some leaders are working to change the way their people think about risk and failure.

‘We are 137 years old. We need to bring about a mindset change, but I will be honest and say that we don’t have all the answers. We

Strategy 21


have always avoided failure and this is part of a culture we need to change.’

Some leaders are simply blind to the need.

‘We have senior leaders who have been successful in the past and sometimes don’t understand the need to change.’

It’s also well worth repeating that APAC is not the same as Europe.

‘I sit at the intersection of a market that is keen to embrace change, and a conservative Western company that cannot read the signs.’

Different stages

Technology innovation has created a convergence of major trends that is re-shaping the way we live, work and interact. This is changing the business world in ways that many successful older companies cannot adapt to fast enough.

Although most companies are talking about disruption, some have not yet felt its effects and many don’t really understand what it means.

‘We are talking about disruption, but we are still not sure what we are talking about.’

‘E-commerce has disrupted the supply chain and compressed demand from six months to two days. The challenge is how to deal with this.’

‘The scariest thing is that our industry has never been through any form of disruption until now. It’s always been a slow evolution. We are not disrupted yet, but it is inevitable. 90% of our business will be impacted by AI.’

Scale is a challenge

Companies achieve scale through successful growth, but in today’s

fast-changing environment, that success makes it harder to respond, for various reasons.

‘Being the biggest player is good, but when the market changes, we are the most exposed.’

‘As a market leader, the party is over. We used to grow at 35% year on year.’

‘We can see a way for a competitor to change the model and this would destroy our business. We are trying different things to see what will work so we can stay ahead. All the time, though, this reduces margins – but we need to be the first mover. At the same time, no customer wants less service.’

For some, scale retains the advantage.

‘A capital-intensive industry like ours is difficult to disrupt from the outside.’

Thinking differently

Some companies are facing disruption optimistically, sensing their need for diversity of input and new ways of thinking. Sometimes the simplest initiatives reap unexpected results.

‘We ran a workshop with people from other areas of the business to help us look at our future. Only 10% of them came from our space. What blew our minds came from those outside of our space. We had no idea – our heads were in our own box.’

In light of the comments that follow, it has to be about technology.

‘We are fearful of being disrupted, so we have invested heavily in technology so that we are the disruptor. We see these as profit and loss projects rather than IT projects.’

‘Our aspiration is to become a tech company.’

Strategy 23


The successful tech companies are already disruptors. Change is no stranger and they know how to hit a moving target.

‘We have no legacy, we started our business like this. There is nothing to let go of.’

‘We believe we need to cannibalise our own business, not protect the status-quo.’

Younger companies find it easier to reinvent themselves, but older companies are seeing the need.

‘There is a lot of automation coming. We believe we need to cannibalise our own business, not protect the status-quo. This is the first time a lot of new technologies are coming together.’

Asia is ahead. And HQ is following

A recurring theme in all interviews was how business model innovation in global companies is increasingly driven by APAC, not HQ in Europe or the US.

‘We need to be brave. It’s difficult as a 100-year-old company. The biggest challenge was for the board to accept that we are in a new world. We were ahead of HQ in our thinking.’

Bold global initiatives

Several leaders explained how their CEOs are firmly in the driving seat of change.

‘Our CEO created two teams from our top execs. He essentially split us into two groups. One group is focused on the current horizon and delivering the current core business. The other is focused on the new horizons and how to challenge, innovate and disrupt.’

After twelve years of mega-growth, and despite current success, one company was completely rebuilding their structure.

‘We are working to reduce complexity within the company, which built up as we went through fast growth and is now overbearing. We built a structure five years ago that was right, but today it is not.’

The upside

Most large global companies are in one of three states: talking about how they will be disrupted, currently in the midst of a transformation or riding the success wave of first-mover advantage. All are faced with the delicate balancing act of responding to forces that are almost impossibly huge, fast and complex. Old methods will not work, and yet the qualities of good leadership still apply.

There is opportunity in the turmoil, as one interviewee pointed out.

‘Because our industry is so old fashioned, there are lots of upsides. That’s why I joined.’

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5

Changing Business Models

There’s a detectable new attitude to risk amongst leaders. The accelerated pace of change is challenging established business theory, with day-to-day realities so altered that decision making is now quite different. Quick adaptations are constantly required.

This, of course, brings its own risks. One executive put it like this:

‘We don’t know exactly what the business will look like in the future, but that’s not a reason to delay the journey. When employees trust leadership, they’re willing to get on the bus, even when they don’t know where it’s headed.’

An executive who is aggressively driving change initiatives in his company expressed the conundrum in which companies find themselves.

‘Should we be disrupted or the disruptor? We don’t know what it is that we don’t know!’

Leaders do know that slow, incremental changes are inadequate.


‘At our HQ, we have a full-size dinosaur skeleton to remind ourselves what disruption can do.’

‘We are in the midst of a transformation and I am trying to work out a business model that is commercially viable in the future. What does disruptive innovation mean commercially?’

All interviewees were corporate executives, not entrepreneurs, but there was an acceptance of risk and a willingness to leap into the unknown with enthusiasm. This fearless attitude is much closer to that of an entrepreneur than we would have seen five years ago.

APAC is different from Europe and the US Every experienced APAC executive knows that the ‘region’ is purely a convenient time-zone demarcation, enabling US or European multi-national companies to conceptualise their spread across the globe.

It is common outside of APAC for businesspeople to speak about India and China in the same sentence. To those actually living there, this is like equating Canada and Iran. APAC is diverse. Therefore to mirror business models that work in the US or Europe in every APAC market, without due consideration for local conditions, is a sure-fire recipe for disaster.

‘If we used the same business model with our local and regional clients as we use with global clients, we would not be able to trade. We set up separate models and teams under the same brand. There were a lot of discussions about a second brand, but we decided to stay with the single brand.’

In China, for example, WeChat is all pervasive. Global companies are using it in a way Western social media simply would not, given Western paranoia about security.

‘Our recruitment of sales agents in China is through WeChat and since we started this, we have seen exponential growth, virally.’

One B2B company explained how they have moved just about everything onto WeChat. Marketing, sales, payments, internal written comms, voice comms, recruitment and more. This is a bold move and food for thought.

The CEO of one long-established global services company said:

‘We run our business on WeChat in China.’

Fast and slower

Developing models that promote speed and agility is critical, and the path to getting ahead is not linear, as it might once have been.

‘In Asia, countries are leapfrogging technology advances. China has adopted mobile financial transactions because Visa and MasterCard were not there.’

Both a country and a company culture can impede responsiveness.

‘In Japanese companies, change is slow. It’s step by step. Very rigid employment law stops us from changing people and skills. Because of this, some Japanese companies will face a severe challenge as disruptive change increases. This is why Japanese companies are not globally successful with their local model.’

One size does not fit all, and APAC leaders are accustomed to adapting to complexity. Most MNCs have tried multiple structures, from fully local P&Ls to a mix of local and centralised regional teams, to matrix models.

There is a strong preference now for fully accountable local teams. MNCs see local team heads as the only way to get close to the market, enabling them to develop and deploy the right model off the back of specific market conditions.

‘A big headline for us is localisation.’

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‘We need to become more local in our approach to be relevant.’

‘As a leader, my philosophy is that the business is in the country. We have to adapt to the country.’

But there are other reasons for this, too.

‘There’s a huge amount of localisation to counteract foreign exchange risk.’

‘We need to become more local in our approach to be relevant.’

Of course, there needs to be a way to keep countries aligned with overall global strategy, quality, compliance and values. Getting the balance right between localisation and established company strengths can be done.

‘We allow each country to run its own P&L, but we have small SWOT teams that we drop into countries for three months to drive change quickly. They are people who have done it before. We stopped asking the local MD to change, as it took too long. This allows fast execution of change while leaving the local MD to do the day job.’

Flatter organisations

This quote explains how moving to a less layered company structure may be a necessity:

‘Speed and urgency of decision-making has a direct implication for our structure. We have eliminated three organisational layers to speed decision-making. This has created speed, urgency and direct accountability.

‘We removed the bureaucracy and we are all aligned on objectives globally. This came from our CEO realising that there was a gap between what was being said at HQ and what was being done in the regions. He pushed the centre of gravity out of the US. In the

last five years, we have grown from 500 people in APAC to 6000. Hierarchy is bureaucracy.’

‘We have eliminated three organisational layers to speed decision-making.’

Thinking differently about the customer

Every business wants to be closer to its customer. One innovative, small acquisition by a global B2B market leader changed the game for this company and their industry:

‘We have disrupted our market by digitally delivering R&D support to our clients to help them bring new products to market more quickly. We brought this in through an acquisition.’

Another company was proactively re-engineering its technology and engagement model to suit consumers in the region. APAC customers have been the earliest and most enthusiastic users of big-ticket financial services online, and don’t expect face-to-face interaction as most Western consumers do.

‘Our industry has always required human-to-human engagement. People are starting to feel comfortable with less of a human touch. The trend is towards less human interaction.’

A manufacturer who does not deal with the end user of their products was nevertheless building much stronger bonds with customers throughout their company to influence sales.

‘Our eco-system is a win/win for everyone and we don’t even brand it.’

‘People are starting to feel comfortable with less of a human touch. The trend is towards less human interaction.’

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Organic growth is not fast enough for some One leader was still looking for a solution to a growing market demand they could not address with their current structure.

‘Asia is a huge market for us and we are struggling to grow fast enough organically. There are not enough robust merger and acquisition targets.’

This is an issue for many. Asian businesses are often family owned. Even though they have scale, integrating these into an MNC is too daunting for most.

Local players in developing Asian markets have often not yet reached a scale or level of sophistication that would justify acquisition by MNCs. There are some real success stories, but the M&A activity for most MNCs is in Europe and the US. This does not solve the scale issue.

Where is the new thinking coming from?

Seven of the 70 companies we visited had moved their global HQ and CEO to Singapore. In their case, they saw APAC as their biggest market in the future, even though this was not the case currently.

Others have moved senior executives to locations across the globe, rather than keeping them at HQ.

‘Our new global chief purchasing officer is based in Singapore. This distribution of power is good for the company.’

Sometimes this plan has not been easy to achieve. Expansion has been more rapid than company structure could accommodate.

‘We wanted to transfer responsibility from HQ into the regions, but there was nobody to receive it.’

‘Our business was built with a US lens, but now 50% of our exco are based outside of the US.’

APAC has become the innovator and testbed for new models An interesting commonality arose from our interviews; most MNCs, no matter what the industry, are creating and trialling new business models in APAC. Then they’re exporting their successes to Europe and the US.

‘We trial our greatest innovations in Asia. If it works, we take it to Europe. In the past, it was the other way around.’

‘We are trialling grass-roots models in Asia and seeing what works, then sending this back to HQ. Once you out-perform the industry, it is hard to argue that the model is wrong.’

Interestingly, these initiatives are being developed and implemented with little or no discussion outside of the region, and sometimes with significant investment. This speaks of risk, and the entrepreneurial attitude now common amongst corporate leaders in APAC.

Their justification is that they don’t want to waste time involving or asking permission from people who will not understand the issues or contribute anything of value.

New products and technologies are being developed away from HQ, too.

‘I went to Indonesia and our GM there demonstrated a technology they had developed and gone live with. I had no idea they were developing this. It was a great innovation and we have now exported it to other countries.’

Amongst all of these new directions, though, most leaders said that the hardest part was getting their teams to accept and adapt to new ideas. We explore this in depth later.

‘Human beings are very hard to change. The mindset is the biggest obstacle.’

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6

Redefining Innovation

As the pace of change accelerates, the gap between where we are now and where we need to be widens. Most leaders realise this and are going all out to stimulate and reward innovation, and to ensure that change is meaningful, warranted and sustainable.

Change has to run deep, reaching to the mindset of employees and culture of the company – otherwise, as one executive put it, we are just ‘rearranging deck chairs on the Titanic’.

Staying relevant

It all starts with one big question:

‘We are 130 years old. How do we stay relevant for the next 130?’

Or, put another way:

‘We have been relevant for the last 50 years. As a leader, I need to make us relevant for the future. It’s a challenge and a privilege.’

A real area of concern for leaders is that many of their people simply do not recognise the transition they are in. They are riding


comfortably on a wave of successes that worked ten or even five years ago, and are convinced this wave has no end. ‘Why change what ain’t broke?’ seems to be their mantra. A leader quoted a sarcastic quip from one of her board members.

‘Our share price is up 30%. It’s a dangerous time.’

Economic drivers have not changed

For all the hype about disruption, the business leaders we interviewed are pragmatic about the need and purpose for all innovation. According to a CEO we interviewed, companies need to analyse their competitive environment at least annually, with an eye to trends that will shape their industry over the next five or ten years, and be prepared to act boldly. Another explained how a single big bet was paying off.

‘We can now increase our capacity by 80% with just a 15% staff increase because of a technology investment.’

Another leader set himself a goal that aims to leapfrog their sleepy competition.

‘I don’t want to know how we get from 1200 to 1100 people in a particular business unit. I want to know how we get to 80. We can reduce our cost base by 60 to 70% in three years.’

The story of how the above leader worked out where to start is fascinating.

‘I tried something new and hired five smart and adventurous young people from outside of our industry. Each of them went into a different business unit on a six-month secondment – the first three months to get to know the business, and the second to work out how they would do things differently if it was their own business.

‘We now have 21 of these people and they all report back to me. These young people are attracting other young people and this has brought an amazing cultural change.’

He went on to explain that while the commitment was huge, the time and finances invested had been well worth the effort. When questioned about where this idea came from, he said:

‘Outside of my corporate role as CEO, I am involved in a venture fund that invests in start-ups, and this has shown me that anything is possible.’

New models for innovation

As one leader pointed out, customers are not interested in products or services; they’re interested in accomplishing their own objectives, and will pay for whatever helps them achieve their success milestones faster and better.

There were several stories about how companies are investing in new teams and models to create or acquire innovative ideas and products.

‘We have a formal disruption model on products. We took this from Silicon Valley and we also look at change from other industries. It’s constantly on the table.’

‘We set up an innovation investment fund. We have looked at 100 companies in APAC and invested in six. They are there to accelerate us. We also have an annual prize for the best idea.’

Changing old ways

Overcoming the inertia that sits at the middle layer of most successful businesses is tough. The CEO of an industrial company explained how he is learning to let go.

‘We love governance. It’s a great way to kill good things. We have dissipated accountability so much that we have destroyed entrepreneurial thinking. For our digital team, we removed all guidance and governance. This is an uncomfortable feeling for me.’

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A comment from an FSI executive in an area that is typically slow to change is telling.

‘If we don’t play in some adjacent spaces, we will not know what is coming.’ And this comment from an industrial executive:

‘Our products are critical, but not considered a high-level issue by customers, so we bring the innovation to them. We invest double our competition in R&D – it’s part of our culture.’

Finally, this comment from a company that is outpacing all of its competitors globally by a huge margin:

‘The word “play” is the key to successful innovation.’

Buying innovation

Silicon Valley is considered the global hotbed of innovation, but much of the technology in daily use is acquired from start-ups everywhere – even before they make their first dollar of revenue.

‘The speed of innovation has increased beyond what one company can create.’

The location of current innovation varies among sectors, with some sectors seeing little reason to acquire in the APAC region.

‘We are always looking to acquire innovative small businesses. We are seeing innovation in Europe and Australia. Less in the US and nothing in Asia.’

The point is that innovation is coming from somewhere – if it’s not in Asia now, it will be soon. Another company acquired a start-up in China before it could become a competitor.

‘We paid a huge sum for a company that had an innovation that

would have killed our business. They were pre-revenue, but three years later we have turned them into a big business.’

Others have found that integrating a start-up into an established corporation can be a disaster of their own making.

‘We ruin the companies we buy. One visit from a corporate audit and we blow their minds.’

Distributed innovation

Historically, global companies had a single, centrally-controlled R&D team, and then a standard go-to-market model that was deployed globally, with little or no localisation.

Today, the business model is as important as the product, and a single model will not work everywhere in the world.

Increasingly, innovation of model, product, service and platform is being developed in APAC and finding its way back to Europe and the US – as the next chapter shows.

‘Innovations of today will be the lowest common denominator in five years.’

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7

Looking East for Innovation

More and more business model innovations are being tested in APAC and exported to Europe and the US. We were interested to find out how this was working out and why Asia is such fertile ground for cultivating new ideas.

For one industrial MNC, moving the innovation teams to Asia was a global decision.

‘Our innovation and digitalisation hubs are in Asia, not Germany. There are 47 projects on this list right now and we are working to see what we can implement. The innovation team has compressed three years into three months to create a prototype.’

‘Innovation is not just about products. It’s also about business models and service. This is empowered by technology and in our business, it’s coming from Asia.’

Most leaders agreed that acceptance of change and the willingness to embrace the new is greater in Asian countries than in the West.


They cite two reasons for this: • The workforce in Asia in younger than in the US and Europe.

• Asian countries have seen huge growth and change over the last 20 years, so people are accustomed to change and expect it.

One pharmaceutical company leader we spoke to was clear about the advantage of developing products in Asia.

‘We have accelerated our speed to market and halved the time taken in Europe.’

‘Innovation is not just about products. It’s also about business models and service.’

More local freedom

Global CEOs are allowing greater local freedom to stimulate innovation.

‘Globally, we are being systematic about change, rather than being bold. Here in Asia, they are letting me do this; be bold, adapt new models, trial them and then export the good stuff.’

In many cases, APAC leaders felt they just needed to get on with things and inform HQ later – being both risky and bold.

‘Our CEO sees a need to delay change, but small teams around the world are innovating and bringing this back to the centre.’ ‘I would never undermine the company strategy, but I am doing some new things. I have a strong obligation to accelerate change that will carve out our future.’

More complexity

A stimulating factor in this openness to innovation is that most APAC leaders operate in an environment that is infinitely more complex

than in Europe and the US. They have to be agile to succeed and sometimes the larger corporation is too slow to understand local needs. They are taking risks and building on innovation.

‘I want to throw the ball out as far as I can and I have some submarine projects going on. We set up a two-year AI development project that HQ is yet to see. It will change the game.’

‘Sometimes I am not asking permission from the US. I am just getting on with it.’

We see two clear challenges faced by MNC leaders as they try to create an innovative environment in APAC – culture and mindset.

Cultivating the right culture

Albert Einstein said that creativity is the residue of wasted time. The success culture that runs through most companies as a point of pride frowns on ‘wasted time’ and often punishes failure, thus stifling creativity. Great new ideas almost always emerge from taking risks, trying something new and spending time on the unknown.

It takes a major cultural shift for a company to encourage risk taking and experimentation.

‘As a company, we are creating an environment where we can try things that may not work.’ This experimentation proves difficult when the structure of a global company gets in the way, as is so often the case.

‘We are working to innovate, but this is happening at the old, slow pace. We are less agile and the smaller players are rising quickly.’

‘To innovate digitally, to be the Uber of our industry, we have to be able to fall flat on our face every time. The structure of our business seems to stop this.’

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This brutally honest comment came from an inspirational leader who is struggling to change their strong legacy culture:

‘The innovators we need probably don’t want to work here.’

Transformation at all levels

According to a McKinsey partner we spoke to, all failed transformation projects can be traced back to a failed cultural change project. Vitally, cultural change cannot be delegated, and must be led by the CEO.

CEOs can support cultural change at the organisational, macro level or at the personal, micro level. This leader was initiating innovation at the organisational level in tangible ways:

‘We have a grassroots innovation challenge. It has funding, resources, teams and prizes. This was started to create innovation, but has brought the benefit of building engagement.’

At the personal level, APAC leaders are inspiring openness of thinking and the flow of new ideas through dialogue and listening.

The word ‘dialogue’ is key; it implies an open, receptive attitude and a degree of humility on the part of the leader. Unlike discussion and debate, which tend to be argumentative and shut down innovation, dialogue is a shared exploration of ideas. It gets ideas flowing.

This example highlights the impact of dialogue on innovation:

‘I bring in lunch for the broader team and try not to speak, so the team knows we listen. The number of ideas that come through this has grown exponentially. I look at this as unleashing the power of the organisation. There are people seeing the trends emerge before I am.’

‘We have a grassroots innovation challenge, with funding, resources, teams and prizes.’

The mindset challenge

A person’s mindset is closely linked to culture. A large percentage of people struggle with new ideas and change – they hang on to what they know and subconsciously resist everything else. Neuroscientist Beau Lotto explains that, as a species, our instinct is purely about survival. We construct a system for survival in our everyday lives and then stay with it until it is seriously challenged before we adapt. When people are being successful, they naturally don’t look for alternatives.

One leader we spoke to explained how she had re-structured the company to change the thinking.

‘The biggest challenge is the mindset change. People are comfortable when things are defined. You need to set up separate cells, so they can find new ways of doing things.’

Another leader created excitement about a new team initiative that operated separately to the core business by making sure he connected with the personal interests of his people.

‘There was always huge resistance to change when we did something simple like a process change. With the digital hub, there is huge interest and support. There is a technology mindset within the company because we are engineers.’

For the leaders themselves, there is a growing understanding that innovation is no longer just top down. This is about the mindset of the leaders too, not just that of their people.

‘The new ideas are not going to come from the same leadership. They will come from the middle layer. I could not think like this if I had not lived in China for ten years – it showed me the future.’

The theme of mindset becoming more important than skill set came through in almost every interview. We cover this in greater detail in a later chapter and offer some practical solutions.

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AI-powered innovation

Until now, all innovation has come from the human mind. The IQ range amongst people is not huge – if it can be created, then most smart people can understand it. The value of big data is limited by our ability to see it, but rapid advances in AI are now at a tipping point, where AI will be able to use big data to innovate.

If you think the pace of change is fast now, you have not, as they say, ‘seen nothing yet’.

Talent

Understanding the expectations of millennial talent•

Proven ways to attract and hire top talent•

Engaging talent for the long term

8

Understanding the Expectations of Millennial Talent

All leaders we spoke to agreed that strategy amounted to little if the skills, mindsets, attitudes and enthusiasm of the workforce was lacking. Talent is everything.

As one leader we interviewed put it:

‘I can’t solve the disruption issue. It’s about first-class people.’

A CEO from a completely different sector simplified this even further.

‘Everything is about the people.’

And the people that pose the most immediate challenge are the millennial generation who have redefined almost every aspect of talent management in APAC. Adapting to meet the needs of millennials has become a disruptor in itself.

‘Globally, our workforce is 30% millennials. In APAC, it’s more than 70%.’


The expectations of millennial employees with regard to their employer and its leadership team are very different from previous generations. The perceived power in the employer/employee relationship has shifted, and this requires leading in a different way.One European executive was surprised at this challenge.

‘When I first took this job, my biggest “Aha!” moment was that we are 65% millennials and they are all local. The first-time leaders are all local and this is the potential we need to unlock.’

And the swing to millennials is a clearly defined trend, as another interviewee confirmed.

‘We are 68% millennials. In five years, that will be 80%.’

Understanding differences

Of course, not all millennials are the same, and it’s dangerous to make that assumption. A 26-year old from India has had different experiences from her peers in China, or the US, or France.

‘I think we are misled on the millennials topic. There is no clear definition on this and there is a danger we are talking about a US definition.’

That said, the generation that grew up with Facebook is generally more demanding, but this is not necessarily a bad thing. As one leader pointed out:

‘Some of the biggest names in history did their big things in their 20s.’

Then, of course, there is the ‘entitled’ conversation. Two interesting comments here offer very different perspectives.

‘It’s not entitlement any more. It’s a two-way conversation.’

‘The entitled generation is very difficult to please.’

Three strong themes

So what is different? What do millennials expect of an employer?

Three themes came through from our interviews:

• Purpose and place in society is important

One executive, from a long-established and global household brand, spoke about his millennial consumers.

‘Millennials are looking for meaning and purpose in brands. The intimacy of a small start-up has more appeal for the consumer today than the heritage [of the brand]. They are looking for a more authentic connection to brands and changing this perception is hard.’

But the consumer is also an employee and applies the same values to their employer. This comment was from an industrial company CEO:

‘Young people today want to work for a company that makes a positive contribution. People are more aware now and they express this both as consumers and employees. The rising middle class in Asia is driving higher values.’

As young people research a potential employer, they look, amongst other things, at environmental practices and track record. All of this is available online and they can distinguish between what is spin and what is real. They want to know about how the mission of the company will benefit society and they want to form part of the CSR programme.

For companies that are on a mission to cure cancer, articulating an important purpose is not difficult.

‘There is a greater loyalty to people and causes than to the organisation.’ (Healthcare)

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But for banks, oil companies, technology players and others, this is not quite as simple.

‘Ten years ago, people were proud to work for a brand name like ours. Today, people need to feel they are doing something important.’ (Financial Services)

‘Millennials have a voice that asks what the company stands for.’ (Technology)

MNC leaders are saying that they are being interviewed by the millennials they are trying to hire!

‘Today, the interview is two-way. The employee is interviewing us.’

The leaders need to be prepared and they need to be authentic.

Some are very comfortable with this dynamic and use it to their advantage.

‘I think our purpose is very attractive. The millennials love it. They get pride from this.’ • Millennials expect their employer to help them learn and grow

In this regard, we heard many stories about the unrealistic expectations of talented young employees. Stories abound of young people almost demanding career advancement, way ahead of their experience and ability. This is particularly an issue in China, where it is common for people to move jobs often for a bigger title or a small pay rise.

‘People in Asia expect a new job every two years.’

The challenge for MNCs is that they need to maintain their high standards, but also to retain their high-potential employees.

Advancing the career of young talent is not just about pay and title, though, and this is where the solution lies. Comments from the leaders of five companies from completely different sectors seem to align.

‘Flatten the organisation and work in a project-based way as opposed to the traditional structure. A lot more planning and foresight is needed. It gives young people a chance to lead.’

‘Employees are looking to make a difference and have a different experience. We are experimenting with a project-based workplace to give people progress.’

‘What keeps people in their jobs is the quality of management. We need to provide clarity. We give them clarity about how to navigate and where they will go from here. We try to create an environment where everyone can be a leader without being a manager, and can grow their career at their own pace. We have a 3% turnover.’

‘We are not promoting people quicker, but we give young people different projects that build their development. Our engagement score has improved significantly and it is mostly because of this.’

‘What holds the millennials is who they work with. They want to work with smart people and learn.’ • Millennials want direct communication with leadership

‘The days of the command and control leader are over. Young people just don’t relate to this.’

They want to be informed and feel part of the big picture, and in order to achieve this, want what feels like a direct line of communication with senior leadership.

The traditional cascading of important messages down through the company layers has always lost the power of the original message by the time it gets to the front line. Several leaders we interviewed have been experimenting with different forms of direct

Talent 49


communication through various channels.

‘E-mail twice a week about passion points. The formal stuff does not resonate. We measured this – the short communications do get read.’

‘Today, the comms is less formal and in smaller chunks.’

‘I now have a full-time exec comms person. Lots of short one-minute videos on the intranet.’

This direct connection comes with risk, as the communication is now two-way. Young people have more confidence and want to be heard.

‘Young people have high expectations of me as a leader. If I don’t agree with them, they may walk away from the company rather than their idea.’

Humility and authenticity

The kind of leadership that is prepared to share ideas and invite comments from young people is one characterised by humility and authenticity. Young people respect and trust a leader who shows a genuine interest in their opinions, even if she differs and says so.

It’s the dialogue and the listening, the readiness to give responsibility, and the passion for the company’s mission that will inspire trust. Millennials are prepared to sacrifice comfort and security for a chance to grow and flex their muscles – and where their ambitions outstrip their abilities, honest (but encouraging) feedback makes all the difference.

Harnessing the passion and talent of the millennial generation is a disruption in itself, but when 70% of your workforce is millennial, learning to lead them effectively is critical.

9

Proven Ways to Attract and HireTop Talent

Finding and attracting the best talent has never been easy, and the disruptive pace of change has made it tougher than ever. What is the key to success in this area? All business and HR leaders seem to be talking about ‘agility’. In a world where skill sets become outdated in a matter of months, they want people who can constantly learn and adapt.

The business environment has become fluid, and people who can learn new things and thrive in ambiguity are in demand. This requirement has become as important as experience. It narrows the field and is pushing companies to re-think their strategies, benchmarks and even the work environment itself. Companies, not just potential hires, are under scrutiny, and are going all out to impress and attract top talent.

‘The business environment has become fluid. People who can learn new things and thrive in ambiguity are in demand.’

Taking control of the story

‘Managing the employer value proposition’ is not a new concept,


but it’s one that is now taken much more seriously than before amongst senior leadership teams.

Potential employees used to look at a company’s website, the annual report and recent press in preparation for an interview. That is information that can be controlled by the company. Today, with social media and damning comments from disgruntled ex-employees on websites like Glassdoor, that control is lost forever.

As a result, leaders are having to work proactively at managing external perceptions.

Managing perceptions

These two comments were from hugely successful global companies that found they needed to re-shape the market perception of who they were as employers:

‘From an R&D perspective, we have re-shaped the company to project that we are a cool company to join for the best and brightest. Founded in 1939, re-invented in 2015.’

‘I am working to make our industry attractive again to people who are looking for a great career.’

Talented people are looking for leaders they can learn from and want to follow. This executive was passionate about taking on public speaking opportunities to create the right positioning:

‘External evangelism is important because it helps with hiring.’

Some older industries are really struggling to compete and fix negative perceptions.

‘Young people are hard to attract and retain. We are not a very attractive sector for young people to join.’

Adding attractions

Proactively changing a company to meet the expectations of the talent market can require financial investment.

‘We had to re-design the workplace so that it is attractive to people.’

It also means taking stock of and learning to talk about the company’s true strengths.

‘We use our culture as a competitive advantage. This is a global project, driven by the CEO.’

Opposites may attract in some areas of life, but in business, like attracts like.

‘We removed limitations on how quickly people could move up. These young people are attracting other young people.’

‘Employees do not expect lifelong employment and in turn, we do not expect lifelong loyalty. Together, we commit to helping them achieve their goals, while they help us achieve ours.’

It is not that difficult to adapt to the millennial mindset, but somehow many companies struggle with it.

Hiring getting harder

Nobody commented that hiring was getting easier.

‘The war for talent has escalated. Our traditional competitors are still there, but now we are competing with well-funded start-ups that don’t have constraints.’

Some companies (mostly tech) have real pull because of their market position and trajectory.

‘When you are riding on the front of the wave and have scale, everyone wants to talk to you.’

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Agility in the hiring process

For most, this is not the case. The companies that struggle to attract talent are often their own worst enemy. The hiring process itself is a component of the employer value proposition, giving potential employees their first direct experience of a company. As such, it carries far more weight in shaping perceptions than many leadership teams realise.

Companies looking to hire agile people need to show off their agility in the hiring process. A long, torturous process lacking clarity and taking months can really send the wrong message, even though the intention is merely to be thorough. Companies need to find ways to streamline the process, keeping it efficient, friendly and well defined at every level.

Attitude is almost all

Almost everyone we spoke to said that attitude was more important than ever. This company had run the numbers to prove it:

‘Attitude before skills in recruitment is directly linked to higher retention.’

There was a great deal of discussion about how the education system is not keeping pace with real-world skill needs. This highly educated CEO has taken an interesting position on their graduate intake programme:

‘It does not matter to me if people have a degree. We have started bringing in “apprentices”. They are our future leaders.’

Cultural fit Most interviews still focus on skills and experience, although the CV provides most of this information. A subjective assessment about cultural fit is often somewhat tacked on.

A more scientific approach based on assessment tools is now bringing the soft issues to centre stage, since mindset is now considered as important, if not more so, than skill set.

This kind of comment is something we heard frequently:

‘I look for people who have done different things in their career.’ It is not easy to find candidates who thrive on change, have diverse, flexible skills and interests and can show evidence that they have put their skills to good use.

‘I am frustrated by our inability to hire leaders with dexterity – those who can drive change.’

‘The talent in their 20s are no more agile than the older generations. It’s the education system.’

Others have a different view:

‘Younger people seem to be less bound by the past, so can accept change.’

Positive qualities

One leader spoke about how for many years he has looked for specific qualities when hiring leaders. He now looks for these qualities in every hire.

‘Firstly, I look for humility. The world is changing so fast that we need to understand that we don’t have the answers. The value of experience is diminishing and the value of learning is rising. Secondly, I look for agility. What we have learned in the last six months can be more relevant than the last 20 years. We need to take the risk on different people. Thirdly, I look for authenticity. The need to be an aspirational leader is more important than ever.’

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From a fast-growing technology company leader:

‘75% of every job interview is about leadership principles.’

Hiring from other sectors

When companies value mindset as highly as skill set, the talent pool becomes smaller. Leaders who are truly driving change have broadened their view of where they’ll find good people.

‘We cannot be constrained by key people from our industry. Many of our best hires have come from outside our industry. We have worked on a constant infusion of fresh blood. They ask different kinds of questions.’ (Transport)

‘Some people can transition and understand new models, but not all. You need some new people. People from finance and IT consulting, for instance.’ (Healthcare)

‘We are no longer hiring from our competition, but from the tech sector. They say “We can do it”, when our traditional people say “We cannot.”’ (Property)

‘For hiring, we have thrown away the rulebook.’

Talking pay

There is no easy answer on the matter of pay. Three leaders spoke in contrasting ways about remuneration.

‘In Asia, the financial component of employment is still the highest factor.’

‘Staff are focused on quality of life as a priority. Our generation would have moved to East Timor for a career opportunity. This is increasingly difficult now. It’s the trade-off between professional development and quality of life. In the past, mobility was refused for family reasons; today it’s all about lifestyle.’

‘The office location has become extremely important for attraction and retention. Pay is just an element.’

Attracting and landing top talent will remain a top-three item on every executive’s priority list. The good news, as we heard, is that leaders are getting better at this. As is clear from our interviews, it takes a real effort, not just from HR, but from the whole leadership team.

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10

Engaging Talent for the Long Term

Finding the right talent is hard enough, but keeping them engaged in a world where they are hugely in demand is arguably an even more difficult task. Is there a formula for retaining top talent?

Every leader knows that an engaged, collaborative team member is more productive than a disengaged one. Engaged people with tenure are priceless, and a fully engaged team can do anything.

This has always been the case. So it’s not surprising that the HR director of a global pharmaceutical company told us that they don’t use the word ‘retention’ any more.

‘Engagement is everything, because it’s engagement that keeps people in the company.’

Premium value

Today there is a premium on engaged, agile people, so there are lots of external distractions for top talent as competitors vie for their attention.

A bank CEO told us that they have invested heavily in their people, which has turned out to be a double-edged sword.


‘We are struggling with people being poached because we are ahead of the game and have developed skills that others need. This has increased significantly over the last 12 months.’

A technology company known for its excellent culture of engagement was also a target.

‘Retention is our biggest issue. We are very successful and people are happy to be here and work well – so everyone wants our people.’

Every one of the APAC leaders we interviewed was concerned about this.

‘Recruiting people who stay is now a hard KPI.’

This leader went on to explain:

‘We had to create new talent pools – these people wanted something different.’

Having done everything they could to create the kind of environment that would retain top talent, this company nonetheless found that employee attitude to commitment could still make or break the situation:

‘If you don’t match the passion with the job, you have six months or you are out. We are defending against a swarm of committed insiders who want that person to leave.’

Millennials stick with a company for an average three years – far less in some of the top digital disruptors. They’re not interested in long-term commitment, but will fully engage if they feel the work has purpose and meaning, and affords opportunities to learn.

‘If talented people don’t feel themselves growing, they want to leave.’

‘We ask every new hire what they hope to learn in the next twelve months. Then we try align projects to facilitate the opportunities they’re looking for.’

‘There is a fundamental shift in how committed people are to their job.’

Higher purpose

Some maintained that a high level of engagement is easier to achieve in Asia than the rest of the world.

‘Our engagement score is a leading indicator of a successful business. In Asia, we have a higher engagement score than anywhere else in the world. The reason is that millennials are more engaged. Perhaps this is because there is a higher purpose in healthcare.’

Others are still thinking about where to start.

‘We need to work on monitoring how talent is progressing and experiencing the company.’

Supporting the professional growth of talented individuals is a major engagement factor. One benefit of disruption is that companies are talking a lot more about investing in their people.

Investing in people

One leader recognised that the current workforce was not keeping up.

‘The new demands from our clients are now such that our people are not geared up for this. The top trends in our sector are very different to a year ago. From a skills perspective, there are different needs. Add the generational changes in the workforce, and it’s hard to keep up. It requires a different mindset.’

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The above leader estimated that 50% of his management team was not well suited for the future direction of the company. This was not an isolated comment – several leaders said the same. The people they had were right when they hired them, but the world has changed and their skills and styles do not fit the new order.

Historically, companies replaced redundant skills or attitudes. Today, that is not necessarily the answer.

‘We have the money to buy talent, but we can’t find it, so we now invest in developing people.’

‘The skills we need don’t exist in our business, our partners, customers or competitors.’

The competition is struggling with the same issue, so re-skilling good people as opposed to replacing them is the answer. But not everyone wants to learn.

‘As we become more digital, we have to re-skill people. Some can do this and some cannot.’

Of course, there will always be a need to bring people in from outside and the above comment highlights why. Some people baulk at change, and leadership needs to become more adept at identifying who can change, with help, and who will never change. The ‘never changers’ will kill progress.

‘The team will not get us where we need to go by doing what they do today. It’s about learning agility. There are no better people out there – to succeed, we need to invest in our people.’

A willingness to change needs to be modelled by all in leadership. If more than 20% of your people are resisting change and refusing to learn new things that are important for the future of the company, then the problem is one of leadership!

Diversity is critical

Diversity is critical to retaining talent – where diversity is valued for the real benefits it confers, and not simply to fill quotas. A company made up of diverse teams will foster a sense of newness, mutual respect and effort, and of being in step with the real world.

‘The professionals we’re hiring expect diversity. They know no other way – their world has always been connected. The opposite – where we all look and think alike – kills creativity.’

Once diversity of hiring becomes a focus, it builds.

‘Diversity creates diversity.’

‘My leadership team is incredibly diverse in age, gender and nationality. They demand change!’

Diversity almost always gives rise to better solutions. The problems companies face today cannot be solved by one person, no matter how brilliant the intellect – they demand a range of inputs, based on diverse backgrounds, cultures and experiences.

From neuroscience we know that when we apply ourselves to finding solutions, we draw subconsciously on our cumulative experiences. Faced with a difficult problem, a board of directors who are all of one generation, gender, nationality and educational background are likely to approach the problem from the same starting point. They’ll reach similar conclusions, and quickly agree on what ought to be done.

It’s normal human behaviour to respect the opinion of people who have the same view as we do. It’s called confirmation bias. And it can be the undoing of a company.

‘Diversity is important. Talent comes to us in different forms. Diversity and collaboration fit well together.’

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Although many are familiar with the concept of confirmation bias, few recognise it in their own boards and leadership teams. It is something that has to be guarded against in every decision-making process.

The optimal solution to every problem, properly debated, almost always comes from a diverse group. This is not just about boards, of course. It applies at every level.

Mixing it up

One company leader explained their exponential growth and success across APAC over the past five years and said:

‘Over the last seven years, our average age has gone from 48 to 32, and the diversity mix has shifted significantly.’

A collaborative, cohesive and diverse team creates additional ‘IQ’ for the company, enabling better decisions, greater creativity and a more adaptable range of products and services.

What is more, it sends a message: ‘This place values differences, respects its employees, and is in touch with reality. This place will grow me.’ Diversity supports the kind of work environment that is likely to attract and retain good people who are, in the end, the key to unlocking everything else.

Leadership

Culture•

Humility•

Communication•

Mindset

11

Culture

It’s certainly not news that the concept of ‘culture’ is a critical component of success in business. But the way leaders are talking about it today is changing rapidly.

That change is not just because there is just a shift in expectations from talent, or even because of new best practice. There is a pragmatic, economic need for cultural change, where financial results will be compromised in a fast-changing environment unless the cultural status quo is broken.

From our interviews, it was clear that the new attitude from leaders is that the responsibility for cultural change cannot be delegated. Unless the CEO leads and lives the culture they want to create, nothing changes.

‘It’s the mindset and culture that is the key to success.’

Bringing values to life

Many of the leaders we interviewed know where they want to go culturally, but their language indicates some future date rather than today.


‘We talk about our great culture and values, but I need to bring this to life. I want to feel it.’

‘Experience is important, but ability to change is more so now. Our leaders need to develop a vibrant, young culture.’

We heard earlier how flattening a corporate structure supported impressive growth, but it is evident that this kind of cultural work is never-ending.

‘The mood and environment we want to create is that disruption is an opportunity.’

DNA is a popular metaphor used to describe the depth of change required:

‘Like sustainability, disruption needs to be part of your DNA. The challenge is the culture. How do we get this to be part of our DNA?’

‘We’re trying to align the DNA of the firm to be future ready.’

‘The DNA of our firm has always been entrepreneurial. I see myself as the catalyst to release this potential.’

It starts at the top

Leaders recognise that in order to get others to change, they have to change themselves first. That’s a tall order – personal change is never easy. But if it’s going to be company-wide, it has to start at the top.

‘I am trying to role model a pace for us that meets the market.’

Changing ourselves as individuals and company culture is not a once-off project; it’s a dynamic and ongoing process, requiring openness, energy, collaboration and a willingness to share ideas. It requires the buy-in of all, especially those in middle management. Without their support for cultural change, the best efforts of those at the top will fail.

‘I can model the behaviour, but if we do not have the involvement, participation and feedback of everyone in the company, we lose our momentum.’

Missionaries, not mercenaries Some companies have become quite prescriptive in the language they use about culture. These comments were made by the leaders of three fast-paced tech companies:

‘I want missionaries, not mercenaries. People who work for the mission, not the money.’

‘We have a concept called “speed of light” and everything is done at this speed. Agile, nimble and grow like crazy. As we grow, we split out businesses and appoint leaders.’

‘We don’t report to the organisation, we report to the mission.’

Being willing to fail

Risk taking is an inevitable part of the process of cultural change. As they launch out into unchartered waters, taking risks themselves, several leaders are encouraging employees to challenge the organisation and take risks without fear of punishment.

‘Challenge is part of our culture. People are expected to experiment and take risks.’

‘Our culture has had to change and encourage fast failures.’

It is often in the aftermath to a failure that the real company culture reveals itself; are managers critical, resentful, defeated – or do they bounce back, support, encourage learning and move on?

‘The hardest thing to manage through change is people. The number one challenge for me is to hire people willing to accept change. If you have any internal resistance to change, you will fail.’

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APAC’s cultural complexity

Beyond the ideal company culture is the role of national cultures, which in APAC are highly diverse. In some countries, this creates an advantage.

‘I feel privileged to be in APAC. People are more open. In Germany, it is hard to get change.’

‘There is a lot more entrepreneurial spirit in India and China. There is always a “better way” attitude there.’

Not that this readiness to embrace the new is uniform – Japan is often quoted as one APAC country that is slow to adapt. In other ways, too, cultural differences between countries can be even greater than generational differences.

As the percentage of global revenue coming from APAC increases for MNCs, the cross-cultural challenge for Westerners is still daunting. However, whereas in the past adaptation was all one way, today it goes both ways.

Many companies have taken to proactively working to equalise cultural understanding. This comment was typical of many:

‘We are exporting a lot of talent to the US and this influences our thinking about Asia.’

The cultural leadership challenge for regional heads was summed up with some humility by this global CEO:

‘After 30 years in Asia, I still can’t say I understand other cultures. I still make mistakes. Now add to this “digital”, and the cross-cultural shock is instant.’

Changing from the outside

For most companies, change is made possible by both working on the mindset of existing employees and bringing in people from the

outside. This sounds obvious, but brings complexity. People who might once have been ideal for a position are no longer so, and vice versa.

‘I recently appointed a marketing director who I would not have appointed two years ago, but the needs of the market have changed.’

Outside appointments bring risk of failure, where the failure may be one of cultural mismatch – not of nationality, but of personal style. The individual may be way behind a fast-paced, risk-taking company culture:

‘We bring people in from outside and some can’t function in this culture and environment.’ … or the company may lag behind the individual:

‘I hired an entrepreneurial executive, who was great, but left because I tried to get him to operate within our framework. It was my fault.’

Assisting the integration of new team members is key.

‘To bring people into our culture, we have lots of programmes to participate in, events, celebrations, etc.’

Sometimes it’s very clear that outsiders need to adapt and fit, or leave quickly.

‘Our people thrive on change. When they join us, they are overwhelmed at first. If they leave, it’s in the first six months.’

‘The culture of new teams is the biggest thing keeping me awake.’

M&A integration has always been difficult to get right, but integrating a new acquisition while a company is working through cultural change is an additional leadership load.

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‘We have made several acquisitions and merged these into our main business. This has created huge change. We can teach skills, but they need to fit our culture.’

Changing from the inside

Company cultures that have developed over generations are exceedingly resistant to change. Many individuals find it impossible to adapt; they work at their own pace, and cannot handle the warp speed of today’s business environment.

‘Some of the talent had no notion of what was needed. I had to create a sense of urgency, and not all of my people could take this on, so I needed to change many of the management team.’

Another leader tried a new idea that has worked well; appointing ‘influencers’ below the middle layer who already had strong relationships and could drive change:

‘We look for advocates from the long-term team to sell change. They are the role models that people relate to and this makes the biggest impact.’

People are influenced by their environment far more than many assume:

‘We changed the working environment, which changed behaviours, which changed culture.’

A key element in changing culture is changing the way we view skill acquisition. Learning has always been key, but the way it is done has changed.

‘We have changed the way we learn. We’re learning on the go through condensed courses – micro-programmes – through our digital platform.’

Ultimately, the culture is led by the CEO. Nothing changes without their ownership.

‘Our CEO has created a culture that encourages growth. Even though we are 12,000 people, it feels like a small company.’

Leadership overheads

Culture is disrupting leadership, because suddenly, leaders have a much greater and unending demand on them to be at the forefront of the necessary cultural change.

‘Managing the change takes a lot of my time.’

Leading by example and adopting a new style of operation means that the nature of leadership has changed too.

‘There is a need to gain influence through collaboration.’ Stripping back on complexity and corporate process to empower people is a necessary reversal of the bureaucracy that most large companies have built to support a successful past. Letting go of this has become the heart of cultural change. This bit really requires leadership courage and humility.

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12

Humility

The pace of change in business today means that individual leaders no longer have all the answers. It’s an illusion that any individual ever had all of the answers anyway – but that illusion has now been shattered forever. Leaders who understand this are talking about the need for humility in themselves and their colleagues.

This goes beyond being reflective, open and approachable – it is very much a pragmatic need.

‘There is so much more information now, that the human brain cannot take it all in.’

No leaders can know it all, let alone do it all.

Known unknowns In our interviews, we heard how leadership today starts with the acknowledgement that the leader does not know it all.

‘I absolutely have to be humble, because I’ve got a lot to be humble about! I don’t know a lot of what I need to know – I’ve got to stay curious, ask questions.’


‘What does VUCA mean to us? We don’t know and that is a good start. We are much more conscious about opening our eyes and ears.’

Several leaders from companies with long histories of global success described how, right from the top, there is a changed attitude to disruption. Company leaders are having to acknowledge their gaps, which takes true humility.

‘Our dialogue from the Chairman is, “What does VUCA mean to us?” We don’t know and that is a good start. We are much more conscious about opening our eyes and ears. It will come our way, but we want to be the leader, not the victim.’

And from this class-leading technology company:

‘We have very strong alignment globally. I have a lot of trust in our CEO and him in me. He is the most humble boss I have ever had.’

With the acknowledgment of gaps in understanding comes a different kind of relationship between CEOs and their teams. Without all the answers, leaders can either feel exposed and maintain the appearance of control, or they can lead through collaboration. In so doing they leverage the collective intelligence of their organisation and inevitably arrive at better decisions than otherwise.

‘We have moved management from command and control to collaboration and empowerment.’

The decision to change

Understanding the need to learn and change is quite different from actually making that change. Most of us are creatures of habit. Leaders build systems of behaviour over time that have made them successful, and letting go, doing something new, takes courage and effort.

Yet many of the leaders we spoke to are forcing themselves to change, and even enjoying it.

‘What I learned before as a leader has been thrown out the window. Today it needs something different. I have become much more open to ideas from the lowest level in the organisation.’

‘The single biggest leadership change for me has been letting go.’

‘The single biggest leadership change for me has been letting go. I used to own the plan and was obsessed with following the plan. Today, I just paint the big picture and ask people to develop their own plan that is relevant to their unique market.’

The language of leadership

Most effective leaders create a ‘language’ within their organisation – a set of words and associated concepts that help management and their teams to align with the mission. They weave these words into just about every communication, repeating them so often that the concepts become part of management thinking, influencing everyone around them.

The leader of one of the world’s largest and oldest companies explained some of the words that are now used to talk about leadership in his organisation – as we saw under Talent:

‘There are three components of leadership that I look for and are the most important to me:

• Humility – The world is changing so fast that we need to understand that we don’t have all the answers. The value of experience is diminishing and the value of learning is rising. • Agility – What we have learned in the last six months can be more relevant than the previous 20 years. We need to take the risk with different people.

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• Authenticity – The need to be an inspirational leader is more important than ever.’

First humble steps

Smart and highly successful people can be humble. In fact, our interviews point to the growing opinion that success is becoming increasingly reliant on humility.

From humility comes the necessary qualities of agility and authenticity.

We cannot be agile if we think we always have the right answers, and we cannot be authentic if everything is always about us. Acknowledging you are not perfect is the first step.

‘I recognised my imperfections and don’t worry about them now.’

There is a growing demand from MNCs to bring in external expertise to help them move the leadership dial.

‘As a company, we work as a leadership team with external coaches, to work out what is important as leaders. Leading from purpose brings people along. It’s authentic. Leadership has moved from directive-led engagement to purpose-led. We cannot direct any more, we have to inspire.’

Open conversations

The trend towards leadership humility is resulting in a different kind of leadership engagement with employees. The conversation is now becoming two way, at every level. Direct, personal conversations may not be possible with everyone, but a sense of connection with employees is something that leaders are aiming for.

A new level of openness that communicates the big picture at every level was the starting place for this company:

‘You always underestimate how much your people appreciate the leadership sharing the strategy with them. It creates passion and engagement. People want to know the big picture.’ ‘Effective leadership comes from trust. They need to get to know me. Leadership needs to use the language of the people here.’

This global CEO explained how he had changed his engagement with his people:

‘As a leader, I work to add value at an individual level. I am never an insider. I am always an outsider. I don’t think of myself as a CEO, but as a coach.’

For this to work, trust is required. How is that trust created?

‘Effective leadership comes from trust. They need to get to know me. Leadership needs to use the language of the people here [in APAC].’

This comment was repeated by several interviewees:

‘My top three areas of focus are people, people, people.’

We’ve all heard this many times over the years, but we now see the idea going beyond the words and really taking hold in many companies. Leaders who drop the stick of authority, listen to colleagues and show appreciation for their input tend to get work done through others way beyond what they expected.

We also heard from more than one leader that it’s not just colleagues who expect and respond well to humility; society in general has changed, and the arrogant, know-it-all leader, whose attitude reflects in the actions of the company, won’t cut it.

‘There is a new kind of leader required if we are to win back the trust from society.’

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Evolving mindset

Change is hard for everyone and none of our interviewees made light of this. They openly admit that they don’t know what is around the corner.

‘The answer is not on the page.’

‘The data is there and so is the computing power. We just don’t know what questions to ask.’

Leadership intelligence seems to be evolving in a similar way to that of computer intelligence; from a single processor to more of a distributed network.

Leaders are having to forget themselves, place personal goals lower on the priority list and create an environment in which others thrive and grow – many of whom may well be more knowledgeable and creative than the leader.

‘Autocratic leadership does not work anymore. There needs to be a why. Strong relationships, communication, clarity and engagement.’

A new mindset is already evolving. The starting point is the humility to know that we don’t know everything, and never will.

13

Communication

The idea that you cannot be a good leader without being a great communicator is as true as ever – but in a world of social media, how do leaders do it well?

The sheer volume of information we receive daily is staggering, having grown exponentially in the last ten years. Smartphones have become permanently attached to our bodies, and it’s a rare person who does not check and respond to alerts throughout the day. We are under a barrage of information coming at us day and night. This noisy environment is a real challenge for companies with more to communicate than ever before.

In our interviews a common theme quickly emerged: leaders are finding communication increasingly difficult, especially where they need to convey critical messages to the broader team.

One global CEO said:

‘We’re wrestling with the right way to communicate. There is so much information that people don’t know what’s happening.’

He went on to describe how they are tackling this by going back to basics.


‘We are back to talking to people directly. One or two simple key messages each year.’

‘There is too much information, but the people connection is what is important.’

Another of our interviewees made the point that leaders need to adapt to new ways of communicating and take advantage of the new channels available.

‘The leadership message has changed, but leadership has not.’

Direct connection with leadership

Millennials expect a direct connection with leadership, yet they don’t hear the message if it comes via traditional routes. Millennials don’t read in the same way as previous generations did, so some leaders are experimenting and finding success using new methods. Shorter, more frequent communications seem to work well.

‘As a leader, it’s important to comment authentically twice a week in a casual way.’

But a single channel is not the way.

‘You need six ways to get a message through to 50% of the people.’

Making friends with Facebook

There is no simple formula to getting communication right – new approaches which seem right may in fact crash spectacularly because the medium, the wording or the timing are simply wrong for the message and the audience. The only way to find out what gets results is to try different approaches, as this CEO explained.

‘Until six months ago, our internal comms was still e-mail and intranet focused. Our ability to mobilise the workforce was decreasing. We hired a new comms person who wanted to use

Facebook, had not convinced the exec team, but launched it anyway. This has been hugely successful with 60,000 of our 90,000 employees engaged.’

In contrast, this (younger) executive in a huge global company with a young workforce was critical of social media as a leadership tool and has gone back to a simpler way to spread his message. ‘I think there is an over-reliance on social medi within companies. I get out into the field with our sales people and meet customers. This has greater value than any other form of communication.’

Doing it in person

The theme of face-to-face resonated with many. Social media is convenient and allows frequency of short communications, but leaders are also investing time meeting in person with groups of people at every level within their organisations.

‘I now run focus groups, rather than town halls. Bring a brown bag for lunch. Twenty people.’

This kind of activity demands that leaders are authentic and really listen to people. The communication has to become two way.

‘As a leader, I try to connect on a human level, so people will talk to me.’

Listen up

Many leaders are accustomed to doing the talking – listening does not always come naturally. Changing this behaviour in themselves and truly listening takes real effort. It’s part of being humble and recognising that others, at every level, may have better ideas.

If a leader asks people for their opinion, they expect to be heard – and to see change.

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‘If I ask for feedback, I must be prepared to act on it, otherwise it stops.’

Real listening can change the dynamic between leaders and teams, creating a sense of trust and mutual respect – an ideal environment for the evolution of new ideas.

‘When we ask people to contribute to the way we approach change, openly and realistically, they engage. They have a voice.’

This leader had read his workforce and understood what mattered to them:

‘Every millennial we have wants to understand our purpose and commitment to sustainability. I need to bring sustainability into the story.’

Simplicity and clarity When a clear message needs to be conveyed, simplicity is key. Just about every successful leader we interviewed focused on a few simple ideas to shape company strategy, and conveyed these strongly in everything they did.

‘We have created a mantra – sustainability, innovation, collaboration.’

‘There are three leadership priorities – customer, people and execution.’

‘Patience, discipline and purpose. This is the role of leadership.’

Cultural differences

As all veteran APAC leaders know, anyone trying to convey an idea needs to modulate their messaging according to the national culture they’re addressing.

‘All countries in APAC are different and I need to behave differently in each country because of this. In Malaysia, staff want their leaders to take them on the journey. In Australia, they want us there to support the journey.’

According to some, direct communication with people at every level raises issues when this is done across cultures.

‘Skip-level meetings are not beneficial where the first language of the participants is not the same.’

The same leader successfully trialed something novel in China.

‘I opened a WeChat account to communicate with people in multiple languages. They can write in Chinese and I see it in English.’

We heard several stories of companies using WeChat as a primary internal communication channel in Asia. In all but one case, these were regional initiatives that worked around global IT policy.

Tough talk

All businesses have cycles of success and challenge. Some of the leaders we interviewed were finding current conditions extremely challenging; messages that seemed to make sense and ‘stick’ during more even-keeled times were simply not being absorbed in the current climate of disruption.

‘Leadership messages only resonate where people are in a business that has a solid footing.’

That comment, though, ignores some of the key leadership lessons of history; that extraordinary things are achieved against overwhelming odds. In the case of his company, there seemed to be a disconnect in communication, right from the top. He was, in essence, feeling the authenticity gap.

By contrast, another leader, in the midst of a global turnaround, said:

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‘Leaders need to be passionate and resilient to keep going and push through the barriers. Only when there is success do others follow. To get people on board, they need to see it for themselves.’

The comment may sound theoretical, but this leader was clearly living this reality himself.

It’s always worth remembering that employees have also been disrupted by technology. They want more from their leaders, but are hearing less. Communication has become another leadership disruption, with leaders having to work harder to get the job done.

No rocket science is needed here; rather an open mind to listen, try new things, and maintain a strong connection with people at all levels – however one achieves this. A final comment underlines the key idea for meaningful communication.

‘I am more in touch with my team these days using many tools. It does not matter which.’

14

Mindset

Getting management teams and workforces to embrace change fast enough is a global problem. The key to change is no longer skills – it is mindset. More and more, this phrase emerges as leaders navigate companies into the future.

Mindset change clearly represents the toughest issue leaders are facing.

Most leaders we interviewed spoke about their attempts to change the way their managers and workers see their business as they transform business models to suit a shifting landscape. Universally, getting management teams and workforces to embrace change quickly is a real issue.

‘The CEO gets it, they get it, but at the next level, the awareness of the need to change is much lower and people are not hearing the message.’

With the pace of change outstripping our ability to adapt, everyone struggles with mindset, because nothing is certain except constant technological disruption and adaptation. The impact on leaders having to steer huge, established companies is huge.


‘Human adaptability is being put to the test. The pace of business is accelerating in a steady way and will really pop about five years from now.’

‘I am an anti-hype person, but today, there is massive change. The pace of change is significantly higher today than ever before. It’s an acceleration of a whole lot of things. Old ways of thinking do not work.’

Skilled but unsuited Many leaders brought up a fairly shocking statistic; that ‘at least half’ of their management team were totally unsuited to the current business environment. They had skills, experience and vast pools of knowledge – but tended to stick with the strategies they know instead of running with the changes, innovating and leading through disruption.

Managers need to do more than simply adapt to and take advantage of digital transformation – they need to pivot the disruption itself and take it further. Curiosity, flexibility, resilience and determination to overcome seemingly insurmountable setbacks are called for.

Cut in half

It’s not possible for every large company to replace half of its management team, when the competition all have the same issue. We would be saying half the world’s management workforce has suddenly become redundant. Finding good talent is already hard. Halving this pool would be disastrous.

New companies don’t seem to have this problem, and nor do newly hired executives.

‘A new CEO has no baggage.’

This medical technology company is the global leader in its sector because of what they describe as the precision and consistent reliability of their products.

‘People here are good at precision, but not good at uncertainty.’

In many cases, the rise of Chinese competitors has forced a pace of change that becomes impossible to match for a company obsessed with excellence. Results are impacted in the struggle to deliver excellence at lightning speed. Smaller companies manage it – MNCs carry baggage. A history of success can cloud the view and keep the mindset static.

‘I took over a business that is doing very well. Getting agreement to accept change is tough.’

And this comment was repeated by many:

‘Middle management are the hardest to change.’

Blocks and limits

The complexity of APAC adds to the management load, which can really hamper progress.

‘Managing the disruption we face is slowed by the daily issues we face in complex markets such as China and India. We are behind because of this.’

An executive we spoke to had a willing team, but without experience beyond the successes of his company, he fears that they are limited by their past.

‘We have a young dynamic leadership team who are willing to change, but they have only seen what they have seen here.’

Making a start

People are generally willing to change when leaders set an example. Changing the mindset of the broader management team and workforce inevitably starts at the top.

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This has always been the case, but it seems that leaders are finding the nature of change quite personal, affecting them as individuals. They are challenged by having to develop new attitudes and expectations of themselves.

‘Traditionally, as a leader, I expected to be largely in control. Before, I never felt that I was not in control. I am now in territory where I have no control.’

‘Making quick decisions means there will be important data that will be missed and lead to wrong decisions. We need to accept that this is now normal.’

‘I don’t think this environment suits all leaders. I think the intuitive leader will be in great demand in the future.’

Managing time and focus of attention was a common theme:

‘How you allocate your time as a CEO is different to ten years ago. The demands are greater than ever and as an executive, I need to be fit and focused. Over the last five years, I have become very disciplined about managing my time. This is a pace demand.’

‘I could spend my whole day taking in relevant info, but I can’t. There are many more competing priorities today and it’s hard for a leader to know the right path and how to best help the team. It’s about courage and awareness.’

‘For me, the leadership challenge is getting the time to change as the market changes.’

There were also comments about prioritising time to think.

‘A CEOs primary job is to think.’

‘I schedule think days – create space to think.’

Seizing the mindset opportunity

When it comes to facing the challenges head on, it seems people fall into three groups:

• Welcoming change and progress; leading through the change. • Not welcoming change, but willing to come along once woken to the need. • Resistant to change; stuck in their own reality.

First steps, long game

The answer seems simple – coach and retrain the second group, eject the third. It’s not so simple, as we have no way of knowing who fits into which group until effectiveness is tested.

You’re not going to find that from any interview or CV. The task is much more demanding; we have to predict the mindset of a person from subtle clues and through assessment tools.

Assessment tools are not new, but their relevance and precision is growing as companies begin to look at mindset above skill set.

Assessments are useful for determining the mindset of old employees and for assessing new hires. A new wave of game-based assessments looks to hold promise, with many of the world’s largest companies experimenting with these technologies to understand the real nature of employees.

Neuroscientist Beau Lotto offers some hopeful insights into mindset change in his book, Deviate. He says that for the majority of us – willing to change if necessary, though not exactly thrilled by it – resistance to change is unconscious. Instant leaps in understanding are not possible for most, but change of a high order is still possible through incremental steps.

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What seems to be a ‘eureka’ moment is often just the last step in a long process, opening the final door to understanding. For this reason, patience and persistence are needed to move the mindset dial.

The wake-up call

Several executives we interviewed told us how their companies have engaged outside consultants to initiate the mindset change journey.

Rik Vera, CEO of the consulting firm Nexxworks and author of Managers the Day After Tomorrow, took the global leadership team of a massive MNC on what he described as a wake-up journey.

‘We wake them up. They take a trip into the future.’

Rik takes leadership teams on trips to Silicon Valley to visit fast-moving, innovative companies.

‘It’s more about the spirit than the actual companies we visit. The first two days is a wake-up call. Ouch. There is anger, argument and/or depression. On day three, they accept and then we have two days to build. 80% of people do get it, but some people just do not want to change. This 20% who resist can kiss their easy life goodbye.’

Decision time

There is some real risk to companies using this approach.

‘Some come back from San Francisco and quit their jobs because they don’t believe their companies can make the change. We warn companies that they may lose people when they go on one of our trips. It’s both the laggards and those who want to move faster.’

He said that sending the senior leadership team is only half the job.

‘In most cases, it’s the middle management that faces the biggest challenge. The top leadership just need a mindset change. We run a middle-management boot camp and interview them at the start and the end, five days later. The difference is mind blowing.’

Rik is seeing several common threads.

‘The way the company is run is becoming more important than anything else. They know something is happening outside, but they can’t seem to escape their own business model. They are using old fashioned processes to try and change the company. This is the biggest problem. If they cannot escape this, they will not make it.’

The mindset change needs to go beyond executives because, as Rik says, ‘Boards are the biggest problem. They still look for long-term, rigid plans.’

And the bottom line on what he sees is scary.

‘In some sectors, they are so stuck in old business models and assets that they will not need in the future, that I predict 50% will not survive.’

Everything stated here has shown how the increased pace brought to business by technology is creating a significant leadership challenge. Rik sums up very simply where the focus needs to be:

‘It’s not about technology, it’s about changing human behaviour.’

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15

Conclusion

This book is not meant to push our views, but rather to present a consolidation of the insights we gained from more than 100 hours of discussion with 70 leaders across Asia Pacific. These leaders stand at the helm of companies that have combined global revenues of more than US$1tn. The companies, spread across multiple sectors, are all market leaders in their industries, and the individuals who lead them are smart, fully engaged achievers.

These companies and their leaders are where they are today because of a highly successful past. Yet they are all staring at the shifting terrain of a very uncertain future. They face the same massive challenges, brought about by an accelerated pace driven by constant technological innovation.

‘There has always been disruption, but the pace has changed. Disruption is the opportunity.’

The most important finding here is that in facing this challenge, the mindset of leadership is the number one factor for achieving future success.

We uncovered specific trends in the three themes that ran across most sectors.


Strategy is impacted and has become fluid because: • Customers are changing their behaviours more quickly than ever. • Competitors, both existing and new, are redefining markets at a faster pace. • Business models anchored to past success are challenged to respond. • Stimulating innovation away from the centre is a positive trend, but tough to implement.

Talent is expecting more from employers. They want: • A closer connection with leadership. • To work for a company that plays a positive role in society. • To work for a company that invests in their professional growth.

Leadership itself is challenged because • Cultural change needs to be led from the front; changing strategy and managing talent expectations requires a leader who models flexibility, curiosity, adaptability and resilience. • A new mindset is required; one that embraces humility, acknowledges that no leader can see or know everything, and seeks to create a new kind of dialogue with employees. • Communication is more important than ever; effective internal communication depends on the use of multiple channels and innovative ways of messaging to connect with different generations.

• Change is permanent; there is a need for a truly agile mindset, to see, accept and take advantage of change.

Almost every leader we interviewed spoke about the new pace as a serious disruptor. Many see this as their opportunity and have already properly embraced the change.

‘Three years ago, disruption meant fear. Today, we have embraced it.’

Leaders are challenged to evolve and this is not going to be easy for them. Some will make it and some will not.

We hope that what you have read here helps relieve the anxiety. You’re not alone on this journey – everyone in business faces the same massive challenges. Hopefully, you have found some ideas here that you can use on Monday morning.

On a final positive note, these two inspiring comments came from leaders in ‘old’ industries, driving their way through the transformations of their companies.

‘We can see the threat, but there is also great opportunity. I have been with this company for 13 years and I am more enthused about the future than ever. Our opportunity is bigger than the threat.’

‘Everyone is having the same challenges, so I am not scared. I have learned so much over the last two years.’

Conclusion 93

About the Author

Mark Braithwaite is the Asia Pacific Managing Director of Odgers Berndtson, one of the world’s largest executive search firms. He has been a board member of the group since 2015.

Mark has operated across APAC since 2000, supporting MNCs as they seek to hire exceptional leaders. Much of his industry focus over this time has been in the technology sector, but since 2013, Odgers Berndtson in APAC achieved a scale where he stopped running search projects to dedicate all of his time as a business leader.

Mark has written and published many provocative research based leadership articles over the last 20 years. His work has appeared in The Australian newspaper, Outside Magazine and online with The Economist.

Mark lives in Singapore with his family.

About Odgers Berndtson

Odgers Berndtson operates at the very top of executive search, helping to build the leadership teams of the world’s best companies. The firm began its journey more than 50 years ago and still operates with the agility of a young company through a unique culture that puts values ahead of rules. There is a relentless drive to ensure a client and candidate experience that is exceptional. This comes from a true culture of collaboration, respect and humility, recognising that asking the right questions is more important than knowing the old answers. The Odgers Berndtson team is more than 1200 people, across 55 business centres globally.

Acknowledgements

I would sincerely like to thank the 70 executives who gave of their time to openly share the insights that form the backbone of this book. The time I spent with each of you was humbling and a true privilege.

Thanks to Richard Martin, Managing Director of IMA Asia, for helping me to create the concept for this book and accompanying me on the first 25 interviews. Your formidable intellect is only surpassed by your selfless friendship.

Our editing team, John Cooke and Jane Mqamelo, for your hard work and late nights.

Carol Reay, our Global Marketing Head, for your positive support and helping align your team in a way that seemingly got me everything I needed instantly, all the way through this project.

Thanks to my Odgers Berndtson colleagues across Asia Pacific for identifying the best targets for the interviews, helping gain access and joining me for many of these. Your critical input along the way is much appreciated.

“THERE HAS ALWAYS BEEN DISRUPTION, BUT THE PACE HAS CHANGED. DISRUPTION IS THE OPPORTUNITY”

DISRUPTION: HOW 70 LEADERS IN ASIA PACIFIC ARE RESPONDING

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MARK BRAITHWAITE

Mark Braithwaite is the Asia Pacific Managing Director of global executive search firm Odgers Berndtson.

Author

As the accelerating pace of technology-driven change overtakes our ability to adapt, some companies are riding the wave of disruption, while others are sinking fast. We interviewed leaders of 70 Western multi-nationals in Asia to find out how they’re being disrupted and what they’re doing about it.

The pace of change is accelerating, and we are living through a period of disruption that will be an extinction event for companies that are slow or unwilling to adapt. Mark is generous in sharing his observations without being opinionated or being overtly prescriptive; one feels like a member of an audience in a series of candid fireside chats with business leaders about their approach. Very practical and insightful read

Benjamin Tan Senior Vice President, Asia, Qantas Airways Limited

A practical guide with real insight into what leaders in Asia are thinking about disruption, how they are dealing with it and getting ready to be disruptive themselves

Raj Narayanan President, Asia, Alcon

Like the best news reports, Leadership Disrupted graphically captures the experiences of CEOs as they confront a wave of disruption to Asia’s markets. As Mark Braithwaite demonstrates, that wave is moving faster than in the West, placing Asia CEOs at the front of a global battle. That makes this short book a timely guide for CEOs on how to frame the strategic challenges in this latest wave of disruption. As is often the case during turmoil, success comes down to the teams that are built and how they are led. Leadership Disrupted provides a concise guide to meeting those challenges Richard Martin Managing Director, IMA Asia

Mark captures clearly, concisely and in their own words the views and experiences of senior executives driving change, transforming and thriving across the Asia Pacific region

John Lombard CEO, Dimension Data

leadershipDisrupted-bookCover-v1.3.indd All Pages 05/03/2019 09:1637332_LeadershipDisrupted_Booklet_CVR_hc.indd 1 6/3/19 8:18 PM

“THERE HAS ALWAYS BEEN DISRUPTION, BUT THE PACE HAS ... · ‘Disruption is by far the most important topic – we are a disruptor, but we are always in danger of being disrupted

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