Chapter 1
Embracing the Why

Freddy

The Scenario

Freddy is in his office unpacking boxes, putting pictures of his family on his desk, etc. He hears an e-mail ding into his Inbox on his desktop computer. The e-mail, marked urgent, is from Trish McDougall, Head of Technology and Operations North America. The other half-dozen members of the New York management team are copied on the e-mail as well. Trish is requesting a meeting to discuss the need for a new strategy.

Part of the senior management team assembles. In addition to Freddy and Trish, present is Vivian Ho, SVP IT, North America, to whom Freddy reports. Absent are Gil Stanton, VP Operations NA, and Patrick White, SVP Operations NA, all of whom report to Trish as well.

Here's how their conversation goes:

TRISH: It's no secret that things have been going downhill, and we need to turn the ship around. The CEO is asking for opinions from all sides, which he's then going to consider before deciding on a strategy. VIVIAN: Trish, I think it's important not to panic. A conservative approach makes sense, and it should be done from a cost-cutting perspective. The immediate focus should be on doing whatever it takes to stop the bleeding. FREDDY: Is there an appetite here for . serious change? TRISH: How do you mean, Freddy? FREDDY: Exploring new opportunities. Riding the digital wave. TRISH: That takes time. The market expects results. FREDDY: I wonder if the traditional diversification strategy is working in the new environment. We've always had our fingers in a lot of pies, and it has worked. But maybe now we're spread too thin. VIVIAN: What are you suggesting? FREDDY: Avoiding risk is obviously good, but maybe it also comes with a danger of, I guess, spinning our wheels. We're in a lot of segments where it doesn't seem like we have any future. VIVIAN: Spinning our wheels? FREDDY: I'd be worried about doing a version of the same thing, but doing more of it. The diversification strategy was put in place years ago, and it worked, but I don't think it really works now. There are competitors in specific segments with superior value propositions. We're losing market share because of it. With a new reality, I think maybe it calls for real innovation to succeed in the long term. VIVIAN: What about the short term? We're hemorrhaging. Keeping the portfolio diverse is exactly what will allow us to withstand the short-term changes. FREDDY: Of course. I mean, you need something for the short term and for the long term. I haven't thought it all the way through . VIVIAN: It's dangerous to overhaul the strategy. Incremental change makes sense, but by turning everything on its ear, well . I think it would be perceived by the market as a knee-jerk reaction. Change is good, but it should be done slowly and thoughtfully. TRISH: I agree. Survival is the primary goal right now. FREDDY: I hear what you're saying . what you're both saying. I just, I heard someone say once, even if you cut off the bad branches and feed the good ones, if the trunk is diseased you really aren't changing anything. You know what I mean. TRISH: Not really. FREDDY: You're saying cut off the bad branches and feed the good ones, or whatever, but the trunk of the tree is still there. TRISH: Okay. We're going to let this percolate for a bit and then push the discussion forward. I'd like each of you to think on this further and then send me an e-mail outlining what you think is the best strategy, and why, by noon Friday. Thanks for your views. We're adjourned.

Questions We Asked

1. Have you ever argued for or against a diversification strategy? What position did you take? How was it received?
2. Have you ever been in a discussion where you felt your colleagues or bosses were adopting a short-term view to the potential disadvantage of the company? Did you say anything?
3. Have you ever had a different view than your immediate supervisor on an important topic? Did you make your opinion known? How was it received and what was the outcome?

Comments We Got

The user community provided numerous anecdotes describing sensitive situations they've encountered just like the one faced by Freddy - whether it was to argue for or against diversification, debate short-term wins versus long-term gain, or take on their boss when they thought he or she wasn't necessarily seeing things clearly. They reported extensively on the classic challenge that arises for many general managers stuck at the crossroads of authority. Often, the greatest requirement of a GM in this position is to be able to argue effectively, at the right times, for the right causes, in the right way.

Six overall themes emerged from the input we received. Here they are, including some of the representative comments made.

1. It's okay to argue for change. Change means innovation, and innovation means value.
   • 'You have to take a risk. Otherwise, sooner or later, you will be out of the competition.'
   • 'After the financial crisis, "long-term" suddenly became equal to a quarter. I spoke up.'
   • 'Short-term strategy is cost-saving, but this will not be sustainable in the long term. As a member of the supervisory board, I'm trying to help the managing director to shift her focus gradually.'
   • 'The phrase "The markets wants ." or "The market is expecting ." comes up often. But seriously - I think that the market is more concerned about a sound long-term business plan than some kind of EBITDA make-up.'
2. Articulate your position with data.
   • 'When arguing against diversification I relied on the lack of value in pursuing it - expected results from the new directions were smaller than in focusing existing resources on the current mission.'
   • 'My approach is to gather the facts on overall developments in the market, our share development over time versus competitors, present them in a format that will allow discussion, start the discussion and ask the team who is winning and why.'
   • 'If you're going to suggest going away from your current direction, you should bring insight, and a plan.'
   • 'Fact basis and risk analysis were the essence of making my opinion known.'
3. Build trust early and often, so that your opinions will matter.
   • 'I prefer to have one-to-one conversations to build my vision before positioning myself.'
   • 'I have learned to choose my battles and argue against decisions only when there is a "material harm" for the company. In those cases, I choose to influence the course of action behind the scenes, not in meetings, and try to form coalitions or find common ground with other members of the management team.'
   • 'In my experience, it is greatly appreciated when you speak up and give your opinion, but only when your relationship is developed in such a way that your supervisor trusts you.'
   • 'I will work hard to support my boss. This will ensure I gain trust and respect, at least for hard work and loyalty. It will also ensure that he understands I support him and it's not my intention to undermine him or his authority. Once I gain that trust, only then will I be more open with my opinions.'
4. Remove any personal agenda. Focus on value for the company.
   • 'I argued for a diversification strategy, and it was well received. Everyone agreed to move forward in a certain direction. Then the group divided themselves in reality. Some people spent their time slowing the process, while others strategically moved to ensure they would get what they believed they needed for their respective market or area of responsibility.'
   • 'The approach that I take always comes from customers' needs, as that is the driver for all businesses.'
   • 'Experts protect their own little corners.'
   • 'I find bringing the discussion back to customer and shareholder value works, as does linking in with the customer values.'
   • 'The internal personal decision that has to be made each time is: (i) take a stand and make a statement, (ii) I am keeping my mouth shut in order to survive and fight another day, or (iii) I don't care, as long as I get paid. The difference between the first two is often seniority and the number of people in the...