To Survive The Unexpected

Step 3: A life of Organizational Dilemmas

Now that we have reviewed the major external challenges that will affect corporate life and leadership skills (see Steps 1 and 2), let us take a look at their impact inside companies. Obviously these upheavals will have a major impact on the structure of large corporations and on how they function as they struggle to  absorb these new challenges and are obliged to reconsider some of their fundamentals: mission, strategies, corporate citizenship, governance, organization and process, leadership and management style, to name the most important.

The primary result of these tensions in the environment is to place corporations at the heart of dilemmas, and leaders in a position of having to manage these. Managing dilemmas that arise from strong and stressful internal tensions requires acting with clarity within a framework of complexity. Leadership is no longer about solving problems, which remains important, but about managing apparently contradictory and sometimes conflicting objectives, or opposing realities that must be reconciled. Some dilemmas are old, others more recent and induced by the accelerated pace of technological innovation, the public pressures that are stirring in human societies and unexpected crisis.

We know that in a period of profound change the old and new worlds coexist. You cannot just get rid of the old one and impose a new one, ignoring the pressures and sometimes the violence that can overwhelm societies and individuals in the process. In any case, there is no reason to “throw the baby out with the bathwater”. The “brand of the best” in leadership will involve knowing how to implement future opportunities while keeping what’s needed from the past in order to resolve dilemmas with maximum success and minimum pain.

We see five paradigms of dilemmas as most relevant. In each case leaders will have to put aside “either…or” choices and find “and…and” solutions.

1. Global integration AND operational split-up
2. Compliance AND Agility
3. Complexity AND Simplification
4. One Culture AND Diversity
5. Financial Pressure AND Wellbeing at Work

Organizational Dilemma 1: Global Integration AND Operational Split-Up

This first dilemma, although quite old now, is fueled by two factors related to the evolving organizational structures and expectations of the younger workforce.

Information systems (ERP) that allow us to process and format real-time field data – and even analyze it using Artificial Intelligence – provide the command and control structures of large multinational organizations (or so they hope) with the ability to exercise real-time decision-making even for remote field activities that were previously out of reach until tedious consolidation and reporting had been carried out.

At the same time, local organizations are demanding autonomy in making decisions and prioritizing actions in order to respond most effectively in their decentralized business units. And new generations are rejecting the constraints of bureaucratic structures, leading many bright and educated young people to start-ups rather than to large groups that are struggling to attract and keep them.

The challenge for the leader will be to navigate at the heart of this dilemma with their teams, i.e. to help promote responses to local realities upstream and to strengthen global guiding principles downstream–all the while delivering results and keeping people happy and motivated.

Organizational Dilemma 2: Compliance AND Agility

This dilemma is particularly sensitive today and questions how to balance the company’s quest for agility (aimed at operational speed and efficiency, sustainable client satisfaction and engagement, and ROI) AND do this while respecting expectations and pressures from regulators and lawmakers to comply with rules that ensure fair, ethical and safe ways of conducting businesses and managing people–but that often slow down operations by stacking control processes. The post-pandemic recovery pressure will make this agility and effectiveness an absolute must. 

Not an easy task. Never has the regulator been so powerful, at least in the West. Pharma, banks or transportation, for example, operate with coercive rules often experienced as limiting constraints. Some of these rules have to do with safety, others with ethics, others with fair competition or the consideration of minority groups. But all of them are binding on economic operators. For some, these constraints are too burdensome, for others they are insufficient. This dilemma has an impact on international competition, and it is up to each organization to adapt its culture and processes accordingly. The equilibrium between compliance and authorized agility differs from one location or business to another, including in the same multinational company.

Agility seems to be less an end in itself than a natural reaction to bureaucratization (size) and the increasing weight of regulation and bureaucratic procedures over the past 15 years. But on the other, is the search for agility just a way to push the difficult responsibility for simplification down to individuals or teams? A banker now spends 80% of his time on KYC (Know Your Customer) in order to meet compliance constraints that, if neglected, could lead to severe financial penalties. At the same time, they are pressured to be “agile” and to deliver results.

Leaders will have to navigate a “grey zone”, between speed and agility on the one hand, and compliance to rules and regulations on the other in order to ensure the performance expected from them. It means sound risk management and a robust decision making process, involving feedback and advice from peers and colleagues.  

Organizational Dilemma 3: Complexity AND Simplification

Organizational complexity is not a choice but a consequence of global complexity. Today, international organizations are matrix-based in order to respond both to the “vertical” performance requirements of their commercial and industrial business units (or regions) and to the “horizontal” need for resource optimization through globalized functions. The one-line traditional chain of command is inoperative here and the matrix is further complexified by widely applied project-based management, which in some case leads to something like “scrum-based” confusion.

When complexity is reinforced by the lack of a clear purpose, it generates more stress and puts more pressure on decision-makers and operational staff, who are subject to contradictory demands from groups with different and sometimes antagonistic internal political interests.

Having become aware of the cost (human, time and money) of complexity, many companies have undertaken to “simplify” which, in general, has been greeted with snickering or weariness. Does it really make sense to go for a simple organization in a complex world?

It is possible to clean up the historical bureaucratic stack and accumulation of processes that are useless today, and that is worth doing. But there is a limit to what can be achieved.

Only leaders who know how to arbitrate and are therefore clear about their own convictions and objectives are able to simplify their environment.  This “work on oneself”, each leader can engage it through training or adapted coaching. It is essential in a period of transformation and economic reconstruction such as the one we are about to experience. 

Organizational Dilemma 4: One Culture AND Diversity

The dream of a homogeneous and global culture, which would translate into consistent leadership behaviors regardless of cultural backgrounds, has come up against the wall of reality. The world is culturally diverse, and this seems to be difficult to accept for some people. We see today how fragile global integration is in the face of a major crisis.

From a cultural standpoint, a large part of Asia and other places in the world are pushing back against a management model largely dominated by the West and the United States. Even within homogeneous cultural groups, individuals express different aspirations and organize around them.

Diversity, at its best, is a source of richness that many companies value. However, cultural homogeneity streamlines effectiveness in that it provides a coherent communication platform and limits the risks of misunderstandings and mistakes. And so, to create cultural homogeneity across culturally diverse geographies many companies have worked on “values” over the years. This has either been taken seriously or giggled at, depending on the process used to identify them and the timing. These organizations have then translated these guiding principles into leadership profiles with an aim to increasing behavioral consistency within management.

But even with the best “values & beliefs” process, can global, diverse companies truly expect to see leadership implemented in the same way everywhere? The challenge for leaders and managers is therefore to embody the right balance between modeling behavioral imperatives imposed by the company and engaging in local practices that may be out of step with the model but are necessary to perform successfully.

Organizational Dilemma 5 : Financial Pressure AND Wellbeing

Due to the unexpected crisis (i.e. Covid) and profound transformations we discussed above the pressure is even stronger on leaders and managers to articulate and deliver a clear vision of the future.

Anxiety, stress and suffering at work have increased over the past ten years due to uncertainty and a sense of dehumanization, among other things. Changes and crisis in the workspace have exacerbated this. For purely economic reasons, employees, traditionally identified by their expertise, function, rank and workspace (which they often personalized with a few personal objects) have in some ways become a human nomadic functionality that sits where they find space in an open and neutral area. These different pressures have created an environment conducive to diseases such as burn-out or depression, which have become commonplace in large international groups. Our recovery period of time will increase this difficulty.

Not surprisingly, there is now an increasing demand for well-being at work, both in response to this pressure and as a generational factor. Companies are trying to respond in different ways. Some provide their staff with more friendly meeting and workspaces; others offer stress management, sports, meditation, creativity or sophrology classes; and many propose personalized support such as training and coaching. And in the best-case scenarios, they work to improve their management style and the capabilities of people.

COVID dilemma: outsourcing VS relocation

The crisis of 2020 has highlighted the issue of industrial relocation. Basic products such as masks, manufactured at low cost in Asia, have suddenly taken on a strategic value. A form of relocation hysteria immediately hit the headlines and animated debates on news channels. But will consumers be ready, after the crisis, to pay 30% more for their local masks than for imported masks, or delivered directly to their homes, at lower cost, via online shopping?

Things are not simple. The dilemma for public authorities could be expressed as follows: We must ensure that the product is immediately available to our people AND offer a price acceptable to the consumer, WHILE AT THE SAME TIME fulfilling our role as public health authorities.  Which of course leads to different options. Relocating production with the risk of being less competitive once the crisis is over? Anticipate and create strategic stocks kept up to date to react in times of crisis? Encouraging individuals to have personal stock on hand at all times? Etc.

For tomorrow’s leaders, this means learning to analyze, choose, decide and implement actions when conflicting options are all legitimate.

One final thing. The generational gap between digital natives and non-digital natives will continue to pose problems between people and create inconsistencies in behaviors within companies for the next 15 years at least. Digital natives also have a radically different vision of the world and society, and different expectations of their professional life. They are less interested in loyalty to their company. This adds an additional source of anxiety.

It is obvious then that, after the crisis we experience today with the pandemic, leaders will need to be able to interact with and support all their employees in a way that goes beyond what was traditionally required. At that point we will be able to start talking about Quality of management as it will be required in the future.

In step 4 we will have a look at what tomorrows leaders may look like. Not an easy task today…

Charles Gancel

April 2020

CGancel@icmassociates.com

ICM Associates (Paris) is a member of the PAWLIK Consultants (Hamburg)

Have a look at Step 1 Leadership definition

Have a look at Step 2 The world as it goes