Transcript of Great Leadership Teams are Fundamentally Sound

Well, it's one o'clock, I think we're gonna get started. Hi, my name is Jack McGuinness and I'm the managing partner of Relationship Impact, a management consulting firm focused on working with the executive teams of growing companies to help them scale more effectively.

Just a couple of notes on logistics. We are going to get started here in a couple of seconds. You'll see in the slide packet that I'll present to you, I'm not gonna go through every slide and every word by word but I do provide a lot of content in the slides so that you can have that for future use.

Secondly, if you have any questions during the course of the discussion, please feel free to use the chat feature to ask me any questions. We'll have a Q & A at the end as well.

With that, we're ready to get started. Again, my name is Jack McGuinness and welcome to the February 27, 2019 addition of Great Leaders Build Great Leadership Teams.

The topic today is, I'm pretty excited about it, I just wrote an article for Chief Executive Magazine that should be published within the next couple of weeks on the three fundamentals of building great leadership teams. I put a lot of thought into this and pulled a lot out from the client work we've been doing over the last year or so and coalesced it around these three fundamentals. I'm hoping you get a lot out of it. We'll see.

One important thing I Just wanted to start with is: there's been a number of studies done. I just read a McKenzie study that suggested that 80% of executives on executive teams polled said that their teams were underperforming. There's a similar study by a group called Team Coaching International that polled thousands of executive teams and suggested 75 to 80% with the same statistics.

What is it that's causing teams to not be as effective as they potentially could be? We think it's a few key fundamentals which we'll go through today.

Just like you'll see in the slide here, a basketball team or symphony orchestra or a ranger unit. Best performers practice. They know what the fundamentals are, they know what's most important for their success, they continue to practice and refine those skills that form the foundation for their greatness. A method of play, if you watch college basketball, Virginia is in the top five for the last several years. They're known for their defense and they have a method of play that they work toward and it works for them, to a point, they don't win every game of course. They have a method of play and they stick to it.

Symphony Orchestra. The fundamentals, they practice, they refine them and before every orchestra everyday they have a warm up.

Being in the military, I know firsthand the benefit of a set of operating principles that teams really need to operate from. Whenever you're trying to master a craft, and we would argue that building a great leadership team is a craft, that's a really important craft for any growing organization. There has to be some strong fundamentals and continual focus and refinement of those fundamentals.

Without fundamentals, we've seen teams doing the wrong work. Focusing on participate in a management meeting or an executive team meeting where teams are focused on mundane tasks such as the seating for the Christmas party when faced with significant growth challenges like a customer concentration issue, for example.

Teams will duplicate effort. Unintentionally, most of the time, sometimes intentionally. There's lack of clarity. You've got two VPs and two units working on the same stuff and wasting resources.

Continually repeating mistakes. Teams are continuing to show up with the same problems over and over again. There's one company I work with where they put a financial system in about 18 months to two years ago, it missed all its deadlines, it went over budget, over time. Finally got it put in then they had a plan to move to a new warehouse and that plan started drifting until they put a project plan in place. Just basic blocking, tackling stuff. A lot of this stuff leads to some relational strife among teammates which exacerbates the issues indicated above.

Poor fundamentals can lead to some significant team challenges.

Why are fundamentals often overlooked? There's a few reasons. First is that there's often an assumption that by putting a group of managers together or executives together that they will know how to function as an executive team. From our experience, that is a very faulty assumption. Doesn't mean they aren't team players but working on an executive team is a much different construct than being a leader of a functional unit, for example.

Another challenge, I think, is oftentimes leadership teams are set up as reporting vehicles where functional heads, lines of business leaders will come together periodically and report out on what has happened over the last month or the last quarter. That reinforces the siloed view of a leadership team structure.

Finally, this last one is related to the first one. It's teams often want to collaborate but don't really know what effective collaboration looks like at an executive team level.

For each one of these fundamentals we're going to go through these issues and challenges we're gonna go through. Hopefully these fundamentals will make it clear on how we can build a great leadership team.

So, from our perspective there are three important fundamentals to building a great leadership team. First, which we'll talk about in some depth, is clarity of purpose, not clarity of mission for the organization, but clarity of purpose for this leadership team at this point in the life cycle of this organization.

Number two is logical structure. Making sure that we have the basic blocking and tackling components in place and everyone is on board and understands what those are so that the natural processes and tactics are in place for the team to thrive.

Finally, operating principles. The norms of behavior for how a team operates. We often see a lot of lip service paid to this last one. We'll just grab a list of norms off a website or we'll just come up with a list of things that sort of make sense without a lot of thought put into them and they kind of become a list rather than a method of how a team actually behaves together.

Let's go through clarity of purpose a little bit. What do we mean by that? Purpose, for a leadership team, has to go beyond the mission and vision and has to look at what is most strategically important for this team at this juncture in the organization's history. As you all know, I'm sure, being part of leadership teams, those strategic imperatives change over time. We might be growing through acquisition so acquisition becomes a central focus, not the only focus but a clear focus and priority for a leadership team to be focused on collectively and bringing the collective wisdom of that team together.

It could be we worked with a number of companies that have had some customer concentration issues. They've grown really well but only with a couple of key customers. While that can be great in terms of growing the organization, it also becomes a risk if one of those customers should disappear or go to a competitor or whatever. So focus for an organization like that is really how do we focus our collective efforts on tackling that issue?

Purpose just simply establish a foundation for how the team will operate and behave as a unit. Like I said before, mission and strategy are not necessarily adequate to provide the guidance that a team needs to be able to operate and behave as a collective unit.

Like I said before, team members often naturally focus solely on their functional responsibilities or lines of business responsibilities rather than that particular strategic priority or imperative that a team needs to be focused on. For example, a couple of relevant examples from client experience. Chief marketing officer might shape the marketing strategy to diversity the customer base but fail to think through the implications on each line of business or the new types of resources that might be required. Or a line of business leader might focus on leveraging services within his line of business without regard to how the other line of business leaders are approaching a similar customer base.

You can get a sense for what can happen if there isn't a real clarity of purpose. Both of these examples are real life examples and both unintentional but they had some serious implications. In fact, the second example up here, we had customers complaining that the company appeared to be three companies rather than one company because they had sales people or business line leaders come to pitch them on their businesses from all three businesses at different times and without regard to the other business lines. All in the interest of growing but not doing it in a coordinated way.

What are the key elements of a great purpose? First, there has to be an impact. The purpose needs to be consequential. The example I'll continue to use because it's relatively fresh in my mind is this customer concentration. A professional service firm of ours grew pretty rapidly on the backs of really one customer, two, but really one customer. Grew rapidly and was doing very well, however, the impact was that they had a massive customer concentration risk. They had to get out of that. For consequential, that's a very consequential thing to focus on is customer concentration risk.

It has to be challenging. It's not easy to move from 85% concentration on one customer to diversifying to relying less than 50%, for example, on one customer.

It has to be clear so that not only those members on the executive team that are focused on customer concentration risk are clear on what the purpose is but that those below them really understand what the real purpose for the leadership team is at this point in time.

Obviously, the last part is evolving. As I mentioned before, strategic imperatives changes over time based on environment that an organization is working in. The purpose of an organization, while it should be fixed for a period of time, 18 months or two years or so, will change over time. No question about it.

These are some clear elements of purpose. Consequential, challenging, clear, and evolving.

Steps to create it. We talked about this a little bit earlier. First, focus on what are the most critical strategic imperatives. For this, you have to look at the mission of the organization, you have to look at the strategic plan for the organization and then you have to look at what's most important for now for the next 12 to 18 months for this leadership team to be focused on?

It doesn't mean that they give up their other functional responsibilities but how do we garner the collective wisdom of the eight to ten people on this leadership team to make sure that we're dealing with our most critical strategic imperatives.

Number two is really understanding what the interdependencies are among team members. For example, for the professional services firm we talked about. In terms of identifying purpose. The lines of business leaders, the chief marketing officer, the chief financial officer, for example, understanding the interdependencies over their three lines of business and how they can leverage the services that they provide into one common go to market strategy, for example, is really understanding those interdependencies among the lines of business, getting the chief marketing officer to help shape that go to market strategy and making sure from a financial perspective that there's the resources in place. The capital and human resources in place to be able to attack that customer concentration risk purpose.

Understanding the interdependencies are huge. Obviously, narrowing those interdependencies down to a critical few. For our client, they identified making sure we had an integrated sales approach, new products were developed that leveraged current offerings, and there was a robust support infrastructure put in place. What that really meant was they had a project management office put in place that pooled resources for deployment among those three lines of business. They hadn't had that set up before. They had a dedicated resources for each line of business.

That just gives you a sense for what we're talking about purpose. Purpose is really focused on what's most important for this leadership team to tackle at this point in the journey of an organization.

These are a couple examples of the rationale behind creating a team purpose. I talked about this young professional services firm. I worked with a ten year old construction contractor scaling to fast and running into some productivity issues. They created a purpose that was really around scaling an operational excellence sense of purpose so everything they focused on was building a common processes from how they order materials, how they deployed their crews, how they measured their crews, to how they manage their materials and manager process. It was a real full court press on let's get a handle on how our operations are providing service to our customers.

Start up medical device company was a recent FDA approval and a large injection of growth capital. That form that based the rationale between the team getting real focused on how do we build the processes and how do we put that capital to use effectively as we can.

That gives you a sense for the first principal is around creating clarity of purpose. We find that a lot of times folks don't really focus on team purpose. They just assume that the mission and strategy of the organization is the leadership teams' purpose. Frankly, that can work. No question about it. However, what we've seen that really gets the collective benefit of those on the leadership team and provides an accelerating function for an organization is when a leadership team really focuses on the most important [inaudible 00:19:45] strategic imperatives facing the organization.

Number two, logical structure. From our experience, structure can be accelerator of growth and scale or it can be an impediment. We're talking about logical executive or leadership teams structure.

This next statement on the bottom here is really important from our perspective. For the team to be able to move toward it's purpose, it must have a common understanding of what work team members need to do together and how they are going to interact effectively. Like I said before, a lot of times leadership teams are brought together as functional reporting vehicles rather than strategic tools to help accelerate the growth of an organization. In order for that strategic tool to work effectively, the members have to know what work they need to do together and what are the rules of the game for them to operate effectively.

The first thing they need to do is to understand what their enterprise or cross organizational roles are, not just their functional roles as the chief marketing officer or the cyber units line of business or product X line of business. It's the clarity of their roles at the enterprise level. Obviously, the second bucket up here is vehicles for maintaining coordination and communication. That's kind of the blocking and tackling of how do you operate a great team?

Without understanding enterprise roles, it's very difficult for a team to effectively attack a purpose. I'm assuming that we have defined the teams purpose and now the next thing is to really identify what are the enterprise roles of each person on the team that contributes to that purpose. Perhaps the most important thing to take away on this slide is it's the discussions that happen about how to create clarity among team members that are the most important part of this whole role definition piece. It's really getting team members to articulate what they view as their enterprise roles as it relates to that purpose and to having an open healthy debate around what those roles look like.

For example, I'm gonna give you one of the debates that happened with professional services firm that we worked with. They're creating a go to market strategy. Out of the starting gate, the chief marketing officer assumed that that was his role to put that together. From many perspectives, yeah, they have a large role in that for sure. But, the lines of business leaders that have the services that the professional services firm were selling needed to have a very strong role in that as well. The focus around it's not just marketing's role to put the market strategy together, it's our collective role to put that together and it needs to be a healthy debate around that is what I'm talking about in terms of enterprise roles. I hope that helps.

Dialogue is huge. The team needs to understand areas where integration is absolutely critical, where coordination might just be sufficient, or where just an exchange or communicating information will do the trick.

Coordination and communication. By this, we're just talking about how do we meet? How do we put together the plans and reviews? How do we work outside of team meetings? Those types of mechanisms. They just need to be thought through and talked through. Most importantly, each of these mechanisms should really focus on what's most mission critical for the team to address. Again, it gets back to purpose. Are these vehicles focused on purpose or are they focused on just reporting out? No question there should be some time to report out, but what we're talking about in terms of really getting laser focused on a leadership team's unique purpose is that any mechanisms you put in place to help drive that purpose have to be laser focused and maintain focus on what's most critical.

No question that meetings are pivotal tools for great leadership teams but to be honest, as I'm sure you all know, most of the work gets done outside of these formal settings.

A few notes on meetings. There's a lot written about meetings and how unproductive they can be. Unfortunately, they're a necessary evil. Great teams that we've worked with are laser focused on purpose and they're very, very focused on what's happening in the future versus spending most of their time focused on what happened over the last month or the last three quarters. I'm not suggesting that having a rear view mirror focus is obviously important, you have to know how you're performing, but most of the bulk of the time that leadership teams need to be meeting is focused on that purpose and what's coming up next.

Anytime spent on past is really focused on learning so that you can mitigate any risks and strengthen any future actions. I think most importantly, great teams, there's a mutual expectation among team members that meetings are gonna be well organized. They are gonna be time bound, focused on priorities, have clear agendas, and be full of lively debate. They are not gonna drone on forever and they are not gonna go off tangent all the time. Obviously, sometimes you go off tangent but there's an expectation with great teams and they are not shy about saying, "We're wasting our time here. Let's get back on track." It's not just the CEOs job to do that.

Those are really important. I'm just going back here. Clarity of enterprise roles and vehicles for maintaining coordination and communication are absolutely critical fundamentals for great leadership teams.

The first two things we talked about are clarity of purpose, second making sure that there's a logical structure in place. With both of those, it doesn't take months and months of time to put those things in place. It just requires stepping back and saying, "Let's focus some time on our purpose right now. What's most important for this team to tackle over the next 12 to 18 months? How are we gonna structure ourselves? Let's talk about how our roles need to be direct and be interdependencies across our roles. Let's make sure we have a good coordination and communication vehicles in place to execute on that purpose."

Finally, the third really important fundamental is having what are often referred to as operating principles. My military career that was a term that was used or norms of behavior. That's another. Those are the things that we're talking about. How is the team collectively going to behave together? As the statement says here, "Teams with agreement on a limited set of operating principles are more likely to experience the behavior they collectively desire." And most importantly, the discussions around creating those operating principles are the critical part of establishing the principles themselves if that makes sense. It's the process, not necessarily the outcome although the outcome is important.

It's not good enough for the formal leader to come to the table and say, "These are our operating principles." That will only go so far. Without a real understanding of what the behaviors are that are expected of each other and a discussion of what it looks like when those behaviors aren't taking place and what we're gonna do about it if they don't take place, that's the real important part of creating real operating principles. Without attention, you will have operating principles that will emerge by default. Some of them will be good. No question about it. Some of them will be good. And some of them may not be as good. For example, if your CEO shows up to meetings late and is on his or her phone during the course of the discussions. That will probably become a default operating principal which is not necessarily a good thing.

There's three critical parts to creating great operating principles and in my opinion, not a lot is written or talked about around creating great operating principles. From our perspective, there's three things. First, creating context or understanding the context of the environment that a leadership team is working under.

You can't create great operating principles without each team member having some sense of self awareness of when they fall down on the behaviors that are expected that they may be letting their team down.

There has to be accountability. Without accountability, and I'm talking about mostly team accountability, the greatest teams have team accountability, not necessarily power accountability, although power accountability is an important construct as well. The greatest teams we work with are those who hold each other accountable.

Let's talk a little bit about context. There are certainly certain principles that will work for almost every teams. A sense of integrity, for example, or it might even be showing up on time to meetings of whatever it might be. You can think of five or six, I'm sure, off the top of your head right now. However, if you really wanna focus on that purpose that we talked about earlier, stepping back and understanding the context that the team is at the current juncture will help define what those operating principles look like.

Here's just a few questions. How long has the team been together? What have been their experiences working on other teams? Most importantly, what are the unique challenges they are facing at the current time? These will help give a foundation for what's most important for the team to expect from each other in terms of behaviors.

Self awareness. I can't stress this one enough. Because most leadership team operating principles emerge in response to a current or past behavior that one or more team members has perceived to be disruptive. For example, these are pulled right from client experience. "It drives me crazy when she goes off on tangents that aren't relevant to the agenda." "I recognize that he is chief marketing officer, but I would like to hear what he has to say about these important operational issues." "It is simply disrespectful not to respond to email messages that are directly relevant to the most important issue or issues our team is facing."

This team was intentional about there's some things that are bugging us about how we work together. Really important to step back and take a look at what those things are and it's hard to take a look at disruptive behaviors without having individuals have some sense of self awareness. That looks like teams should first discuss their mutual expectations for each other. Then openly discuss their frustrations.

My expectation, for example, is that we're gonna start our meetings on time and we're gonna put our cell phones down while we're meeting for this hour we're together. That could be one. Another frustration might be, go back to the previous page, I really wanna hear what everyone has to say about important operational issues. You're the chief marketing officer but you've been in business now for 30 years. I wanna hear what you have to say about these operational issues, too, not just the marketing from a marketing perspective. That could be another thing that frustrates me. Getting those on the table is important.

First, individuals needs to dig deep and evaluate what are you doing that might be getting in the way of the team being as effective as they can be? Are you only focused on your line of business, for example? You're not really taking your enterprise role as serious as your teammates would like you to. If that's the case and you're only focused on taking care of your own functional unit or your own line of business, then you should own up to that.

Finally, team members need to be open to receiving feedback from their teammates. Building on that example. "Hey, Jack. We need you to be not just focused on your line of business. We need you to be focused on how we're going to cross sell across all three lines of business," for example.

Without self awareness, to be very blunt, operating principles often become pieces of paper on the wall. We believe that self awareness is the grease that enables meaningful norms of behavior to be put together.

Lastly around operating principles, Operating principles are absolutely useless unless there's an accountability construct. Team members need to commit and feel accountable to following everyone of the five to ten operating principles the team establishes all the time. Not just sometimes. Recognizing that people make mistakes or fall down or forget or whatever. They'll make mistakes. If we do, great teams don't just rely on a formal leader to hold the team accountable for the behaviors they expect of each other. They hold each other accountable. They constructional confront each other when the principles aren't followed.

From our perspective, these fundamentals are absolutely critical for building a great leadership or executive team. Making sure there is clarity of purpose so that every person on the team understands what the strategic imperatives, the most important priorities that the executive team is focused on collectively at this point in time, the next 12 to 18 months. For example, we're gonna focus on reducing our customer concentration risk. We're gonna put a go to market strategy together, we're gonna build the support infrastructure to make sure that that's in place. To make sure that the team understand what is most important, and obviously that that cascades down to the rest of the organization.

Number two, make sure there is a logical structure in place and that the team members understand the interdependencies of their enterprise roles. The roles that are focused on that purpose. Obviously, they still have their functional roles. I'm still chief marketing officer. I'm still chief financial officer. But I have to take a broader view to help that purpose come to fruition. Really important that those enterprise roles are clearly articulated and talked about among a team. There's not a lot of room for ambiguity.

The other part of logical structure is just making sure that the communication and coordination mechanisms, how you meet, how you report to each other, how you communicate outside of formal team meetings. Have some discussion about how that's gonna work so that we can efficiently and effectively maintain our clarity of purpose.

Then, finally, building a set of expectations for how team members are going to behave with each other sounds like a soft thing, but I tell you what, it can really be a powerful thing when a team doesn't get in its own way and has the rules of the game are very clearly defined and they hold each other accountable to those rules.

Just one more note on operating principles that I emphasized earlier. Really important, the discussion, the debate, and the level of self-awareness from each individual is really important to get a sense for these are some things that I am doing and that are potentially getting in the way and I do commit to change.

These are, from our perspective, really important for teams to focus on to build a great team. I will be sending out an email to all participants on this webinar that will give you a link back to our page that will have these slides, it will have a recap, it will have an audio of the presentation or the webinar today, and we'll have a summary recap, and there will be a link to the article that is published and will be published in Chief Executive Magazine on the same topic that talks about each one of these fundamentals in a little bit more detail.

Thanks so much for your time and I look forward to seeing you or having you participate on our March webinar. Thanks.