Future of Executive Teams: Assembling the Party

Art and science of winning competitive strategy ExCo FTSE 100 management management teams strategy
This is the fourth part of a thought experiment I’m performing about the future makeup of executive teams. If you’ve skipped them, here are parts one, two and three.

One of the motifs that I use in the book to describe the role of leaders in the Digital Economy is the famous Hero’s Journey. Although it may seem a strange thing to reference, in reality that flow of comfort, storm clouds, challenges, fall and redemption is a useful metaphor for the journey that organisations go for.

No leader is more exposed to this journey than the CEO. Interestingly though, it feels to me that the average CEO fails to engage in one critical part of the Hero’s Journey: assembling their party. Having talked about the kind of people that the CEO might want around him or her to defend their core business and take the offensive, we should now think about the way those perspectives can be combined to best effect.

Of course, the combination of people that a leader wants around them is very dependent on their own preferences and style. Drawn to the bizarre, I am personally much in favour of the approach taken by Hansel, a key protagonist in Zoolander. Hansel’s retinue consists of a big wave surfer, a Finnish folk band and a sherpa. Quite what insight Hansel draws from this collection of perspectives is lost to time and scripting. What we should take away from it is the idea that the nature of the advisors that any one individual leader has should be personal to him or her. Since unorthodox strategies are often winning strategies, my general belief is that unorthodox perspectives and combinations of perspectives are thus more likely to result in winning businesses than conventional constructs.

A quick word on number of seats

The number of people that should sit on an ExCo obviously depends on the situational needs of the business and on the personal preferences of the CEO. That said, classical management theory suggests that the optimal span of control in any one organisation is between 4 and 7 individuals per manager. More modern West Coast doctrine suggests a similar number makes for the most efficient decision-making: ‘the number of people who can be fed from a single pizza’.

In Art and Science, I spend a number of chapters getting under the skin of this issue of how decisions are made without (spoiler alert!) concluding on an optimal number. For the sake of this post, I’ll attempt to reach a rapid conclusion now, in the following way:
  1. Although all actors around an ExCo have agency there has to be some form of tie-breaking asymettry in the total size of the group 
  2. Spans and layers infers reduced agency amongst those being ‘managed’, which is not the case here, but it does raise a valid concern about the upper boundary size of any group that will allow each person to have their say in any decision. I am therefore going to remove group sizes about seven from the discussion
  3. One person is not a group (although it is asymettric, I guess), so I’m taking out dictatorships (maybe more on that at another juncture)
  4. Having three people making all the decisions would be optimal if each were the absolute best, multi-faceted leaders… but my view is that this group is simply too small to contain sufficient perspectives to be actually useful. There is also the practical problem of keeping each of these polymaths entertained (!)
  5. That leaves us with five and seven. How to break the tie? Having worked top-down, let’s now work bottom-up to decide…

Roles and responsibilities

Underpinning the following thoughts is the idea that there is a clear difference in roles and responsibilities between the executive team (ExCo) and the people who make tactical decisions within the organisation. In a well-setup business, strategy drives a clear plan that outlines actions to be taken and the expected results of said actions. This clarity enables operational managers to run the business without the need to ask for direction from the most senior leadership.

In the event of lack of clarity or unexpected results being seen then the first filter between leadership and operational management would be the strategy team, who can assess the significance of the findings and run an initial filter of information. Filtration of information to the ExCo is vital to prevent that group being overwhelmed with signals. Only if the result is significant and relevent would the ExCo become involved.

The question in my mind about this is whether the alternate perspectives that are a must for the ExCo are also required at a more tactical level. Speed is even more important in the tactical domain than in the strategic. The advantage of perspective is that it expands understanding of the nature of problems and solutions. But the process of orientation on this expanded data set is a complex one psychological and thus takes time. Introducing new perspective therefore reduces efficiency. Over a strategic time line this is no problem because one may discover new forces or new materials to combine into outputs, thus redefining efficiency. This is not feasible on the tactical time line, where we are trying to allocate known resources to a known end. If we fail, then we produce an information flow alongside any residual economic value we create.

In the real world, we do need innovation (‘sustaining innovation’, no less) on the tactical level and more importantly we need to empower individuals with sufficient freedom of action such that they take ownership for their tasks (‘missions’). So we face a bit of a quandry, but one that is conveniently catered for by scaled agile.

What we do in the scaled agile approach is allocate resources between different ‘features’ or initiatives on a given day each month. In Art and Science, I advocate for every organisation thinking of every activity as a mission. Each mission has a mission team and that team should be multidisciplinary. Where this gets me to in terms of the responsibility for operations is that it is a matrix between the multidisciplinary professions and the ultimate owner of the strategic vision. 

In terms of the potential roles I’ve laid out, this suggests that an Ultimate Professional has to be involved, in concert with either the CEO themselves or perhaps the Chief Design Officer. Why the CDO? Because he or she holds the most complete pictoral and narrative essence of the vision – essential in an agile process due to the need for development based on customer needs. In this case the CDO is also essential so that the tactical edge of the organisation keeps its eyes on the prize.

Supplying the ammunition

Agile organisations work well when they are feeling their way to demand. In this way they generate their own missions and resources. To work really well in shaping the future they also require missions to be supplied to them – missions in support of objectives that when one is head down one can’t see for the trees.

All organisations need perspectives about what Bismark would have called ‘the art of the possible’. Having those perspectives enables broad spectrum thinking about the implications of observations and – in concert with the CDO – provides a means to generate novel strategies in response to them. This immediately suggests that the Wack Chair is a fundamental role on any leadership team… which, in turn, makes me wonder whether I need to find a less comedic (or reverential) name for the role.

The degree to which one also requires an internally-facing mission-generator depends on the nature of your organisation. If you’ve been around for a couple of generations of Managers, then the chances are that all sorts of organisational weirdness has been built up over time. Fixing all the quirks is the key to enhanced productivity, so you will need a Corporate Handyperson (a reader correctly pointed out that ‘handyman’ defines gender, which isn’t my intention, therefore a change to the term). Again, I’m wishing I’d chosen a more professional name.

If you’re a much a younger business (i.e. still in the first generation of management), then this job may be a ‘nice-to-have’ because the same complexity may not have happened yet. The caveat here is that businesses tip over into incumbency quite fast and at that point it is important to also adjust management approaches to emphasise efficiency over the prior ethos of capability-building at all cost. I rarely see businesses at any age that lack institutional weirdness that’s constraining productivity. The question is simply whether it is worth fixing that complexity given the other areas in which resources could be expended.

Optional roles

We’ve now established a core five jobs within the ExCo of the future:
  • CEO
  • Chief Design Officer
  • Corporate Handyman
  • Ultimate Professional
  • Wack Chair
That leaves some optional roles that will be situational or preferential. For example, the Head of System Economics will be important as an additional perspective in organisations with highly complex infrastructures and value flows. At some point this complexity exceeds the capacity of someone else to understand it at the side of their main role, hence the need for someone who focuses on it full time.

Likewise, the Chief Competitor Officer is useful in organisations that are defending an incumbency position while also seeking to shape a future market. In a newer business obsessesed with scaling, competitor actions are less important and impactful because of the relative distinctiveness and strength of the core value proposition. I’m not suggesting that understanding competitors is unimportant, it’s more that the perspective can be provided with others around the table.

Finally we come to the Chief Venture Officer– arguably the trickiest job to classify. This is a broad-spectrum innovation role that seeks to reposition the organisation by building a new one alongside it. Whether this perspective is required depends on the CEO’s ethos. In the case of transformation based on evolution from the current state to the future (rather than a Big Bang transition of economic value), the CVO is less important as an ExCo role. 

There are further exceptions on this one. For example, if the organisation is engaged in product or product system business it will likely have an R&D centre – the CVO would increase the scope of that centre to encompass structural innovation in addition to product platform or feature innovation. A good Wack Chair can bring some of that long term thinking on potential innovations but may be less practical about how they would be brought into the organisation. The latter would be something for the System Economist, but that is also an optional role in my hypothetical ExCo… it’s a tough one, and since it’s hypothetical I’m going to leave it there!

Having thought through combinations of roles, next time I’ll look at alternative configurations that could supercede the ExCo entirely. Hope this was interesting – please leave comments if you have other ideas on roles or combinations!
READ THIS:  Future of Executive Teams: Defending the Core
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