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February, 2008,
Volume 12, Number
4
CONTENTS
Wharton Leadership Conference Named a “Five-Start
Conference” for Executives
Back to School for Corporate Board Members
Lesson from Davos: One of
Globalization’s Best Classroom
From Challenge to Opportunity:
Q+A with ICICI’s Chanda Kochhar
Leadership School: Developing
People Skills at Fujitsu Services
__________________________________________________________________________
Wharton Leadership Conference Named a “Top Executive
Gathering”
With the World
Economic Forum in Davos topping the list of annual
must-attend executive-level events, Forbes.com
writer Matthew Kirdahy
asked in January: What other gatherings out there
are most popular with, and most beneficial for,
corporate leaders? For answers, Kirdahy turned to a
report released mid-January by public relations firm
Weber Shandwick entitled
Five-Star Executive Conferences.
On the basis of
how many C-level executives participate, the
Wharton Leadership Conference was ranked second
overall by the Weber Shandwick report. The Forbes.com
article noted that
William Weldon, chair and CEO of Johnson & Johnson
is set to address the upcoming 12th annual
Wharton Leadership Conference scheduled for June 18,
2008, “Emerging
Trends in the Search for Leadership.”
Three new speakers have also confirmed this month they
will speak at the June conference:
Back to School for Corporate Board Members
Corporate Governance
Essentials for New Directors
is a an integrated program designed to promote the
leadership and effectiveness of newly-inducted board
members. The program was designed jointly by Wharton and
Spencer Stuart, an executive-search consulting firm, to
be an entry-point into the complex and regulated
world of corporate governance. Facilitated by Wharton
faculty members including Thomas Gerrity, Brian Bushee,
John Core, Tom Donaldson, John Percival, Harbir Singh,
and David Wessels, this program will help new directors
formulate a best-practice framework in their new board
positions.
Click here to view the list of
advisory board members
and industry speakers
for the March 2008 program.
LESSONS FROM DAVOS: One of Globalization’s Best
Classrooms
By Michael
Useem
I was about to board a flight to
London and then onto Zurich for the annual meeting of
the World Economic Forum in Davos, Switzerland. With a
final check of the Internet, my laptop screen lit up
with headlines of financial crises, sparked by sub-prime
woes and, we would later learn, rogue trading at Société
Générale. The Frankfurt and Mumbai stock exchanges had
dropped seven percent in a single day. The Wall
Street Journal headlined the stunning developments:
"Stocks
in Europe, Asia hammered by U.S. woes; more downside
seen and recession fears; 'panic' out there."
 It
was obvious that the Davos discussion would not go
entirely as planned. But few of the 2,400 people
expected to attend the 38th annual meeting of the World
Economic Forum were deterred by the plunging market. The
four-day gathering of the world's leading business and
political figures was too instructive to miss. The
annual meeting of the World Economic Forum has come to
serve as one of globalization's best classrooms.
My formal assignments at the meeting
included moderation of a session on "The Rising
Influence of Minority Shareholders" and a panel on "The
DNA of Effective Boards." In anticipating my informal
experience during the flights to London and then Zurich,
however, I was reminded of a response that I often
received when I asked American and British CEOs in a
research study why they served on the boards of other
companies. Yes, they were extremely busy running their
own firms, but their outside board service provided an
unrivaled personal education in the corporate issues of
the moment. For me and many others, Davos constituted an
unrivaled personal window into the global issues of the
moment.
Lands of Opportunity
My experiential learning began as I
left customs at the Zurich airport. Two years ago, a
luminescent display touted "!ndia." Today, in its place
I found "Turkey: Land of Opportunity." In 2006, Indian
business had sought to brand itself in the minds of
those on their way to Davos; two years later, Turkish
business now evidently appears to be coming of global
age.
On the two-hour bus drive to Davos,
the editor-in-chief of a financial media company
characterized what lay ahead. "This is a conference," he
said, "on steroids!" The event and the energy behind it
are the brainchild of Klaus Schwab. Starting with
nothing, he has single-handedly created what Forbes
magazine recently named the world's number-one corporate
leaders' conference. Schwab today oversees a large staff
with dozens of programs and events, but he has built
them all on his own with neither university incubation
nor state subvention. I was reminded just how much
impact one person with vision and resolve can have on
the world, and I made a mental note to reinforce those
qualities in the MBA and mid-career leadership courses
and programs that I offered at home.
New Power Brokers
The first morning of the conference,
I wedged into a jam-packed session hosted by CNBC's
Maria Bartiromo under the intriguing banner, "Who's in
Charge?" On stage was a luminary cast including former
U.S. Treasury secretary John Snow, Nobel-prize winning
economist Joseph Stiglitz, financier-philanthropist
George Soros and Infosys
Board
Co-Chairman
Nandan Nilekani. With
studio cameras everywhere -- CNBC would later broadcast
the session in the U.S. and Europe -- they and a set of
designated challengers, including former Treasury
secretary Larry Summers, debated three timely
resolutions:
Motion 1: Central bankers
have lost their focus and control with respect to
economic governance.
Motion 2: New stakeholders
such as sovereign wealth, hedge and private equity funds
have become the new power brokers.
Motion 3: We need a new
sheriff to police global financial markets.
The sides were drawn, and the
rhetoric was sharp. One of the participants advocated
for the first motion, declaring that "sovereign wealth
funds are the new powers and the new power
brokers" and they are now deciding "which banks are
re-capitalized and which will fail." Another advocated
against the third motion, asserting that a global
sheriff is "completely impractical." Can you imagine, he
warned, "the President or the Fed calling up a sheriff
to ask for permission to stimulate the economy or cut
interest rates?"
With handheld voting devices, the
large audience then cast its ballots
-
against the
central bankers -- 59% said they have indeed lost
their way;
-
for the new
stakeholders -- 81% said they are the new power
brokers; and
-
against a
global sheriff -- 75% said we need no such policing.
It proved one of the most riveting
sessions of my six years at the forum, in part because
the audience's votes confirmed a new global reality:
Several hundred of the world's elite had concluded that
central bankers had lost control; sovereign wealth,
hedge and private equity funds were increasingly in
control; and no new authority should be put in control.
But it was also riveting for what it said about the
conduct of dialogue on contentious issues whether in
Davos or the classroom: For optimal impact, sharpen the
issues -- as the motions and debaters had so well
achieved -- and sharpen the conclusions -- as the
audience voting had decisively done.
Further insight into new power
brokers came from a subsequent panel on sovereign wealth
funds with those who managed the funds for Kuwait,
Norway, Russia and Saudi Arabia. Driven by oil revenues,
many of these funds have become enormous, and they now
operate at the same scale as giant investment firms such
as Fidelity or Vanguard. The Norwegian fund, for
instance, has accumulated $380 billion, now the
equivalent of Norway's GDP. Taken together, such funds
worldwide control $2.5 trillion in assets, and like
traditional institutional holders, such as pension funds
and investment companies, their managers said that they
considered only risk and return in their investment
decisions. But another panelist questioned whether they
would long stay so un-sovereign in behavior. He urged
that they explicitly pledge to use purely financial
principles in their investment decisions now to ensure
that political calculus would not intrude later.
Within the new power-broker club,
private equity welcomed the rise of the sovereign wealth
funds with some ambivalence as well. A panel with
principals from private equity firms Carlyle Group,
Clayton, Dubilier & Rice, and Apax Partners attracted a
number of private equity managers. They and the audience
questioners implicitly concurred with the "Who's in
Charge?" vote that private equity was indeed an
ascendant power. One person noted that the sovereign
wealth funds were fortunately taking some of the heat
off private equity. Media criticism and public "scorn"
had long been directed at private equity funds, he said,
but now the public spotlight was turning on sovereign
wealth funds. It would be only a fleeting advantage,
however, since he expected the sovereign wealth funds to
move into private equity themselves. As private equity
continues to globalize in its search for deals, it may
be facing a new set of far larger competitors in the
field.
Leadership and Big Capital
A personal directive from these
sessions on sovereign wealth and private equity was to
ensure that the leadership classroom includes a focus on
how company executives and directors can effectively
work with the principals of such funds. Company
leadership has traditionally been defined around
inspiring and directing those below, but increasingly it
will also require a capacity to attract and enthuse
those above -- the new holders of big capital whose
decisions to invest or not can be just as fateful for an
enterprise as employee decisions to rally around the
enterprise.
Finally, this year's Davos forum
provided insights into an array of global trends with
implications for both teaching and research. India's
aviation minister, for instance, reported that more
people travel on Indian trains in a day than by air in a
whole year, almost the reverse of the U.S. But his
country's 9% annual growth rate is transforming
traditional habits in everything from aviation to
consumerism (see the interview with ICICI Bank CFO
Chanda Kochhar below). India boasts 450 commercial
aircraft now, up from 125 four years ago. Daily flights
between New Delhi and Bombay total 57 now, up from four.
India operates 50 commercial airports now, but 400 are
planned. Other Indian political and business leaders in
Davos recited a host of similar growth statistics over
the four days, and anyway you looked at it, "!ndia" was
booming. I am working with several colleagues on a study
of Indian business leadership, and I was reaffirmed in
our belief that the story of Indian business leadership
success is one that business leaders everywhere will
need to know more about.
New worries over sub-prime loans and
rogue traders altered the tenor of the annual gathering
of the World Economic Forum, but the rising economies of
India, Turkey and elsewhere, and the rising assets of
sovereign wealth, hedge, and private equity funds all
suggested that whatever has been transpiring in mortgage
markets or French banks, global business will remain
vibrant and -- hopefully -- resilient.
Note:
This article also appeared in the
February 6, 2008, edition of
Knowledge@Wharton.
FROM CHALLENGE TO OPPORTUNITY: Q+A with ICICI’s
Chanda Kochhar
When it was founded more than
half a century ago by Indian industrialists, the World
Bank and the Government of India, ICICI was envisioned
as the first development bank for a newly independent
nation. Today, ICICI is India's largest privately owned
bank with assets of nearly $80 billion, as of March last
year, and an expanding global reach. The group's story
is not one just of growth, but of transformation: ICICI
has evolved from a development bank to become a
corporate and then a retail bank, meeting the needs of a
newly prosperous population.
 Chanda
Kochhar has helped shape the bank's ever-evolving
strategy. Having started out at ICICI as a management
trainee in 1984, today she is ICICI Bank's joint
managing director and chief financial officer -- and is
also widely regarded as a leading contender for the
CEO's position in the future. Wharton management
professor Michael Useem spoke with Kochhar last month at
the World Economic Forum in Davos about the leadership
challenges she has faced in her two decades as a banker.
An edited version of that conversation follows:
Useem: What are
the major leadership qualities that helped you grow
within ICICI during the past two decades?
Kochhar: The
organization has grown and evolved substantially in
these last 20 years. Normally, we define banks as being
either retail or corporate, but ICICI transformed itself
from a corporate bank into a retail bank, and now a
universal bank. So although I've been with the same
organization for the last 20 years, I've created and run
different businesses. I joined on the corporate side of
the bank. Then, when infrastructure financing became a
big thing in India, I set up the
infrastructure-financing practice for the bank. When
commercial banking opened up for the private sector, I
set up the retail-banking division for ICICI and grew it
substantially. I then ran the international side of the
ICICI Bank for a few years. Having run all the
businesses, I'm now a supervisor, overseeing a number of
functions: finance, risk, audit, compliance, industrial
relations, all those kind of things. It's been a great
journey for me.
Useem: Some
people would find those transitions daunting: Moving
from retail banking to commercial or investment banking.
When you considered each of these new assignments, were
you worried about mastering the new areas?
Kochhar: I moved
from corporate banking to retail banking about ten years
ago. The biggest challenge for me, for all of us, was
that the consumer-credit market was very, very new for
India and for ICICI. I was trying to create something
that was not just new for me but absolutely unknown to
the organization and the country as a whole.
I was running the corporate side
of the bank and handling almost 50% of its profits and
assets and business at that time; consumer credit was
less than 1% of the bank's business. When my CEO asked
me to take over the consumer credit business, I asked,
"Why should I move from handling 50% of the bank to
handling 1% of the bank?" I clearly remember him
answering: "Because I want you to make this business
more than 50% of the bank." And that did happen.
On a personal level, it wasn't
always easy. But as a leader, I think you need to be,
first of all, adaptable, so you can quickly understand
and move forward in new business situations. Second, you
need to treat each challenge as an opportunity. I
treated this challenge as an opportunity, not just to
learn for my own development but also to create
something new for the organization.
Useem: In 1998,
ICICI created a major-clients group to handle
relationships with the bank's top 200 clients. You
headed that effort, setting up cross-divisional teams to
market the bank's products. What lessons about internal
teamwork and marketing did you gain from that
experience?
Kochhar: At that
time, we had a bank, a securities company, and various
other companies, so each of us was going to the same
corporate customer and marketing different products. The
idea was to set up this group to handle relationships
with all clients and to draw on the experience of all
the product groups internally. I was purely a corporate
banker at that time, with no experience of investment
banking or commercial banking. So, first, I had to
create a team, and I created one with eight members
drawn from the different parts of the ICICI group:
Investment banking, the securities business, commercial
banking, and so on. I organized our work so that while
each member of our team handled clients, we met every
morning and every evening to exchange notes. Our
approaches were so very different: The way an investment
banker meets a client and talks about a product was
entirely different from the way a commercial
banking-oriented person meets a client and talks about a
product. I had to make sure all nine of us met
face-to-face twice a day, and the end result was
multi-faceted leadership. I learned it is possible to
quickly share knowledge and ideas with each other,
rather than sitting on a pedestal, saying, "I'm the
boss, and I'm not here to learn from anybody."
Useem: Once your
team was formed, you then presented a unified team to
the outside world. Did that affect the way you went
about marketing to your clients?
Kochhar: Yes, it
did. Instead of sitting at our desks and waiting for
clients to come and ask for products, we had to get out
there and market the products to our clients. It meant
we had to do a lot of internal analysis to predict which
client needed what product. That was a huge shift in the
way we worked.
Useem: In
mid-2000, you led ICICI Bank's foray into the retail
industry. How did you go about formulating your strategy
to enter and grow that business?
Kochhar: As I
said earlier, the retail industry itself was very, very
small in India at that time. The first strategic
question was whether to plan for a big-scale business or
a small-scale one; we had to guess whether this industry
was going to grow significantly for the country or not.
We knew this: If per-capita income crosses say, $500,
there is a shift in consumer behavior, which results in
a huge amount of consumer spending and consumer
borrowing. Then we made the strategic call, saying,
"India is passing through that phase, and therefore this
industry is going to be a big one. Let's plan not for
the small size the industry is today, but for what the
industry is going to be five years from now." Clearly,
many people were skeptical, saying we were creating a
scale that may never be used. But, as it turned out,
this industry grew by more than 50% per annum, year on
year, for many years.
The other strategic challenge was
that the business was very new for ICICI itself. I had
to create a team of people who had worked in this
industry for other banks. What I brought to that team
was ICICI's strategic thinking, but when it came to
domain knowledge or product nuances, I had to learn from
the team. In that way, I was a kind of a leadership
bridge between ICICI's way of thinking on the one hand
and the domain knowledge of the team on the other hand.
I had to arrive at decisions not based on past
experience, but on a mix of their domain knowledge and
my gut feel.
One of the big decisions was about
customers using electronic channels. At that time, India
had some 200 or 300 ATMs. We made the call to set up
3,000 ATMs just from ICICI Bank over two years. This was
a big decision, for which we had no past experience to
tell us whether it was correct or not. We had to do a
lot of thinking about the shape consumer behavior was
going to take. But I thought, "This business is
scale-related. You cannot make money in a retail
business if you're small-scale." So, we planned that in
three or four years, we ought to be the number-one
player in this business, starting from a zero market
share. That's indeed what happened. After about four
years, we had 53% market share of the country's retail
credit business. Today, we are by far the largest player
in the consumer-credit business in India.
Useem: Looking
back on that experience, would you have done anything
differently?
Kochhar: I don't
think so, in terms of broad strategic direction. Small
tactical decisions -- yes, maybe we could have done them
better, but in terms of the broad direction that we
took, it has played out right.
Useem: In the
third quarter of 2007, retail advances seem to be
slowing down. As you look now at 2008, how does the year
ahead look in light of the world economies hitting a
speed bump, or worse?
Kochhar: Let me
put India in perspective. In the last five to seven
years, India has grown on the basis of its knowledge
economy and consumerism. The IT industry, and its
related industries, provided jobs for Indians. As
Indians earned more, they spent more, and that's how
consumerism drove economic growth as a whole and also
led to a huge growth in the retail-credit and
consumer-credit business in India. As we speak today,
this growth in consumerism is leading to a huge
investment cycle in India. Because manufacturing
capacities have been fully utilized, and infrastructure
needs to be established, people are now investing in
manufacturing capacities and infrastructure. I estimate
the Indian corporate sector has plans today to invest
about $700 billion in manufacturing and infrastructure,
which will be spent over the next three years.
The next wave of growth for India
is going to come out of capital investment. While growth
for the retail and consumer industry is going to be
between 10% and 15%, the growth in corporate lending
will accelerate and be between 30% and 40%. In the last
four or five years, the growth was essentially driven by
consumer credit. Now the growth is going to be driven
more by investment cycles and corporate credit.
Useem: ICICI has
set itself a goal of not only becoming a global bank but
also becoming a top-25 bank, or even a top-10 bank in
the next five to 10 years. What is your strategy for
getting there?
Kochhar: The
strategy is two-fold. One, India-related growth is
really going to let us grow. The Indian banking sector
is growing at a rate not matched by many banking sectors
the world over. Two, we're going to capitalize on the
globalization of the Indian economy. As our Indian
corporate sector acquires companies abroad and sets up
manufacturing capacities abroad, we have positioned
ourselves very effectively in terms of setting up a
global network: We are already assisting our Indian
corporate sector in global ventures.
Over and above this, we're going
to become big as a group, because our subsidiaries are
creating a lot of value for us. We have subsidiaries in
life and non-life insurance, securities, private
equities, and so forth. As we aspire to get into the
top-25 and top-10 league, organic growth is coming to us
very well from the Indian economy's growth and
globalization. When we feel the time is right, we will
look at some inorganic growth as well. It's going to be
a mix.
Useem: What steps
are you taking now to anticipate challenges five to 10
years down the road, the slowdown in the world economy
being the most obvious? How can you anticipate and be
ready for such hurdles?
Kochhar:
Challenges could come for India, or for the bank, so I
will break this up into two. As far as India is
concerned, we are watching very closely whether the
current world economic scenario will impact India and by
how much. In the globalized world of today, no country
remains immune to what happens elsewhere, but at the
same time, India is very resilient because of the sheer
fact that the domestic economy is very large. India's
reliance on the global economy in terms of exports is
also less than that of many Asian economies. So while I
would not say India will remain totally insulated, I
will say India's resilience is much higher than many
other Asian economies. The fundamentals of the Indian
economy will continue to drive its growth for a long
period.
Thinking about ICICI as an
organization five to 10 years from now, as a leader I
have to make sure as we grow and become more successful
that we don't become complacent. We have to continue to
innovate in order to keep ahead of others in the race.
It's not enough to become a leader: You must maintain
that leadership, and therefore, you have to ensure the
culture's innovation, energy and competitiveness doesn't
get lost.
Useem: Looking
back on your two-plus-decade career at the bank, what
are some of the biggest leadership challenges you have
faced personally? What did you take away from those
moments?
Kochhar: All my
challenges have become opportunities. As India evolved
as a country in these 20 years, ICICI as an institution
evolved substantially. If I was not a person who could
adapt and move with this evolution, I would not have
grown as a leader. The constant challenge is to keep
evolving and adapting as the country and the company
evolves. Moving from corporate banking to retail banking
to international banking to supervisory roles has meant
completely reinventing myself. But every move fed on the
previous one. When I moved from corporate to consumer
banking, I brought a lot of synergy with me. When I
moved from consumer banking to international banking, I
thought I brought a lot of insights from India we could
implement globally. Now that I've moved to the
supervisory role, having run all the businesses, I'm
able to appreciate the challenges of a business in a
much more rational manner. So, adaptability was a big
challenge for me personally, but this opportunity to
handle all sides of the bank -- globally, I can't think
of many bankers who have had this opportunity.
Useem: You've
managed to look upward and not see a glass ceiling above
you as you moved up in the bank, but some women have
experienced that kind of challenge. Is there still a
glass ceiling for women in banking and, more generally,
in business in India?
Kochhar: India
has evolved a lot in this aspect in the last 20 years.
When I started my career, there were clearly some
industries and some companies where we, as "lady
students," would not even apply, because we knew there
was a glass ceiling and we would not move forward. But
now I see an intentional consciousness in all Indian
corporations to recruit women executives. They have
learned that diversity has its advantages, and that it's
better to be a merit-oriented organization and use the
talent available, regardless of whether it comes from a
male or a female.
Even ICICI was very different 20
years ago. When I entered that group, I thought it was
one of the most proactive groups, in the sense that it
has always been a merit-oriented organization. Every
time there's an opportunity, a job to be assigned, the
organization doesn't look at whether the right person to
do it is male or female, the organization just hands
over that responsibility to the person most suited to
the job. The rewards and punishments are based on
performance and not on gender. I have experienced that,
and that has enabled me to grow and move in this
organization.
But this is a two-sided coin.
While many women have moved forward in ICICI, they have
done so because they have worked as hard and as many
long hours as men have. That's the way going forward.
Organizations should look at merit and not discriminate
based on gender. Similarly, women should not expect any
special advantages or favors. If they want to grow, they
have to put in the hard work and the hours and the
travel that's required.
Useem: Looking
back on your own career, what advice would you have for
a young person entering banking today? Or business more
broadly?
Kochhar: A
person should enter their career with a very open mind,
because you have to constantly learn. When we leave
school, we tend to believe we know it all. But when we
start to work, that's really the beginning of school all
over again. We need to start work with the idea that
we're going to learn every day. I learn, even at my
position, every single day. My second piece of advice
would be that there is no substitute for hard work. Even
as one gets opportunities, one gets challenges, and hard
work is essential for success. Third, whenever there's a
challenge, I see an opportunity in it: You have to find
a way of converting challenges into opportunities.
That's the way one learns and moves forward. I evaluate
a leader more in terms of how the leader performs in
difficult times, rather than how that leader performs in
easy times. A person who can take on a challenge and
maintain equanimity and turn it into an opportunity --
according to me, that's the biggest leader.
Note:
This Q+A was originally published
February 6, 2008 in
India Knowledge@Wharton.
LEADERSHIP SCHOOL: Developing People Skills at Fujitsu
Services
By Mark
Hanna
Here's the
assignment from headquarters: Teach effective
people-management skills to 2,200 information-technology
managers. These managers are spread over 13 European
countries and speak 11 languages. Because there must be
behavioral change, the training has to be done in
small-group settings with face-to-face instruction and
interpersonal exercises. The course content has to be of
the highest quality and be consistent from one country
to the next; however, it must also be customized to the
needs of individual managers, taking into account their
local cultures. Also, top leadership wants the program
to be cost effective and show measurable business
improvement. And one more thing, the managers’ time is
precious, so they can only spare one day out of each
year.
This is the
"mission impossible" scenario faced a few years ago by
the
Danish Leadership Institute (DIEU) when London-based
Fujitsu Services asked it to design their management
training program, the Fujitsu Management Academy. Given
the daunting size of the task, pundits might have
predicted a dismal failure, but they would be proven
wrong. DIEU got the job done.
How DIEU pulled
off this tough assignment is the topic in a 2007
Management Decision article, "Innovation
in Learning: How the Danish Leadership Institute
developed 2,200 managers from Fujitsu Services,"
authored by
Jørgen Thorsell, executive vice president of DIEU.
The Key
Players
Fujitsu Services is the information
technology-services arm of the Japanese-based
Fujitsu Group, a $44.5-billion leader in the
provision of IT systems and services in the global
market.
Although centered primarily in
Europe, Fujitsu Services also has operations in the
Middle East and Africa. In 2007, it had revenues of US
$4.8 billion. It designs, builds, and operates IT
systems for a number of markets, including government,
financial services, retail, telecom, transportation,
utilities, and the media. It employs approximately
21,000 people and has offices in more than 20 countries,
but its reach extends even further. When the media giant
Reuters searched for a ten-year service provider to
support its operations in more than 100 countries, it
turned to Fujitsu Services.
Acting as the key organizer for the
Fujitsu Management Academy was the Danish Leadership
Institute. With offices in Copenhagen, London, Brussels,
and Berlin, DIEU has been in operation for over 30
years. It has over 350 faculty members whose expertise
includes business psychology, project management,
strategy implementation, surveys and tests, and
e-learning. It has a long and distinguished record in
the area of leadership education.
The Case for Change
Like many change
efforts, the motivation for creating the Academy started
with some painful experiences. The corporate predecessor
of Fujitsu Services was a U.K.-based computer company
called International Computers Limited, or ICL.
Originally founded in 1968, ICL had a long history of
troubled finances going back to the late 1970s. In the
late 1990s Fujitsu acquired ICL and planned to take the
company public in 2000, but then cancelled the initial
public offering due to poor execution of ICL’s
e-business strategy. ICL’s CEO at that time was replaced
with Richard Christou, and in 2002, Fujitsu re-branded
the company as Fujitsu Services. Richard Christou
eventually became the chairman of Fujitsu Services.
When reflecting
upon ICL’s past failures, Fujitsu Services’ leadership
realized that poor communication and poor people skills
contributed to the problems. Ian Williams, head of
organization and people services at Fujitsu Services,
spoke with key internal and external stakeholders,
including senior management and the Corporate Leadership
Council, a human resources membership program of the
Corporate Executive Board.
Goals and Metrics
When all the
input was analyzed, three content goals emerged in the
areas of communication, leadership, and team
development. Managers would be expected to:
-
Have more skillful and productive conversations;
-
Request feedback on their leadership styles and
handling of leadership challenges;
-
Develop their understanding of teamwork in the
context of Fujitsu Services.
Top leadership
also decided that the training would have to have
business impact and, given the tremendous costs of
restructuring from the old ICL days, would have to be
cost effective. Additionally, they wanted to raise the
external “Investors
in People” rating for Fujitsu Services. This is an
external rating backed by the U.K. Department for
Education and Skills that recognizes “best practice”
achievement in organizational learning and development
programs.
To measure
organizational shifts and improvements, DIEU and Fujitsu
Services decided to use an existing Employee Opinion
Survey (EOS), plus 360-degree assessments and ongoing
“pulse” surveys. The agreed-upon metrics were an
improved management capability in the EOS score (at
least a five-percent improvement) as well as an increase
in the managers’ “soft skills,” as shown by the
360-degree feedback scores (again, at least a
five-percent improvement). The pulse surveys were used
to shape the course process and content in an ongoing
fashion.
Design
Given the
Fujitsu Services’ goals, the leadership team at DIEU
decided upon a three-year, three-module program
(communication, leadership, and teamwork), augmented
with two 360-degree feedback sessions. Furthermore, it
decided to take a consortium approach to delivering the
modules, calling upon the services of two additional
consulting firms:
Oxygen Learning and
Track Surveys.
After extensive
consultation with Futjitsu Services’ internal staff,
DIEU came up with a tailored solution with content and
processes based on three different approaches:
interactive role play sessions, experiential workshops,
and fun-based learning. These approaches were deemed to
be most effective for achieving behavioral changes.
Although most of
the course content would be delivered in one day,
face-to-face sessions in small classes with
approximately 20 participants, some material would be
available online. All course material was extensively
“road tested” before being rolled out. To keep delivery
of material consistent, facilitators operated as a
“virtual team,” staying in touch via e-mail, weekly
conference calls, and the web.
To ensure that
the course material could be understood by different
nationalities, facilitators shaped classes with local
languages and cultures in mind. For the leadership
module in particular, local-country Managing Directors
were encouraged to act as ambassadors and role models
for the module by introducing it to their local leaders
and managers. This approach also allowed the Managing
Directors to overlay whatever specific agendas they had
on to the central message.
The final
outline of the program looked like this:
Module One:
Straight-talking, genuine listening
In this module, DIEU facilitators
were “setting the business context for Fujitsu
Management Academy and addressing issues of the role of
a leader in driving high performance, managing skill
conversations and active listening, business improvement
and performance management, and giving and receiving
feedback.” These sessions were offered from August,
2005, through March, 2006.
Module Two: Leadership
Prior to module two, all managers
participated in a 360-degree feedback exercise,
administered by Track Surveys. This exercise provided
detailed and highly customized feedback to each
participant. This module took place between April and
November, 2006.
In this module, DIEU facilitators
were “addressing issues of leadership styles, leading
through change, strengths and development opportunities,
peer coaching and feedback, delegation and motivation,
communication and feedback from the 360 degree appraisal
tool.”
Module Three: Team Development
For this module, Oxygen Learning
facilitators were “addressing issues of where one’s team
is now, managing virtual teams, diversity,
team-development models, trust and understanding, and
managing internal and external expectations.” This
module took place between January and August, 2007.
Subsequent to this module, the Track
Survey people administered another 360 degree assessment
to measure improvement in manager’s skills.
Results
In reporting the
results of the project, Jørgen Thorsell repeatedly used
the phrase “Kirkpatrick
evaluation” to summarize his findings, which at the
time the article was written were still in the
preliminary stage. The Kirkpatrick evaluation a
four-level model developed by Donald Kirkpatrick to
assess training effectiveness. It posits that trainers
must look at four different kinds of evaluation, in
order: reactions, learning, transfer, and results. (For
more information, see Kirkpatrick’s books:
Evaluating Training Programs: The Four Levels
and
Transferring Learning to Behavior: Using the Four Levels
to Improve Performance.)
Regarding the
Level 1 Kirkpatrick evaluation (initial reactions to the
training), the Thorsell wrote that evaluations returned
on more than 250 modules had averaged above eight out of
a possible ten across all measurement dimensions. When
participants were asked whether they would recommend the
Fujitsu Management Academy to their colleagues, 95
percent, to date, had said “yes.” Furthermore, the
managers indicated a strong interest in having tailored
“just-in-time” courses as business challenges arise.
The 360 degree
assessments were still being processed and analyzed, as
were the
Level 3 Kirkpatrick evaluations.
At the business
level, net profitability at Fujitsu Services had
increased in the last few years of the program. While it
would be hard to attribute cause and effect to this
aspect of the program, no doubt the managers feel better
equipped for their roles and the people challenges they
face.
Regarding the
“Investors in People” goal, it is gratifying to note
that IiP awarded Fujitsu Services the designation of
“Champion Status,” which is a tremendous achievement.
Based on anecdotal
evidence, at least until all the data are analyzed, it
is clear that the managers did achieve small,
incremental changes with regards to their people skills.
When it comes to “re-programming” people’s behavior, the
secret to success is in making small yet consistent
changes. Never underestimate the inevitability of
gradualness. Judged on this basis, the Fujitsu
Management Academy is off to a very good start.
Final
Thoughts
In reflecting on
why the program was created, Paula Graham, the project
manager for the Fujitsu Management Academy, had this to
say: "Our people needed to be able to match the needs of
the business and the challenges presented to them.
Despite its size and geographical reach, the Fujitsu
Management Academy is a straightforward model that's
driven by the needs of the business. Good people
managers will enable us to become more effective as a
business, and we anticipate that the program will grow
and adapt with the changing business priorities."
The Danish
Leadership Institute's gives an excellent model of a
well-thought-out model combining the best of
individualized training with the wonderful efficiency
features that information technology has to offer. It is
an approach well worth emulating.
Author’s Note:
Mark Hanna is a freelance business researcher and writer
based in Cedar Rapids, Iowa. He can be reached at
markhanna@mchsi.com.
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