MITCH GARBER

News Web

The Telegraph: The Secrets of CEOs: Leading through fellowship is the way ahead in globalised age

How will chief executives lead in the future and respond to the new challenges posed by globalisation, sustainability, the next wave of the internet, the credit crisis and the ongoing war for talent?

Steve Tappin and Andrew Cave’s new book, The Secrets of CEOs, brings together 150 top global chief executives to give readers a unique insight into how the most successful brains see the future.

The current leadership model of many traditional Western “command-and-control” businesses is destined to fail because the many challenges they face will overwhelm cumbersome corporate structures. At the same time, many CEOs are not happy and are failing to obtain any balance in their lives, with many complaining that it is very lonely at the top and they have little support.

In the next decade, many successful companies will be forced to replace command and control with more fluid and fast-moving cell-like organisations that provide business leadership at the centre by giving greater freedom to act to much more decentralised operations, whilst still policing performance.

Imagine a new global powerhouse run by an executive “dream team” of former BP chief executive Lord Browne fulfilling a global ambassadorial role, Tesco’s Sir Terry Leahy driving operational execution, WPP’s Sir Martin Sorrell developing entrepreneurial new ventures and markets, mining group Xstrata’s Mick Davis pulling together massive value-adding deals, while Alcatel-Lucent’s new CEO, Ben Verwaayen, focuses on inspiring the troops. Sounds amazing.

But clearly in practice this would probably be a disaster, as each of these chief executives works in his own way and all are used to being the boss.

Equally, however, it’s clear from our interviews that top global companies, while on the surface operating as a conventional management group, are really run by a close-knit team of key executives with extraordinary and complementary skills – and all the more so when they operate in a cell-like fashion.

We believe that the outstanding companies of the next decade will be led by a tightly bonded fellowship of remarkable leaders operating as one.

Arguably the most well-documented fellowship is the team that drove mobile phone manufacturer Nokia’s phenomenal growth through the 1990s. Jorma Ollila worked in partnership with Matti Alahuhta, Pekka Ala-Pietilä, Sari Baldauf, and his replacement as president and chief operating officer, Olli-Pekka Kallasvuo.

A fellowship has also driven Indian IT services group Infosys. Deepak Satwalekar, the lead independent director, says: “At the heart of Infosys is a fellowship which was formed over 20 years ago, based on a mission, strong values, and a firm commitment to doing the right thing and integrity.”

At Resolution Group, the financial services business, former chief executive Paul Thompson says he also thought of his top team as “partners, not people run by command and control”.

Fellowships feel radically different from a conventional leadership team in the closeness of their binding, the total openness between their members and the level of conflict and disagreement the members can tolerate with each other.

Archie Norman fondly recalls his time as chief executive of Asda, which spawned a generation of FTSE 100 CEOs, including Richard Baker, Andy Hornby, Justin King and Allan Leighton. “A real team is a rarity,” he admits. “All chief executives tell you they’ve got a great team but when you say ‘who is the great team?’ 80pc of them tell you it’s these 20 people or these 12 people. I know what they’re trying to say, but that’s not a team. You very, very rarely find a team of 12 people, in fact pretty much never. That’s not a real team.

“A real team is typically three or four people, because the real team in fast-moving companies is one where, when things are going wrong, they share things with each other completely openly. When they have a rotten day, they come in and say, ‘I’ve made a right mess of that, can you help me out, just tell me where you think I should pick it up’.

“Or someone comes in and says, ‘I’ve got this idea, do you think we should do it?’ and somebody else will say, ‘No, I think that’s rubbish actually’. You can have that sort of joint, heavy lifting. There are high levels of inter-changeability – if you can’t make that meeting, OK, I’ll go and pick it up for you. No sweat, no problem. That is a huge advantage to have, but it’s unusual.

“The right culture to create is one where there is total transparency. There are no secrets. Everybody knows what everybody else is doing. We all respect each other for what we are doing, but we are able to have an open argument about things, like a family row.”

Chinese computer group Lenovo has such a fellowship. Senior vice-president of human resources Kenneth DiPietro says: “We have some awesome arguments; we make it a rule to discuss the un-discussables.”

National Grid chairman Sir John Parker expands on this idea. “In the executive cell, there will be ideally three to four people who collectively drive at pace and with integrity, releasing energy across the whole organisation,” he says.

Indeed, the most significant danger with a fellowship model is that, in the words of Standard Chartered chairman Mervyn Davies: “You have to be careful the top team does not become a cult. In a world of fast change, you continually need new blood and fresh ideas in teams.”

Taking the lead remains the role of the CEO.

Former Party Gaming chief executive Mitch Garber says: “The true test of a CEO is not when things are going well, but when things are not going well and you have to go off course and ski off-piste. It needs real self-belief to change course and make tough unpopular decisions, but ultimately this is the difference between the success and failure of a leader.”

Certainly, businesses should not be governed by majority vote. However, many CEOs told us how infrequently they take unilateral decisions or override their top teams. Although some situations, such as turnarounds, require strong leadership more than others, most CEOs recognise the value of working in a team.

Rather than robbing the CEO of the initiative or exchanging him or her for a consensus-seeking council, a fellowship model strengthens the CEO significantly. What could have been impossible becomes possible. A CEO in a fellowship is stronger with regard to internal opposition or inertia, as there is a core team of really close advocates within the business.

The fellowship can give the CEO valuable support in hard times and the trust they share with him or her can make it easier to face reality in tough spots. A trusted fellowship can work particularly well during transformation phases. At Tesco, for example, Tim Mason is setting up the Fresh & Easy venture in the US while the rest of the fellowship focuses on the core business.

The closeness of fellowship members requires a much closer alignment of personal values than most leadership teams manage. The fellowship members have to be very clear on what moves them individually and as a team. They must invest heavily in probing and really understanding the other members’ values, so that they can all align their beliefs on how to conduct business and be fully frank and open with each other as disagreements arise.

Fellowship members must also respect and value each other’s skills so that there can be mutual respect and equality of contribution.

Finally, there must be a sense of collective responsibility, so that all fellowship members back the decision of the CEO whatever the previous argument and its intensity. Several CEOs told us that their fellowships do not necessarily mimic the company’s senior management team; some of that team may well be excluded and some more junior executives may be part of the fellowship.

Paul Manduca, former chief executive of Deutsche Asset Management, says: “The non-executive boards of tomorrow will have to be highly supportive of these talent teams but still not be afraid of testing strategy and key operational risks. It will be their role to check that the fellowship still has the right members to address each phase in the company’s development.”

Adapted from The Secrets of CEOs: 150 Global Chief Executives Lift the Lid on Business, Life and Leadership by Steve Tappin and Andrew Cave, Nicholas Brealey Publishing. To order a copy from Telegraph Books for £14 + £1.25 p&p call 0870 428 4112 or go tobooks.telegraph.co.uk

- By Steve Tappin and Andrew Cave

READ ORIGINAL ARTICLE HERE