1. business and industrial

How to achieve and sustain
outstanding levels of performance
Report for the British Quality Foundation (BQF)
by Manchester Business School (MBS)
February 2013
Volume 3: Leading with Vision, Inspiration and Integrity
The BQF is extremely grateful to Boots UK, O2, Ricoh UK Products and Siemens Industry Automation
and Drive Technologies for sharing their excellent insights and information.
The British Quality Foundation | Patron: HRH The Princess Royal
Registered Office: 32-34 Great Peter Street, London SW1P 2QX T +44 (0)20 7654 5000 F +44 (0)20 7654 5001 E [email protected] www.bqf.org.uk Registered in England No: 2770257.
How to achieve and sustain outstanding levels of performance: MBS report for the BQF
Volume 3: Leading with Vision, Inspiration and Integrity
Contents
Page
Introduction .......................................................................................................................................... 3
Leading with Vision, Inspiration and Integrity ...................................................................................... 5
1. An historical consensus ................................................................................................................. 5
2. ‘New Leadership’ (1980s) .............................................................................................................. 6
3. Emerging Leadership trends in the 21st century........................................................................... 6
3.1 Rost’s Leadership for the 21st century ............................................................................... 6
3.2 Yukl’s 21st century Leadership critique .............................................................................. 6
4. Emerging Leadership concepts and themes ................................................................................. 7
4.1 Level 5 Leadership .............................................................................................................. 7
4.2 Distributed Leadership ........................................................................................................ 7
4.3 Trust-based Leadership ...................................................................................................... 7
4.4 Creative Leadership ............................................................................................................ 8
4.5 Positive Leadership (health and well-being) ....................................................................... 8
5. Embryonic Leadership themes in the 21st century ....................................................................... 8
5.1 Authentic Leadership .......................................................................................................... 8
5.2 Sustainability Leadership .................................................................................................... 8
5.3 Positive turbulence and crisis management ....................................................................... 9
5.4 Visionary and Inspirational Leadership ............................................................................... 9
5.5 Discursive Leadership ......................................................................................................... 9
6. Summary...................................................................................................................................... 10
7. Leading with Vision, Inspiration and Integrity in the case study companies ............................... 10
7.1 Level 5 Leadership ............................................................................................................ 10
7.2 Distributed Leadership ...................................................................................................... 10
7.3 Trust-based Leadership .................................................................................................... 13
7.4 Creative Leadership .......................................................................................................... 14
7.5 Positive Leadership (health and well-being) ..................................................................... 15
7.6 Authentic (Ethical) Leadership .......................................................................................... 15
7.7 Sustainability Leadership .................................................................................................. 17
7.8 Positive turbulence, crisis management ........................................................................... 19
7.9 Visionary and Inspirational Leadership ............................................................................. 22
7.10 Discursive (story telling) Leadership ............................................................................... 25
8. Discussion and conclusion .......................................................................................................... 26
9. Appendices .................................................................................................................................. 29
9.1 About the case study companies ...................................................................................... 29
9.2 Glossary ............................................................................................................................ 33
9.3 Reference list .................................................................................................................... 37
9.4 Reference notes ................................................................................................................ 41
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Volume 3: Leading with Vision, Inspiration and Integrity
Introduction
In 2012, Manchester Business School conducted an extensive Excellence research project on
behalf of the British Quality Foundation (BQF), the community for every business seeking insights,
tools and experiences to improve itself. The purpose of the research was to provide insights into
contemporary business excellence practices to further develop understanding of what it looks and
feels like and how it benefits business.
Thus it focuses on emerging areas of business excellence: new ideas, concepts and practices
identified in extensive reviews of current practitioner and academic literature. In some cases these
practices can be small things, appearing almost inconsequential to some, but combined together
and driven by an uncompromising and consistent strategy, their accumulation gives the
organisations involved an edge, something for which every business should be searching and
striving.
Four research themes were identified for investigation:
1.
2.
3.
4.
Adding Value for Customers (Customer)
Leading with Vision, Inspiration and Integrity (Leadership)
Succeeding Through the Talent of People (People)
Managing Processes with Agility (Process)
These themes are four of the eight Fundamental Concepts of Excellence within the EFQM
Excellence Model. Extensive in-depth literature reviews were conducted for each of the four
themes, and a number of key emerging or recently emerged contemporary topics were identified
within them. These topics are areas that are experiencing significant research interest or where
practitioners are making significant improvements.
Following identification of the topics, four organisations, two B2B (Ricoh UK Products and Siemens)
and two with a significant B2C focus (Boots UK and O2), were selected to determine how they are
achieving excellent business practices across them. The report highlights the techniques and
processes that help these organisations to excel, with implications for business in the UK and
globally. More information about the four companies can be found in the Appendix.
The report was produced by Dr Jamie Burton, Cheryl Holden and Jan Kitshoff. Expert content
direction and contribution under the four themes was also provided by:
•
•
•
•
Customer: The Customer Management Leadership Group (CMLG) team: Professor John
Murphy, Dr Jamie Burton, Jan Kitshoff and Robin Gleaves
Leadership: Emeritus Professor Tudor Rickards
People: Dr David Holman
Process: Professor Ruth Boaden and Professor Peter Kawalek
The BQF has undertaken this project because it wishes to support UK businesses by providing
them with access to leading edge insights and experiences from excellent companies.
The studied companies have all achieved excellence, doing so through a commitment and passion
to be the best. They are outstanding organisations that lead their sectors in market share and
customer satisfaction, have consistently high employee satisfaction levels, have achieved sustained
growth and high performance, and have won an abundance of awards in recognition of their
success. Unfortunately however, UK businesses such as these are in a minority, and by
showcasing their examples of excellence we challenge the majority to aspire to greater levels of
achievement.
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Volume 3: Leading with Vision, Inspiration and Integrity
The BQF provides companies with help and advice to improve their performance, particularly
around the EFQM Excellence Model which, by streamlining operations and improving productivity
and efficiency, improves business performance and profitability.
The findings from the research have been published in five volumes:
1.
2.
3.
4.
5.
Executive Summary
Adding Value for Customers
Leading with Vision, Inspiration and Integrity
Succeeding Through the Talent of People
Managing Processes with Agility
This, Volume 3, deals with Leadership.
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Volume 3: Leading with Vision, Inspiration and Integrity
Leading with Vision, Inspiration and Integrity
Effective leadership is fundamental to the success of any enterprise, but there is no simple, single
view of how it should be delivered: context and personnel are key factors. Its importance is
highlighted by the 2011 Ernst & Young Business Risks report which observes that the number one
opportunity for global organisations is improving execution of strategy across business functions,
facilitated by improved strategic communication. The same report also highlights key risks that firms
need to combat via effective leadership, including regulation compliance, expansion of government
involvement, slow recovery, pricing pressure, market risks and credit access.
The earliest ideas of leadership were inspired by heroic leaders whose actions were associated
with charisma which was believed to be possessed by special individuals endowed with exceptional
talents or traits. Trait theories (what leaders are) persisted in modern times, but were replaced in
the mid-20th century by style theories (what leaders do).
In the 1980s, interest in ‘New Leadership’ concepts grew. Charisma was re-interpreted as
transformational and visionary leadership. Attention was also drawn to interpretational treatments of
reality (the management of symbolism and meaning).
By the 21st century, charisma had been further challenged through a post-charismatic perspective
which introduced political and ethical theories of knowledge and power. These ideas also
recognised the ambiguities and complexities of contemporary organisational systems. A greater
turbulence of the business world has seen increased attention paid to crisis management under
complex environmental conditions, as well as to innovative leadership.
Five significant emerging themes of the 21st century have been identified namely:
1.
2.
3.
4.
5.
Level 5 Leadership
Distributed Leadership
Trust-based Leadership
Creative Leadership
Positive Leadership
Five potentially significant themes for leadership development were also identified and often shown
to be rework of older ideas: authentic leadership (ethical leadership); sustainability leadership;
positive turbulence and crisis management; visionary and inspirational leadership; and discursive or
narrative leadership (modern enactments of the ancient processes of myth-making and cultural
story-telling).
Important historic and contemporary leadership themes in theory and in practice have been
identified, while the case study data has been analysed in order to identify examples of excellent
practices within the topics of the leadership theme. Following an extensive literature review, the
topics are outlined briefly below. They are followed by examples of excellent practices from the four
case companies listed in alphabetical order.
1. An historical consensus
The earliest (pre-modern) theories regarded leaders as endowed with special gifts and who acted
as intermediaries with the supernatural world1. The hero-leader was to become identified with the
charismatic style until modern times2. In the 20th century, it was proposed3 that the forms of modern
industrial institutions required a move away from charismatic and other traditional leadership styles
toward a modern rational mode of leadership which accepted legal authority to maintain the
functioning of established bureaucratic structures. Professor Rickards highlights that this helped
establish the primacy of the Dominant Rational Model4 in organisational and educational thinking to
the present day. It is important to note that in practice, charismatic leadership never completely
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disappeared, and continues to receive attention in contemporary textbooks5 as well as in accounts
of effective business practices attributed to such leaders6.
A fundamental belief has also persisted in inherited capabilities characterised as a stable set of
traits shared by outstanding leaders. Trait theory held considerable sway for a century roughly
associated with the rise of modern cognitive psychological scholarship (1850s-1950s), and with a
particular period of dominance in the 1920-1980s7. Its relative decline since the 1980s is widely
attributed today to the influence of a magisterial survey and analysis by Ralph Stogdill8 and the
subsequent rise of style theories. Increasingly, focus turned from what leaders are to how they
behave9.
2. ‘New Leadership’ (1980s)
In the 1980s, a set of ideas identified with the so-called New Leadership movement10 emerged.
New Leadership placed emphasis on transformational processes, both for organisations and the
individuals within them. A major influence was the study of political leaders11. Later work extended
the concept widely to business leaders and team leaders at other organisation levels12.
Transformational leaders were believed to elevate followers beyond economic rationality of selfinterested goals towards a willingness to espouse socially desired (‘normative’) goals accompanied
by an inspiring vision.
It has been suggested that New Leadership attempted to ‘tame’ Charismatic Leadership by
providing it with a modern assessment methodology13. Attention also widened to leaders of various
kinds and at all levels in business, political, and social organisations14. However, the New
Leadership model retained those elements of charisma associated with visionary and inspirational
leaders. This was in keeping with professional interest in exceptional leaders in the 1970-80s.
(Andrew Peters and Waterman, 2004).
3. Emerging Leadership trends in the 21st century
Two influential reviews influenced subsequent thinking of 21st century leadership theory and
practice and these are discussed below.
3.1 Rost’s Leadership for the 21st century
Rost’s Leadership for the 21st century15 is often cited as a landmark piece of visionary writing16`17`18.
According to Rost, 20th century leadership was appropriate for a business form dominated by an
economic dimension. He points to the absence of concern for ethical issues in the dominant model.
He argues for a 21st century treatment which is more relationship-based so that there is a
necessary mutuality of interests between leader and followers.
His work is an antecedent of more recent studies of ethical leadership19 and collaborative
leadership20, and a shift to recognising ethical dilemmas of leadership. An ethical emphasis can be
found in various current business programmes which address issues of social corporate
responsibility, sustainability, and faith-based beliefs.21`22
3.2 Yukl’s 21st century Leadership critique
Gary Yukl, one of the most respected leadership educators of the late 20th century, also offered a
critique of 21st Century leadership23. In his view, 20th century thinking had been over-influenced by
‘two-factor models’ (i.e. a functional and a behavioural component). Yukl adds criticism of two-factor
(dyadic models) of leadership such as Leader Member Exchange24 and Situational Leadership25.
Nevertheless, there are still valuable corporate programmes applying such dyadic approaches26.
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Yukl advocates a shift away from ‘either-or’ thinking. In this he is supported by models of creative
leadership, within which ‘either-or’ tends to be replaced by ‘bothLand’ thinking27`28`29.
4. Emerging Leadership concepts and themes
From a list of approximately thirty themes identified from the data base, the themes which most
strongly meet the criteria of citation in textbooks plus evidence of application in leadership
development practice are:
4.1 Level 5 Leadership
Level 5 Leadership is characterised by personal humility and fierce resolve, and has become
popularised as an alternative to ego-driven charismatic leadership. It is presented as a progressive
step beyond the 20th (and 19th) century notions of the special charismatic individual. Based on
empirical studies, Collins (2001)30 claims that Level 5 leaders are less ego-driven and less prone to
personality dysfunctions than are more widely-admired and flamboyant business figures. As a
concept, Level 5 Leadership is regarded as valuable among practising executives. It has significant
implications in leadership selection and development programmes for assessing the implications of
psychometric tests. However, evidence for this leadership is unlikely to be forthcoming from a case
study-based research approach that relies heavily on interviews with senior staff about their own
roles. Research into the current significance of this leadership style at the case study companies
would involve interviewing junior staff about their perceptions of the leadership styles of their senior
teams.
4.2 Distributed Leadership
This involves the distribution of leadership roles and responsibilities, and is much more than the
simple allocation of leadership roles. Good examples can be found in sports teams, musical
ensembles and military tactical teams.
These approaches are consistent with the shift away from the ‘great man’ theories and the move to
collaborative models31. Considerable attention has been paid through the work of the Sloan School
on this model32. The shared leadership concept was advocated as creating a collective ‘super
leader’ within a project team33, and far earlier through the work of Belbin (recently summarised in
Thornton34 based on Jay35 cited in Rickards36). Sir Terry Leahy talks of the need to create ‘balance’
in an organisation so that everyone is guided in the right direction but also encouraged to work on
their own initiative and take responsibility for their own actions37.
4.3 Trust-based Leadership
Trust-based Leadership achieves results by gaining the trust of colleagues and the wider network of
social contacts. It is seen as increasingly important as trust in political and financial leaders
declines.
Leader failure is often attributed to a breakdown of trust38`39. Trust-building as a leadership
development skill tends to be included in programmes for collaborative action40. Features of such
programmes include ways of dealing with vulnerabilities within trust-based relationships41. Among
the more unusual treatments are those developed from the work of animal behaviourist Monty
Roberts42 claimed to be applied in organisations such as Volkswagen, General Motors, AT&T and
Ford Motor Company43. In the UK, the work on Trust-based Leadership derived from such
programmes has been tested through leadership courses at Manchester Business School.
Manchester alumnus Sir Terry Leahy highlights that trust is fundamental to good leadership, and
that seeking and speaking the truth is the most important thing any manager can do.
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4.4 Creative Leadership
Creative Leadership stimulates creative outcomes in others through a style that encourages change
and innovation, and has emerged as a 21st century leadership theme44. Its impact has been studied
for MBA and executive groups for several decades45`46`47 and it lies at the core of the Progress
Principle48. Gerard Puccio (a Manchester Business School doctoral alumnus) has worked
extensively on training programmes internationally on enhancing creative leadership skills in
organisations such as Procter & Gamble, Kraft, Nabisco, the BBC, 3M, IBM and Fisher-Price
Toys49.
Features common to these approaches include a view of an enabling or facilitating leadership style
enhanced by skills at helping teams and other social groups to break away from dominant beliefs,
assumptions and mind sets. A distinction needs to be made between creative leadership skills, and
those of the creative individual which often reveals traits of self-obsession (narcissism) shared with
many charismatic leaders.
Creative Leadership aligns with increasing interest in approaches for open innovation50`51 and its
advocacy of flexibility and Distributed Leadership in complex and turbulent environments. The
comments of Professor Kawalek under the process theme suggest that Creative Leadership could
grow in significance as market leadership becomes increasingly dependent upon leadership that
focuses on utilising technological advances.
4.5 Positive Leadership (health and well-being)
Positive Leadership promotes positive self-image as a means of personal development and has
become increasingly important within various social institutional frameworks. Its popularity can be
traced to movements in humanistic psychology, and the beliefs that a route to self-actualisation is
through recognition of the worth of an individual, granting ‘unconditional positive regard’52.
5. Embryonic Leadership themes in the 21st century
5.1 Authentic Leadership
Authentic Leadership promotes an ethical climate and a moral perspective and has been
popularised in response to non-ethical practices post-Enron and the financial crises of the early 21st
century53. The approaches are grounded in the older concepts of ethical leadership54 and the
embedding and ‘living’ of positive organisational values.
George, a former head of Medtronic Inc. and Avolio (a pioneer of transformation leadership) have
been among its advocates55. The approaches have been linked to ‘The Disney Way’ offering a
route to inspirational, visionary and ethical practices. Body Shop, IBM and ITV have been practical
users via the Disney Institute56.
5.2 Sustainability Leadership
Sustainability Leadership is aimed at achieving sustainability and has attracted increasing attention
at corporate levels, overlapping with attention to corporate social responsibility57. The programmes
appear to be initiated with top leadership support and incorporate many of the principles of
transformational leadership (the modern version of charismatic leadership) and creative leadership.
Sustainability appears to be a key leadership issue for the foreseeable future, with the 2012 World
Economic Forum’s survey of 469 experts and industry leaders at Davos including environmental
issues as one of five main sets of global risks with greenhouse gas emissions as the third overall
most likely global risk58. The Ernst and Young Business Risk Report 2011 reports social
acceptance risk and pressure for CSR to be ninth risk faced by firms and that it is likely to rise in
impact in the future59.
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Chris Sherwin, Head of Sustainability at Seymourpowell, believes that practical initiatives are
gaining widespread attention with the current trend of appointing sustainability officers: “In my 15
years in the field, sustainable business has changed beyond recognition – moving from a risk to an
opportunity; and from compliance to a leadership issue. The old way of doing things – of reporting
and monitoring, through supply chains, communication and PR – simply won't work anymore.
Increasingly, sustainability will be about creativity, entrepreneurship and growth, placing it squarely
in the hands of innovators and designers.”60
Professor Rosabeth Moss Kanter highlights six facets of an institutional logic present in most high
performing and sustainable companies: a common purpose; a long-term view; emotional
engagement; community building; innovation; and self-organisation61.
Corporate sustainability programmes have been cited from companies including O2, Marks &
Spencer, Unilever, Proctor & Gamble, Mars, Akzo Nobel, eBay, BASF, PepsiCo, Tata Beverage
Group, Sony Ericsson and Boots UK.
5.3 Positive turbulence and crisis management
Positive turbulence and crisis management is leadership in the coordination and control of
procedures during crises and involves Creative Leadership.
Crisis management has become a given for effective strategic and operational functioning of
organisations62. The quality movement has developed sophisticated methods of risk assessment
and management. The dominant approaches are considered effective at addressing the functional
procedures 63 while requiring attention to dilemmas of coordination and control64.
Under complex conditions, skills at dealing with environmental turbulence are required65. Drawing
on the principles of creative leadership, Gryskiewicz, of the Centre for Creative Leadership (CCL),
cites Intel and Honda as exemplary organisations. The CCL has strongly advocated leadership
development training, claiming that 400,000 professionals have been through their programmes
internationally66.
5.4
Visionary and Inspirational Leadership
According to Sir Terry Leahy: “Goals have to be bold and daring. They need to cause excitement
and just a little fear.” (2012)
Visionary Leadership encourages the acceptance of a powerful shared vision of a desired future. It
has an ancient pedigree in pre-modern beliefs (Potts, 2009) and was retained in the new leadership
era as a component of transformational leadership67`68`69.
Another ancient concept, Inspirational (or Charismatic) Leadership, has been incorporated into
modern practices through grounding in social identity theory70`71, and is based on the appeal of a
leader’s unique character, behaviours and visionary messages.
5.5 Discursive Leadership
Discursive Leadership encourages mutual learning through conversational style and is another
older mode with a modern variant. In pre-modern times, leadership was enshrined in mythology and
enacted through the story-telling of the deeds of heroic figures72.
Considerable scholarly attention has been turned towards the analysis of discourse and
organisational symbolism since the work of Berger and Luckmann73. In recent times, story-telling
has become rediscovered as a means of understanding the origins and persistence of leadership
myths74`75. Denning76 has become an influential advocate. See also recent UK work on the
topic77`78.
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6. Summary
Professor Rickards comments that the above review captures current empirical and conceptual
leadership activity. He notes that 21st century leadership practices are yielding evidence of many
applications in effective organisations. However, the new is often grounded in traditional beliefs of
visionary and ethical leadership, together with modern ‘new leadership’ approaches appropriate to
contemporary organisational conditions of complexity, crisis management and globalisation.
The most promising approaches combine learning through creative and ethical practices, grounded
in sound theoretical principles.
7. Leading with Vision, Inspiration and Integrity in the case
study companies
Leadership issues span all areas of business and particularly the three other themes in this
research report. For this reason, the following results will frequently refer back to concepts outlined
in the other report volumes. Most of the leadership types identified in recent research could be
observed to varying degrees in the four organisations.
7.1 Level 5 Leadership
The principal research method of senior team interviews does not lend itself to significant
exploration of Level 5 Leadership. However, there was some evidence of this approach at O2,
linked to a climate of team work and open sourcing.
7.1.1 O2
Ronan Dunne, CEO, recognises the significance of Level 5 Leadership when he states that: “It’s
empowering for a leader to recognise that his job is to bring together a team that is better at their
job than he is.” Derek McManus, Chief Operating Officer, also demonstrates it: “Given the diversity
of the job I’ve got, the chances of me having the right answer are pretty small, so I try to give people
the power to buy into the conversation.” However, O2 appears more dependent upon Distributed
Leadership.
7.2 Distributed Leadership
7.2.1 Boots UK
A key indicator of the climate of Distributed Leadership at Boots UK is the lack of the ‘management’
and ‘staff’ distinction; everyone is referred to as a ‘colleague’. Boots UK displays Distributed
Leadership in its focus on ‘performance leadership’ throughout every level of the business and the
concern with the quality of the line management that underpins its reward and training process.
Templates for these Distributed Leadership roles (which are vital, given the need for leaders in
every store) were written by the people in the roles, not Head Office, and its Attitude Survey is
used to monitor this.
Boots UK recognises that it will not be able to sustain high performance unless people know where
they stand, trust their leaders (see also section 7.3.1 below), and know what they are doing. The
leadership template highlights examples of the right behaviours as well as the wrong ones. It covers
four areas of leadership: establishing a risk-taking climate and target setting (reflecting a creative
leadership ethos); being available to colleagues and committed to their success (relating to trust
based leadership); being authentic and dynamic (reflecting authentic leadership); and being active
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and focused on the present about leadership opportunities (showing elements of a discursive
leadership approach).
Boots is currently running a series of leadership performance workshops looking at the
connection between macro objectives and people’s individual objectives, and encouraging
people to be open about their own learning.
“The starting point is the climate set by leaders,” says Stephen Lehane, Director of Group HR.
“There needs to be encouragement of open expression of views and genuine empowerment for
people to be able to think for themselves and to act. It’s encouraging a spirit in which people’s ideas
are genuinely seen to matter.” Boots UK has a scheme for recognition of employee innovation
through its Bright Ideas scheme. There is also national forum in which colleagues come together
with the executive every three months to talk about new ideas and what is happening. There is a
well-established network of feedback through the business. “The distinctive point, however,” says
Simon Roberts, Chief Operating Officer, “is in the leadership mind-set of going out and wanting to
know what could be better, spending time with colleagues, finding out what is going on, and finding
out what could be better for them and their customers.”
Finally, Simon suggests that Distributed Performance Leadership is easier in relation to the more
customer-centric aspects of the business. He argues that it is easier to sustain cultural change led
by colleagues when that change is closest to the customer, as it ‘sticks’ quickest because it makes
the biggest difference.
7.2.2 O2
The online and mobile working model adopted by O2 requires the use of Distributed Leadership
across flexible working teams. This is reflected in Derek McManus’s team-focused comment under
Level 5 Leadership above about giving staff power to take part in the conversation. He states: “We
consult as many people as we can, but obviously we cannot consult everyone.”
Each individual has a core role within the overall process. “People are also encouraged to
champion the USP that they bring to the table,” says Ronan Dunne. “We want diversity, and to
make sure that people appreciate how what they do makes a difference to the outcome.” This is not
about function, but about behavioural qualities that make things work. Ronan tackles this by using
one-to-one sit-downs with team members, alongside off-site team sessions focusing on how to work
together better and build relationships. “The lateral dimension of leadership is important, with
contributions from peers, rather than just an up-down model,” says Ronan. “We are trying to change
the context of the peer relationship, looking at how we make a difference as team players.” What
distinguishes successful teams is that the collective impact should make a greater impact than
individual strengths.
“Personal respect is important, as is a clear mandate for everyone,” says Ronan. “The more
confident you are as a team, the better you will be at aligning around a common mission, and then
pushing the boundaries.” This distinction between personal respect and expectation of outcome
achievement is significant. “This allows us to be more demanding of each other and willing to take
more risks with each other, as well as being more demanding of ourselves,” says Ronan. “The
amount of constructive tension that can be created is much more significant. This business is about
how you can truly make a difference in a commoditised marketplace. Being good is not enough: we
have to be exceptional. The way you do that is to stretch yourself: you build a level of personal
comfort, but then the challenges you take on give you an appetite for discomfort.”
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Training is fundamental for distributed leadership. Executive development programmes are run
in the Telefónica University in Barcelona. Around 100 employees a year go on residential
modules that are typically a week long. It also gives an opportunity to meet colleagues from all
over the world. Annual conferences are also used to develop a climate that supports and
encourages distributed management leadership: “This year, our big staff conference is purely
focused on improving line management,” says Derek McManus.
Distributed Leadership also depends upon a managerial foundation being in place. “I’m trying to
encourage the board to develop general manager capability rather than just specialists,” says Ann
Pickering, HR Director. “You need both to have a balance. I’m trying to create a pipeline of leaders.
Look at the civil service: you have great leaders who just take on different portfolios. You recruit for
attitude; you train for skill, and assume people are bright enough to pick up a portfolio and manage
that. There is a balance between skill and specific knowledge that you need.”
7.2.3 Ricoh
The leadership style at Ricoh is ‘empowering’ in the view of Tim Webber, Executive Director, with
people being allowed space to develop and being encouraged to do so. Whilst there may be a
general direction given for the role of any individual, how they might get there and how they achieve
this is within their own remit. This ethos came from the Japanese parent company and can be
challenging for UK-based staff. Tim reports having found it fairly difficult to respond to at first, but
acknowledges that it has given him room to grow. The empowerment approach extends as far
down the company hierarchy as assistant manager.
Tim’s personal leadership style centres on interacting with people. He focuses on talking to people
in the offices and on the shop floor and listening to how they feel. Managing directors are sent from
Japan, generally for five-year tenures, but, says Tim, “we have a well-established management
infrastructure at local level and therefore these relatively frequent changes at the top do not cause
significant disruption.” He says the EFQM Excellence Model, which has been in use since 1999,
“has given us a blueprint for how to run the organisation, and has helped us to stabilise the way that
things are done on the site.” It started small as a pilot project, but it has now evolved into a
business-as-usual management tool which is developing its leadership approaches as much as
other areas of the business.
Management development has been initiated for all line managers to assess capability in a
standardised way and identify training needs. The model used was MAPS (Managerial
Assessment of Proficiency provided by Development Processes Group plc), in which leaders
are scored across a set of 12 transferable management competencies with the aim to get
everyone to a higher than average level. Accreditation with the Institute of Management follows
together with Management NVQs. All line managers (approximately 120 team leaders or above)
have completed MAPS and it enables Ricoh to benchmark managerial competence against
other companies.
7.2.4 Siemens
Jim Harris, Sales Director, describes the approach to leadership at Siemens as Distributed
Leadership; not as a formal model, but as a reflection of what happens internally. He describes this
as a decentralised management style and structure, with objectives being set by the MD and
cascaded to his management team, who will pass them on to their own team.
Asked about the division between leadership and management, Jim Harris says that his approach
is to empower his managers and not to interact with them on a day-to-day basis. He is not an
advocate of micro-management. He describes the attitude to objectives as disciplined. Siemens
operates a formal ‘4Success’ staff dialogue programme, and the organisation uses its Leadership
Framework to drive and measure levels of compliance to central goals. The company uses a
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process of performance evaluation involving evaluation scales, with discussion taking place in
annual appraisals and also in half-yearly reviews with managers as part of a series of 1-to-1
reviews. Managers then review objectives quarterly with their sales teams.
Leadership is guided by a culture underpinned by behaviours defined by organisational values. Key
processes are defined and allocated to appropriate members of the senior management team. They
take responsibility for ensuring that the correct behaviours, those that support the organisation’s
vision, objectives, goals and values, are exhibited by staff. This is guided by the Siemens plc
leadership framework (reviewed annually), which sets out values and supporting behaviours.
Nine leadership capabilities are documented and outlined in detail at seven different levels with
links to supporting mechanisms, to processes and to key members of the management team with
related responsibility. These relate to ‘how’ things are achieved, rather than ‘what’ is done.
Leadership is reviewed and improved across the different business units within Siemens via a
number of approaches, including use of the EFQM Excellence Model, Investors in People,
Balanced Scorecards (see Volume 5, section 5), management appraisal, and results from the
employee opinion survey. An annual performance management process considers each individual’s
objectives and targets and how they are aligned to the business strategy.
7.2.4 Distributed Leadership highlights
For effective Distributed Leadership to take place, all the case study organisations highlight the
importance of developing the right culture. Across all the companies, individual personal reviews
play a key role in the cascading down of duties and in the development of leadership capabilities.
At Boots UK, the use of a leadership behaviours template, developed in conjunction with the
colleagues who will be involved in living the leadership behaviours, encourages effective
engagement and implementation. O2 focuses on developing a climate where teamwork is the norm;
harnessing the impact of the individual (and making it clear to the individual that their contribution
makes a difference) but maximising the whole contribution via an effective team network. Ricoh has
a culture of empowerment creating an expectation of individual initiative, but like Boots UK and
Siemens, this is guided by a framework.
In Ricoh’s case, this allows the mapping of individual’s leadership competencies so that it can
address areas in need of development. Siemens also uses its own detailed leadership competency
mapping process with measurement of progression. Part of this process is the annual performance
management process, checking how the individual’s objectives and targets fit with business
strategy.
Distributed Leadership at the case study companies is delivered via creation of a climate of
empowerment and expectation that is supported and delivered by rigorous checking against
measurement frameworks.
7.3 Trust-based Leadership
There was evidence of Trust-based Leadership being dependent upon transparency of
communication and development of a climate in which staff are expected to constructively
challenge behaviours that do not fit with organisational values.
7.3.1 Boots UK
For Boots UK, communication and transparency plays a key role in generating the trust needed
at every level of leadership, whether at senior level or at distributed levels through the
organisation. Boots UK invests in communicating and engaging teams around big change. It is
done in such a way that people understand what is happening and why. It also conducts
national events across the country to have a conversation with different groups of colleagues. It
aims to put energy, focus and clarity into these processes so that people feel that it is a
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conversation. “The way you go about sharing information, particularly when there are hard
decisions to be made, is what makes the differences; leaders have to be right out there talking
about it and why it has to happen, and people will tend to come with you,” Simon Roberts says.
7.3.2 Siemens
“It is massively important to have the trust of your staff,” says Juergen Maier. He adds that this
is not just his personal philosophy, but is encouraged in all of his managers. Juergen links the
gaining of trust to an authentic or ethical leadership style (see section 7.6 below). “They need to
see you as being authentic, credible, open and honest in order to gain that trust,” he says. At
Siemens, employee engagement is linked to this open, trust based approach, as demonstrated
by direction to staff to constructively challenge others whose behaviour is not in line with
standards.
7.4 Creative Leadership
A key concern of all four organisations was how to introduce creativity and fresh ideas. The main
challenge lies not so much in attracting staff (for example many people want to work at Boots UK),
but in managing their turnover. Excellent organisations encourage low staff churn, though this can
stifle creativity. The problem for all four companies is how to create opportunities to bring in the new
creative leaders of tomorrow.
For both Ricoh and Siemens, a focus on servitisation shows increasing Creative Leadership beyond
organisational boundaries as they attempt to lead partnerships with customers through offering new
value solutions.
7.4.1 O2
O2 utilises the concept of Creative Leadership in implementing its Red 60 initiative where it has
empowered staff to do whatever it takes to get the right outcome for customers. Creative
Leadership is evident in the ‘hackathons’ which are used to encourage technology skills and new
thinking. Processes and systems also support a Creative Leadership approach through the
development of a creative climate and culture through the use of Yammer (a social network for
businesses) and the gurus’ internal social network. O2 also actively engages with customers and
stakeholders via open-sourcing of ideas; creative leadership then can come from outside the
organisation!
Telefónica also engages in creative leadership to help external stakeholders.
In 2012 Telefónica launched Wayra, a global start-up accelerator where applications are invited
from anyone who has a digital start up or even an idea and wants to access the rich experience
and resources this digital communications business has to offer.
In the UK, over 1,000 applications were received in one month. Following a tense vetting and
pitch process, Telefónica now has 16 start-ups working from its London-based UK Wayra
academy, officially opened in June 2012. Each start-up has six months of Telefónica support
and mentoring before a new wave of applications takes their place.
The aim is simple: to help incubate and foster talent and innovation across the globe.
Telefónica only holds small stakes in the start-ups. They continue to seek investment and
growth independently, and several have already secured additional funds. In the UK, Feilim
Mackle, Sales and Service Director, along with Ann Pickering, HR Director, are sponsors of the
academy.
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7.4.2 Ricoh
Ricoh uses its Customer Satisfaction Working Group to encourage leadership engagement with the
customer. Changes in market demands are identified and opportunities prioritised, with a key focus
on the establishment of closer relationships and partnerships with customers.
7.4.3 Siemens
“Setting innovation as one of the organisation’s key values is important in encouraging creativity
and appropriate risk-taking,” says Juergen Maier, but mechanisms must also be put in place to
facilitate development. Siemens has a process improvement team which involves bringing crossfunctional teams of people together to find new ways of solving problems. Its user group community
is also an example of creative leadership beyond the boundary of the organisation.
7.5 Positive Leadership (health and well-being)
There was limited evidence of Positive Leadership. Flexible working and flexible holidays are
available where possible and work-life balance, safety, and health are recognised as important at
Ricoh. Boots UK looks to recompense Sunday workers with subsequent weekends off. Some
evidence of positive leadership outcomes is provided in the people theme under Employee
Engagement (see Volume 4, section 3).
7.6 Authentic (Ethical) Leadership
7.6.1 Boots UK
Given the healthcare focus of its business, an ethical approach to every aspect within the business
is paramount. It is reinforced by leadership aiming to sustain a people-centric culture that targets
wellness. “That’s the one thing in our business that’s unique. Customers trust the advice we give
them, the care that we give them, and the strength of our brand,” says Steve Evans, General
Manager of the Arndale Centre store in Manchester.
7.6.2 O2
“People are attracted to employers that take their social responsibility seriously,” says Ronan
Dunne, “and customers place their trust in those brands. This involves external activity in the
community. It is not about philanthropy or about ticking boxes; it is just good business sense. We
are very strong on our sustainability agenda.”
“Social responsibility is part of being a large responsible PLC,” says Feilim Mackle, Sales and
Services Director. “We have a responsibility to do the right thing by our own staff, our own
customers, but also by our external partners and stakeholders, too. We’re not the world’s best yet at
corporate responsibility,” he says, “but we are getting better and better. We’ve used some external
companies to help us develop.” O2 invests heavily in youth, on programmes that allow young
people to take action to help themselves, and staff are actively engaged as volunteers. O2 has a
Think Big initiative to try and make it possible for people to do something they would never have
done before. It also launched an incubator and accelerator fund for business start-ups in digital
related areas called ‘Wayra’, a South American dialect word for the wind of change.
Feilim believes that customer satisfaction and reputation correlate, and more satisfied customers
will spend more money with brands they are more satisfied with. There is evidence that very
satisfied customers spend up to 40% more at O2.
“At a personal level, authenticity in leadership is really important,” says Feilim. “It’s someone who
means what they say, who has wonderful listening skills and is absolutely prepared to get feedback,
even if it makes them feel uncomfortable, and it’s someone who believes and lives the values of the
organisation every day.”
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7.6.3 Ricoh
Ricoh supports local initiatives including a credit union, local charities, and in 2011 sponsored an
award at the Pride of Shropshire event: a ceremony in which local people were celebrated. “The
value of that to the organisation is in the good PR it generates,” says Rod Baggott, Company
Secretary and Director. Much of Ricoh’s ethical approach is focused in its Sustainability Leadership
approach which is outlined in section 7.7.3 below.
7.6.4 Siemens
Juergen Maier lists authenticity as one of the three main strands of his leadership style79 – believing
in what he and Siemens are doing.
Although community involvement and education are both part of corporate social responsibility for
Siemens, they are viewed as distinct strands. “Education is important not only to fostering skills in
the future for Siemens,” says Juergen, “but also for the UK.” As a big brand, he sees Siemens as
having a responsibility to be playing its part. “Many of Siemens’ customers feel it is equally
important to be seen to be making a contribution to the environment,” says Brian Holliday,
Divisional Director, which means putting effort into either people or environmental protection.
Community involvement is split into local community activity and sponsorship for arts and culture. In
Manchester, the organisation sponsors the Hallé Orchestra. The relationship means the orchestra
becomes involved with the organisation. Siemens supports the Hallé’s outreach projects in schools
aimed at helping young people be creative in the arts. The orchestra is also asked to play a part in
Siemens’ internal initiatives looking at culture and leadership. Comparisons are made between
leading an orchestra and leading an organisation. “If you are leading an orchestra, and not
everyone is working in harmony, it sounds like a car crash, whereas if you are leading an
organisation the size of Siemens and not everyone is working in harmony, you do not spot that it
sounds like a car crashLit will just lead you to one.” says Juergen.
On a more local level, the organisation is also involved in supporting the Didsbury Arts Festival, a
local celebration very close to a Siemens site. Staff read with pupils in local schools, and support is
offered to a specialist science college80. “People get it,” says Brian, “and they tell other people
about it. The value is also evident in the standing you have with your customers,” he says. “In
addition, whist the original intention might have been altruistic, you invariably find that it creates
opportunities and opens doors that you might not have thought of. Whilst once Siemens might have
just been seen as a technology supplier, increasingly it is being seen as a company that wants to
make a difference.”
Juergen says Siemens has learnt over time that it ought to try to measure the impact of what it
does.
Siemens now uses ‘Make an Impact’ statements to help determine the value being created
through its activities. “We have learnt that you shouldn’t be scared of attaching a business
agenda to your corporate social responsibility activities,” says Juergen Maier, Managing
Director. “At the end of the day our boards want to see a business case for doing this. If we can
demonstrate that it raises the profile of the company amongst young people who might want to
work with us, then that helps release more money for these causes.”
7.6.5 Authentic Leadership highlights
For Boots UK, these practices have been crucial because an ethical approach has been a core
element of generating consumer trust in its brand for many years. For more modern brands like O2,
authenticity in leadership is still vital and it is developing a number of initiatives, aiming to develop
an internal climate that develops a feeling of responsibility for ethical behaviour at every level.
Interestingly, O2 then formally measures external reputation in order to gauge how effective this
process is.
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All four organisations are involved in creating value for stakeholders beyond their owners and
customers. The concept of Corporate Responsibility is widely accepted, but what is notable is the
recognition that such an approach can widen organisational networks and create value for the
organisation in new, underexplored areas. The Siemens ‘Make an Impact’ approach builds in a
planning aspect to Ethical Leadership that starts to plan value outcomes for the community and for
the organisation. Finally, one of the key elements of Authentic (ethical) Leadership for all four
companies is the link to the key issue of leadership in sustainability.
7.7 Sustainability Leadership
Leadership in sustainability covers two areas: continuity of business and protection of the natural
environment.
7.7.1 Boots UK
“Excellence is about sustaining what you started,” says Simon Roberts, “and, particularly today, it is
important to have the courage to stick with one plan and not keep changing it, even when the
conditions have got more difficult. Five years ago we engaged with customer care; two years ago
we put rockets on it, and now everyone gets it and talks about it.” Sustaining what matters is
strategically important, sometimes more important than starting the next thing.
Boots UK also has a programme called Leadership for Growth, focusing on strategic issues and
also the impact of individual leadership. This provides coaching and guidance for people in the
layer below, preparing them for leadership opportunities. Mentoring and coaching is offered by
people that individuals do not work for, which gives a broader perspective to the feedback, but also
a feeling that people further up the hierarchy are ‘on their side’.
7.7.2 O2
In terms of environmental impact, “O2 UK uses a thousandth of all the electricity used in the UK,”
says Anthony Soothill, Head of CEO’s Office. That caused enormous headaches when the green
agenda emerged and O2 began to consider how it could address sustainability leadership. “How do
you have a business that deals in irradiated energy and tackle the green agenda? You can tackle it
on two levels,” suggests Anthony. “Firstly, when we buy kit we do consider its usage, as well as
cost, and our new sites are hugely energy-efficient. Secondly, the business we are in is about
mobility products and ICT. We can talk to our clients about how our products can make their
business more efficient and save costs.” That included demonstrating that its office could be closed
down and run remotely as a trial run ahead of London 2012. 2,500 people continued to work that
day without coming to the office.
“Research says that ICT can improve productivity by 10% in coming years, and we think we can
double that and help save carbon,” says Derek McManus. “We could more than offset our carbon
footprint just by helping other people do their jobs better and that makes the type of conversations
we can have with our business customers very different. Technology makes sustainability easier.
We trialled one of our health products in the Hebrides where patients can be examined remotely. A
visit to a specialist would normally be a three or four day trip to the mainland,” says Derek, “with a
boat trip then a trip to a big city, then the return trip. It makes the whole thing much more efficient
and sustainable. O2 also pays customers to recycle their old handsets. It disposes of them, sells
them into other markets, or refurbishes them. It is a big USP for customers.”
7.7.3 Ricoh
“The organisation takes corporate social responsibility seriously,” says Rod Baggott. Ricoh
established an Environmental Protection Office in 1976. Ricoh UK Products has an energy
reduction programme which has reduced CO2 by 40% since 2002. Telford is one of the highestachieving Ricoh sites in this respect, and this has led to a great deal of outside interest, much of it
from Ricoh’s customers.
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Rod Baggott, Ricoh’s Environmental Officer, leads a local business community group in Telford
which aims to reduce their impact on the environment. Techniques in use on the Ricoh site
such as a zero waste and CO2 emission reduction are shared and implemented in member
organisations.
“In terms of product development, recycling is considered to be one of Ricoh UK Products’ key
activities in the future,” says Colin Weaver, Engineering General Manager, and Ricoh has a recently
set up a small R&D group to look at recycling technology development, including recovery of
materials and reuse of parts in line with Ricoh’s Comet Circle principles. Recycling is one area
where Ricoh UK Products Ltd has a significant cost advantage over the Asian subsidiaries. “The
environmental agenda has been important to Ricoh,” says Colin. Since 2000, the Telford site has
been a zero-to-landfill site. Green procurement is also important, and Ricoh asks all suppliers to
work towards ISO 14001 certification, but where this is not practical, to work instead towards
Ricoh’s Environmental Management System certification. Ricoh has run a society satisfaction
survey every two years since 2002, measuring engagement of the local council, local Chamber of
Commerce, the CBI and key community stakeholders.
7.7.4 Siemens
One of his key tasks when he moves into any new role, says Juergen Maier, “is to make the
organisation and the people considerably fitter: smarter, more experienced, more confident and
more able to take the business to the next step.” To get that to a sustainable level takes between
three and five years. He is currently confident that what has been achieved so far is self-sustaining.
Juergen describes the Siemens approach to developing leadership potential as “very systematic”.
New employees are introduced to the 4Success process under which everyone is set targets
aligned to the top level objectives, and in which behaviours, values and individual contributions to
the organisation are discussed. An annual evaluation then follows which assesses an employee’s
performance against all targets, as a result of which Siemens identifies the best performers and
those requiring more development. The Top Talent quadrant contains those who are consistently
achieving their targets, meeting criteria regarding other values, and demonstrating leadership
potential.
Siemens then has a succession of management programmes to enable the development of
potential leaders, starting with a Junior Management Programme. In addition, there are two
succession planning processes: Workplace Management, which allows assessment of how many
job roles in each area are going to be needed over the next five or ten years; and Succession
Planning, which deals with people at the level below managing director, making sure that internal
potential candidates have been identified for senior roles. These candidates are identified from the
Top Talent pool, with very few managers being brought into the organisation from external sources.
“It is particularly important as an engineering company to have a self-awareness about the
importance of developing people,” says Divisional Director Andrew Peters. “There is a danger that
you get drawn into believing that success is down to the next great product. Actually, it is so
important that everyone understands what they need to be doing, and it is even more important that
you can see what they are doing, so you can stop them doing things you don’t want them to.”
“As a leader, you have to paint a very clear picture of where you want to take the business,” says
Andrew. “It is also very important that managers manage. They sometimes come into a role from
another area of knowledge. If their management skills are not developed, they won’t be able to get
the message down to the grass roots.”
In terms of environmental impact, Juergen cites the sustainability focus group for the environment,
society and business compliance as one of four equally significant key stakeholder groups (the
others being Siemens group, suppliers and customers/partners). Sustainability is so important that it
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is part of their mission. Commitment to the sustainability agenda is demonstrated by Siemens’
commissioning of a sustainable cities81 study and work with the Carbon Trust82 to establish reduced
emissions. Its balanced scorecard now contains a carbon indicator measure and other sustainability
issues are measured, including ‘contributions to society per employee’.
“Strategies may not work the first time,” adds Juergen. “You have to relentlessly keep trying to get
better. You also have to understand what getting better looks like. In sport, there is no hiding place.
If you are not good enough, you will be beaten. You need to bring that level of clarity to business.
That means having a set of sustainable indicators monitoring all areas of the health of the company
and having a trend in the right direction. The challenge is having the energy and the passion.”
7.7.5 Sustainability highlights
Business sustainability operates on two levels:
•
Business
sustainability
including
leadership
•
Leadership in environmental protection.
development
and
succession
planning.
The former links with other aspects of the leadership and the people themes, whilst the latter
naturally involves conversations with a wider set of stakeholders, e.g. the Carbon Trust which acts
as an independent auditor of firms’ sustainability endeavours. At the same time, the case studies
illustrate that sustainability involves innovation, a long-term focus and emotional engagement of
employees (and involvement/partnerships with other stakeholders) in pursuit of a common purpose,
all of which are highlighted as key issues by Professor Moss Kanter83.
7.8 Positive turbulence, crisis management
7.8.1 Boots UK
Boots UK has experienced a recent merger that resulted in Alliance Boots. “Bringing two big
companies together is a difficult task,” says Jane Nicholas, Head of Customer Care, “but we did that
by using leadership. The aim was to get a high quality leader in every store. Once we had good
leaders in place, it was easier to put store colleagues back at the heart of the process. Now that we
are part of a bigger group,” she says, “the values of the organisation are central to bringing
everyone together. They are intrinsic to everything we do, but we do not sit and measure them all
the time. At a store level, the role of the Area Manager is to monitor and lead the Store Managers’
performance. If one of the stores is not performing, then the Area Manager will be in the store,
getting to understand the issue, supporting and helping to put things right.”
7.8.2 O2
“Leading through change requires communication, communication, communication,” says Ann
Pickering. “We have long conversations about alignment: being 100% behind what we are doing
and making it happen.”
O2 has set up a very large contact centre in Dublin (for internal people-related queries), and has
created centres of excellence for Europe. This means that O2 does things that work well once for all
of Europe, rather than reinventing the wheel. This has improved efficiency and saved money.
“We’ve raised the bar, big time,” says Ann. “Leadership development is now dealt with as a Europewide model, which means we’re developing leaders who can move seamlessly across the whole of
Europe. Communication is critical: we keep talking – what’s gone well? – what do we need to
review? – what do we need to change? When we set up the European model we had seven centres
of excellence; eighteen months later we sat down to assess what was working well and what could
be better, so we actually reduced the number of centres of excellence we had. Being agile and
prepared to make changes is really important.”
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“We started on a transformation journey three years ago,” says Anthony Soothill, “which resulted in
a fairly fundamental reorganisation of the company. We devolved responsibility down to the next
layer of people down from the board, but also helped people develop into their roles. Four board
members have left the organisation and three new ones have joined, reflecting the new challenges
we face, and we have removed some of the senior management at the layer below as well as
bringing in new talent. It was about building the capabilities and skill sets in that tier of management
so it would be fit for purpose. Our strategy is one of continued growth, but also diversification. We
are building markets where we have had no skill sets, for example O2 Money. In a mature core
market, with a diversification strategy and a digital world, it’s a very different type of leader that we
are looking for compared to three years ago.”
Transparency has become vital for O2 when leading through turbulence. It decided to be very
open with staff and management about the journey they were going on: the senior team
wanted them to be engaged and part of it. Employees were told that the company was going to
grow whole sets of businesses and that things were going to change. Some people wanted
details of what it meant to them and the answers did not exist.
O2 risked creating nervousness. However, employee satisfaction survey results showed that
the employees subject to change were more satisfied than the ones that were not affected. It
found that it had been making the former feel informed and looked afterCeven if that was by
offering them voluntary redundancy.
“Before the current economic crisis, there was probably more of an adult-child conversation
between the organisation and its staff,” says Ronan Dunne, “celebrating successes and a constant
diet of positive news. Now this has become more of an adult dialogue, with a conscious effort to tell
staff how it is; what the challenges and issues are. There has definitely been a change in tone, but
one that the employees themselves asked for. Everyone is getting a much more explicit analysis of
performance and the challenges. This is something that is likely to continue. If people feel they are
part of the actions and responses that are necessary, they feel part of the process, rather than that
they are having things done to them.”
The economic situation has had an impact on the nature of O2’s offers. Priority Moments was a
customer incentive born out of an attempt to give value in a different way during the recession and
against a general feeling of doom and gloom in the UK. Priority ticketing brings 15% higher brand
loyalty. O2 has linked up with different partners to offer discounted goods and experiences via an
app. This year it has also lowered prices on its core tariff.
“We’ve had to recognise that our customers have less disposable income this year than they had
last year and the year before,” says Feilim Mackle, “Every pound matters. So there are tariffs
pitched at every level from SIM-only through to £70. Not all customers are equal in their needs or
their financial status. We’ve also worked with managing customer debt in this difficult period,
employing highly empathetic people to help the customer get through the period, instead of
switching directly to a recovery process.”
The combination of the recession, leading to consumers having a greater focus on value, and
emerging opportunities through step changes in technology, is causing O2 to look at creating
working partnerships with companies that traditionally it would see as competitors. This unusual
approach is a strategic attempt to grow the industry as a whole during a turbulent period. The view
is that O2 has to be agile to adapt to a changing climate; this involves change management and
innovation and about the development of an international mind-set. “We need to be looking at shortterm trading measures versus long-term business success,” says Anthony Soothill. “Our ambition,”
he says, “is to shape not just our company, the industry, the UK market, but even Europe. That
creates a platform to enable you to show leadership.”
“One of the things we’re proposing is a joint venture with two of the other mobile operators,
Vodafone and Everything Everywhere, and we’re currently seeking EC merger clearance,”
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continues Anthony. “We are trying to create a new m-commerce market for the mobile phone
involving, for example, the use of mobile phones in contactless payments and mobile advertising. If
we fight for that on our own, we might come out with a piece of the pie, but actually, if we want to
create value, what we need to do is work together to create a common interface that all retailers
can buy into. We need to create a platform that creates new innovative services and value to the
consumer and actually allow Europe as a region to be able to create value with the likes of Amazon
and Google on a global basis in m-commerce. If we were to fight each other [in the UK] for a very
small pie, the likes of Google would come in over the top and, because they have got global scale,
dominate.”
“If organisations across the UK or Europe are not careful, we will not have an industry or
competitive offering to take on the likes of Google or Amazon or Apple in any of those sorts of
areas. It is about how we can help our customers and how we can help UK plc stimulate the
economy, drive itself out of the current recession and help Europe keep America and Asia back on
a global scale. We will certainly still be competing with Vodafone in the retail market, for example,
but what we are trying to do is create a much bigger pie. If we are going to fight with Vodafone, let’s
fight over a pie that’s a hundred times bigger than the one we have currently got.”
7.8.3 Ricoh
“Ricoh UK Products has had to make changes to cope with the recent economic downturn,” says
Tim Webber, but has had to comply with the policies of its Japanese parent84. Ricoh Japan’s
organisation structure is large and complex and changes take time. Ricoh UK Products has a much
lower critical mass and can respond to the need for change more quickly. The British are
traditionally great innovators, and Ricoh Japan recognises this and allows them some freedom to
develop new ideas and inform them of the learning.
Ricoh has also had to take measures to respond to recent crises. It has faced a difficult time as a
result of the 2011 tsunami in Japan and the floods in Thailand, and as a result has faced
redundancies and cost-cutting measures. This has led to restrictions on corporate travel, which
meant that meetings and benchmarking trips to other sites have been temporarily suspended, as
have company-funded communication evenings and family fun days, both of which are social
events for staff. It was important for the Telford site to be seen to be in line with the wider Ricoh
group. As was outlined under the Employer Branding topic, transparency with all stakeholders plays
an important role in the way Ricoh manages this.
7.8.4 Siemens
Similar to the comments from O2 and Ricoh, Juergen Maier suggests that good, open, honest
communication is important in getting an organisation through difficulties such as the recent
economic downturn. Juergen says he has spent even more time than usual out of the office talking
to staff, confronting the fact that times would be hard, and fostering a team will to get through. “That
honesty was vital in getting Siemens through the recession”, he says. “Staff did not get a pay rise in
2009; they got a small bonus, but much less than in other years, but they put in longer hours to
achieve our results.” Staff also saw management allow profit to decline rather than cutting the head
count to preserve it. Juergen says that Siemens came out of the first recession very well and has
continued to grow as a result.
Leaders also need to look for opportunities for flexibility. Having experienced the market decline
in 2009, Siemens wanted to change the make-up of the workforce to ensure greater flexibility.
In one business unit, a decision was made to have 25% of the workforce as third-party workers
– agency staff. If there is a requirement, they can be brought in without having to make
redundancies to the main workforce. Such agency staff can also become a possible source of
new employees when permanent vacancies arise.
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“It is essential to figure out how you know you are making progress,” says Andrew Peters,
particularly in a difficult economic climate. “A good way of doing that is looking at the market share
development of your business. If times are tough but you are winning business from your
competitors, you are doing something right. Siemens spends a lot of time looking at market
transparency: understanding who the customers are, understanding how big they are and their
potential, understanding the opportunities you have to win business from those customers, and your
own strengths and weaknesses, attractiveness, and the likelihood of success. Understanding the
market is key.”
7.8.5 Positive Turbulence Leadership highlights
Transparency and communication (in the form of dialogue rather than one-way) are key issues for
effective leadership in periods of turbulence across all the case studies. The Siemens case study
illustrates that leaders need to be out of their office and seen and heard more during periods of
turbulence. Increasing agility and flexibility, in order to be able to respond and change to fit new
circumstances, is also a key issue in periods of uncertainty, as illustrated in all four case studies,
the work of consultants85 and recent revisions to the EFQM Excellence Model. Finally, the O2 case
study highlights that periods of turbulence have the potential to cause dramatic change in the
environment and in the way businesses are structured. Fresh thinking about who a business’s real
competitors are, and in what markets they should be challenging, can open up opportunities for
future growth.
7.9 Visionary and Inspirational Leadership
7.9.1 Boots UK
Simon Roberts leads the Retail leadership team at Boots UK: eight leaders all looking after the
various elements of the retail operation. The company’s approach is driven by Performance
Leadership, one of the five core elements of its UK focus since the merger in 2007. Visionary
Leadership is also playing a transformational leadership role within HR, as Boots UK strives to
improve the quality of people it recruits, retains and develops. Together these two factors make up
the organisation’s customer-based people plan.
The quality of leadership in individual stores has been addressed. The view is that people work for
people, first and foremost, not for a company. Wendy Richardson, Director of Customer Care, links
inspirational leadership at a store level to the concept of Authentic Leadership. “Authentic leaders
are magnetic,” says Wendy. “They have passion and they genuinely care. I don’t care what they
score,” she says, “but the culture in the shop is right. You end up feeling ‘I want a bit of what you’ve
got.’”
A great deal of emphasis was placed on the quality of in-store leadership which Simon believes
fuelled the circle of better quality people serving customers better and creating a better experience.
That acceleration was used to drive the whole organisation, with Performance Leadership counting.
The interaction between store colleagues and the customer is critical to the leadership approach
within the stores, and is the starting point for everything the organisation does. The pharmacist is
the core of the shop, and Boots UK believes that customers trust it for accessible health care advice
and for helping people to ‘feel good’.
Boots UK has a leadership behaviours framework, created by the executive team a year ago,
setting out 16 behaviours. The aim was to develop one common approach to leadership to make
the business and the brand successful. What is important is not the piece of paper, but what the
organisation values and what is considered to matter. “Care is what differentiates Boots UK as a
business from its competitors,” says Stephen Lehane. The ambition to be No. 1 for Customer Care
is laid out within Boots UK’s strategic goals, with the aim that it should be the world’s best
pharmacy-led health and beauty retailer. It is all about championing everyone’s right to ‘feel good’
which is characterised by four pillars:
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•
•
•
•
Accessibility
Pursuing new possibilities
Active care
Dynamic and inspiring
Everything Boots UK does is framed within those areas. Beneath these are the strategic goals. “The
organisation is,” he says, “absolutely obsessed and passionate about the quality of people. That’s
what will make a difference to customers: having a mind-set that it’s about you, not me; getting
everyone really excited about the service to customers. That’s how we link our people to our brand
performance. The phrase we use is being committed to each other’s success.” This is essentially
about commitment and authenticity. The quality of leadership in the organisation is also measured
in direct relation to the standards that came from the behaviour framework. “If we are not the
exemplar of how this is going to play out,” says Stephen, “then it’s not going to work. We share the
feedback and our collective development plans with the layer below us and ask for their support.
This is then cascaded throughout the rest of the organisation so you have a unified approach.”
Boots UK operates a Best of the Best scheme, in which people are identified at every level in the
organisation through nomination, and held up as exemplars. There is also a Store of the Year. From
talking to colleagues, information has been gathered which has contributed to the three simplified
levels of performance that were identified for use throughout the organisation: legendary;
performing; and not performing.
Wendy recently won the ICS Customer Service Leadership Award. Her view is that this was
possible because 85% of Boots UK customers are women, and the strategy has been focused on
insights into the female psyche: how they shop and what matters to them. The reason the
programme is successful in Boots UK is because it is relevant to the store leadership and it was
possible to communicate what was necessary to succeed. “The plan is holistic,” she says. “You
speak ‘customer’, and you create a culture of ‘how’ is more important than ‘what’. Women will shop
where they are made to feel like somebody.” “Colleagues have to be tuned in to that,” says Jane
Nicholas.
Leadership in Boots UK is about empowerment, believes Andy Francis, Head of Retail Capabilities.
“We’ve invested heavily in the capabilities of leadership, and it’s a fine balance between getting too
ethereal and remaining a healthy retailer.” Boots UK is looking for people who can lead and engage
others, according to Stephen, and he does not believe that these are management tasks. People
need to be able to manage operations, make sure that shops are clean and tidy and get products
on shelves. But maintaining staff morale is a leadership task. The starting point is the climate that
leaders create, suggests Stephen: “There needs to be encouragement of open expression of views
and genuinely empowerment, to be able to think for themselves and to act. It’s encouraging a spirit
in which people’s ideas are genuinely seen to matter.”
7.9.2 O2
Ann Pickering describes her personal leadership style as strong and directional, setting out a vision,
but very much expecting people to do what is expected of them, so employing a light touch.
“Leadership is very personal,” she says, “and echoes the link between inspiration and authenticity in
leadership; authenticity is very important, so everyone has to have space to lead in their own way. It
is not about having a single style, but about having some very clear beliefs and expectations of our
leaders.”
The importance of a light touch and the role of empowerment are echoed by Mark Evans, Chief
Financial Officer: “My approach would be to ensure clarity about the purpose; clear guidelines to
what’s needed and when, and then allowing the individual to deliver accordingly. There is a lot of
trust on the premise that you recruit wisely at the outset. We test their capability, their competence
and their skill set. The more confidence you build in someone, the more you empower them. If they
don’t perform, you step in and work out what each of you can do to improve the result.”
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There is also seen to be a need to lead by example, through living the organisation’s values, as
demonstrated by comments of three of the senior team at O2. “We set parameters and we’ve got
certain non-negotiables,” says Ann, “but we know that leadership has to be consistent at all levels.
Great role models are great at engaging our people: they are absolutely customer-centric; they
combine and collaborate across all boundaries, and these are leadership capabilities. When they
do, they are great role models. The headlines are Know – Connect – Grow – Lead – Deliver.” This
is reinforced by Derek McManus: “It is important for your words to match your actions. I like face-toface conversation whenever I can. I put myself out there. I am happy to take feedback. A good
leader has to be a good manager, but it doesn’t necessarily have to be the case the other way
round.”
“One of my objectives is to be the example of a leader that we want everyone to be,” says Anthony
Soothill. “A lot of it is about behaviour in front of other people. It’s like the Northern Ireland crisis:
someone’s got to show willingness to give up some territory and be willing to do something for the
wider good.”
7.9.3 Ricoh
At Ricoh, “leadership is also about inspiration and giving people understanding of the wider
business circumstance, so that they are able to modify their behaviour accordingly,” says Tim
Webber. “You have to motivate and inspire through discussion, role modelling and encouragement.
In many ways it’s about establishing an emotional connection with people to influence and
encourage the right behaviours.”
The key touch points within Ricoh’s leadership approach are the Employee Congress and the MD’s
factory address at which Tim and the company’s managing director address the staff. The
Employees’ Congress is held in the local university auditorium and features an open question and
answer session, while the MD’s speech takes place on site in the New Year. The off-site event is
repeated four times so that all staff members get to hear the same speech. “This is about giving
staff broad information about what Ricoh is doing globally, what is happening in the industry and the
global economy, and what Ricoh UK Products is doing and how they can contribute,” says Tim.
7.9.4 Siemens
Juergen Maier talks of three strands of his own personal leadership style, with the first being a
visionary element which is thinking ahead to where the organisation will be in the next five or ten
years. He also describes his leadership as being values-driven and authentic. The former is, he
says, often underestimated, but involves defining a set of values for the organisation and absolutely
sticking to them. (This fits with research into organisational values which suggests that leaders have
potential to influence values early on, but then as an organisation matures consistency is key and
values are increasingly shaped by all staff across the organisation as a whole, observes Dr Burton).
Siemens is, Juergen says, “innovative, process-oriented and customer-focused”.
Leadership is both a team function and a personal responsibility in the view of Brian Holliday. On
the one hand, it is undertaken collaboratively with his fellow Divisional Directors. More personally,
he sees it as being a role model, leading by example and focusing on the behaviours that Siemens
espouses. Similarly, Jim Harris’s view is that it is essential that he is seen to practise what he
preaches: “Personally my view is that I have to be the super salesman. If you want your sales team
to be red hot, you have to be white hot. I have to be up earlier, back later, working on projects that
are more exciting and innovative than they are. Not because of big headedness, but because I want
to be seen to be someone to aspire to. If I can’t do it, then I can’t expect them to do it.” He makes
sure he is visible to his team by communicating with his managers; holding regular briefing
sessions; writing for the monthly team brief; and sharing best practice at an annual sales
conference. Information disseminated at bi-monthly meetings with his managers is intended to be
cascaded to their own teams.
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7.9.5 Visionary and Inspirational Leadership highlights
The results suggest that visionary and inspirational leaders show evidence of:
•
An Authentic Leadership style
•
The importance of transparent communication and emotionally engaged dialogue
•
Consistency in acting as a role model and living the organisation’s values
The Boots UK case also illustrates that inspirational leadership is dependent upon getting things
right across the other three themes in this report: having the right people, supported by the right
processes in order to develop the right culture for delivering value to the customer. This
interdependence between the themes is also reflected in the other case studies when exploring
inspirational leadership; without these foundations in place, leaders risk being seen as not authentic
and therefore not inspirational.
7.10 Discursive (story telling) Leadership
Discursive Leadership is most obvious at the two B2C organisations, highlighting a link to the
requirements of maintaining a consumer brand. The two-way nature of discourse is significant at
both these organisations.
7.10.1 Boots UK
One of the four elements of Boots UK’s leadership behaviours direction focuses on the creation of a
climate where anything less than the best leads to ‘a conversation’. Leaders are encouraged to
both give and request feedback in the moment and to look to create opportunities to learn from and
with colleagues, suggesting a co-created discourse approach.
7.10.2 O2
Ronan Dunne describes his role in O2 as “chief cheerleader and chief storyteller”. There is an
alignment within O2, he says, around a common objective of wanting to “surprise and delight our
customers”. Storytelling and appreciative enquiry is important to that. He sees himself as
championing employees’ best efforts on the part of customers.
Ronan describes work done a few years ago with consultants on the idea of appreciative
storytelling. O2 can be described, he says, as “a brand that runs a business, rather than a business
that runs a brand”. The business is held together by a shared set of values, and they are brought to
life by the conversations that describe exceptional outcomes; how they do things differently. Going
beyond the call of duty is not lost time, but potentially the acquisition of a new customer.
Empowering individuals means they have the right to make a difference without being overly
constrained. “We try to represent ourselves as a business that’s genuinely trying to make a
difference to the customer.”
Ronan’s view is matched by the comments from Feilim Mackle, outlined under the people theme.
The Big Yak, interactive town hall style meetings, the Big Story, communication call for about 500600 people every month, and the video stories for sales and service all show that O2 fully embraces
a discursive, narrative approach to shaping the climate and culture so that there is a consistent
understanding of what the organisation does. The discursive approach is used to underline and
reinforce their organisational values: bold, open, trusted and clear. “It’s really important to paint a
picture of the future and the art of the possible when you’re trying to motivate thousands of people
and helping it resonate,” says Feilim.
Conversations are disseminated formally and informally throughout the organisation, ranging from
formal meetings of the Executive Team to conversations with members of staff to deal with issues
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as they arise. Ronan uses a blog to discuss current issues in the media and their impact on O2, and
asks for volunteers from staff to mentor him so that the conversation is a two-way process.
The core leadership team meets every 4-6 weeks, and the wider leadership team meets once a
quarter. Each directorate has two big get-togethers a year. The aim is that messages across the
business are understood top to bottom. Senior leadership meetings are rotated round the
organisation’s different sites to maintain visibility, and quarterly town hall-type meetings also take
place; these are 40-minute meetings with question and answer sessions where the leadership team
disseminates results and information about marketing campaigns. Staff can also take part by video
link, helping to demonstrate to them what can be done with in-house technology as well as the
potential for flexible working.
Discursive Leadership helps to illustrate the importance of customer experience to everyone across
an organisation. For O2, the single focus point is the customer, and the disparate categories of staff
members are united around that. The organisation views itself not as a technology business, but as
an experience business. The focus on the customer allows the creation of a common language.
KPIs are also set up to be relevant and the same wherever you are in the business, whether in a
retail store or in the technology department.
8. Discussion and conclusion
There was evidence of multiple approaches at all four companies studied. For example, there was
evidence across all organisations of Trust-based Leadership being dependent upon transparency
of communication and the development of a climate in which staff are expected to constructively
challenge behaviours that do not fit with organisational values.
For effective Distributed Leadership to take place, all the case studies highlight the importance of
developing the right culture and the role of personal reviews to cascade duties and develop
leadership capabilities. It is delivered via the creation of a climate of empowerment and expectation
that is supported and delivered by rigorous checking against measurement frameworks:
•
At Boots UK, the use of a leadership behaviours template, developed in conjunction with the
colleagues who will be involved in living the leadership behaviours, encourages effective
engagement and implementation.
•
O2 focuses on developing a climate where teamwork is the norm; harnessing the impact of the
individual (and making it clear to the individual that their contribution makes a difference) but
maximising the whole contribution through an effective team network.
•
Ricoh has a culture of empowerment that creates an expectation of individual initiative, but like
Boots UK and Siemens, this is guided by a framework. In Ricoh’s case this allows the mapping
of individual’s leadership competencies (via a proprietary system) so that it can then focus and
work in areas where they need to develop.
•
Siemens uses its own detailed leadership competency mapping process with ongoing
measurement of progression. Part of this process is the annual performance management that
checks how individual’s objectives and targets fit with business strategy.
Authentic Leadership practices are important for all the organisations. For Boots UK these have
been crucial in what it does because for many years an ethical approach has been a core element
of generating consumer trust in its brand. For more modern brands, like O2, authenticity in
leadership is still very important and O2 is developing a number of initiatives, aiming to develop an
internal climate that develops a feeling of responsibility for ethical behaviour at every level.
All four organisations are involved in creating value for stakeholders beyond their owners and
customers. This concept of Corporate Responsibility is widely accepted but what is interesting is the
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recognition that it can widen organisational networks and create value for the organisation in new,
underexplored areas. Siemens’ ‘Make an Impact’ approach builds in a planning aspect to Ethical
Leadership that starts to plan value outcomes for the community and for the organisation.
Business Sustainability Leadership was identified at two levels:
•
Business sustainability including leadership development and succession planning
•
Leadership in environmental protection
The former interlinks with other aspects of the leadership and people themes, whilst the latter
naturally involves conversations with a wider set of stakeholders, e.g. the Carbon Trust which acts
as an independent auditor of firms’ sustainability endeavours to add credibility. At the same time,
the case studies illustrate that sustainability involves innovation, a long-term focus and emotional
engagement of employees (and involvement/partnerships with other stakeholders) in pursuit of a
common purpose on a global level.
Transparency and communication (in the form of dialogue rather than one-way) are again
highlighted as key issues for Positive Turbulence Leadership.
•
The Siemens case illustrates that leaders really need to be out of their office and seen and
heard more during periods of turbulence.
•
Increasing agility and flexibility in order to be able to respond and change to fit new
circumstances is a key issue in periods of uncertainty- as illustrated in all four case studies, the
work of consultants86 and recent revisions to the EFQM Excellence Model.
•
Finally the O2 case study highlights that periods of turbulence have the potential to cause
dramatic change in the environment and in the way businesses are structured. Fresh thinking
about who a business’ real competitors are, and in what markets they should be challenging
can open up opportunities for future growth.
The results for Visionary and Inspirational Leadership suggest that visionary and inspirational
leaders show evidence of:
•
An Authentic Leadership style
•
The importance of transparent communication and emotionally engaged dialogue
•
Consistency in acting as a role model and living the organisation’s values
A key comment on leadership styles and approaches is that there is no one correct route.
Organisations need to identify and cultivate an approach to leadership that fits with the culture of
the organisation. However, increasing impact from other themes or influences (for example the
impact of technology on processes of communication) may increase the importance of particular
leadership approaches. In this case, the importance of Distributed Leadership will increase as
teams begin to self-organise, hierarchies become flatter and decision making is based more on
data than opinion or experience87.
In conclusion, as has been outlined in all the case studies in this report, inspirational leadership is
dependent upon getting things right across the other three studied themes: having the right people,
supported by the right processes in order to develop the right culture for delivering value to the
customer. Thus leadership plays an integrated, facilitating and holistic role for the other themes. An
organisation’s senior team need to take responsibility for strategic decisions around issues like
sustainability, whilst at the same time they need to be seen to live the values of the organisation.
What is significant in this research is the breadth of the mix of leadership styles and approaches in
evidence across the four case study companies. Clearly organisations need to identify leadership
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styles with the ‘best fit’ for their context and values, but the evidence suggests that organisations
will tend to adopt multiple leadership styles in order to achieve multiple goals.
This report highlights the complexity of the task that leaders face, but it also observes the benefits
that can be achieved if they work at achieving joined up, incremental improvements across all areas
of the business.
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9. Appendices
9.1 About the case study companies
9.1.1 Boots UK
Boots UK is part of Alliance Boots, a leading international, pharmacy-led health and beauty group
delivering a range of products and services to customers. Working in close partnership with
manufacturers and pharmacists, the company is committed to improving health in the local
communities served and helping customers and patients to look and feel their best.
Organisational focus is on growing the two core business activities:
•
•
Pharmacy-led health and beauty retailing
Pharmaceutical wholesaling and distribution
The Group employs over 116,000 employees in more than 25 countries, and dispenses over 260
million items per year, through over 3,330 retail stores, of which approximately 3,200 have a
pharmacy. In Europe, the organisation is the market leader in pharmacy with stores in the UK,
Norway, the Republic of Ireland, The Netherlands and Lithuania. There are also pharmacies in
Thailand, and associates and joint ventures operate pharmacies in Switzerland, China, Italy, Russia
and Croatia. In addition, 58 Boots stores in total are operated by its franchise partner in the United
Arab Emirates, Kuwait, Qatar, Bahrain and the Kingdom of Saudi Arabia, and there are seven
individually franchised Boots stores in Sweden.
The principal retail brand in the Health & Beauty Division is Boots UK, which the company trades
under in the UK, Norway, the Republic of Ireland, The Netherlands and Thailand. The Boots UK
offering is differentiated from that of its competitors due to the product brands which are company
owned and branded, and ‘only at Boots’ exclusive products, together with a long established
reputation for trust and customer care.
The Group’s mission is to become the world's leading pharmacy-led health and beauty group. The
announcement of the strategic partnership with Walgreens represents a vital step in achieving its
vision of becoming a global healthcare leader. The organisation seeks to develop its core
businesses of pharmacy-led health and beauty retailing and pharmaceutical wholesaling across the
world and become a significant player in many major international markets.
Simon Roberts, Chief Operating Officer of Boots UK, states that since 2007 the company has
worked on five things and these are now impacting on each other and working as a positive
cycle or virtuous circle, leading to on-going improvement. Boots UK focuses on the themes of
leadership and customer together in striving for (i) performance leadership in creating a climate
focused on delivering great customer experiences. This depends in turn upon the people
theme, as it focuses on (ii) employing, recruiting and developing the best people, combined with
the process theme; (iii) getting its reward strategy right and (iv) deploying those people in the
right place at the right time to best serve the customer. Finally Boots UK focuses on (v)
process, developing measurement systems to check on the other elements.
Boots UK believes in making a difference and is proud of the contribution that it makes to the wellbeing of the communities served. Its core values are:
•
•
•
•
•
Partnership
Trust
Service
Entrepreneurship
Simplicity
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Key contributors
Simon Roberts, Chief Operating Officer
Stephen Lehane, Director of Group HR
Wendy Richardson, Director of Customer Care
Jane Nicholas, Head of Customer Care
Andy Francis, Head of Retail Capabilities
Steve Evans, General Manager, Arndale Centre Store, Manchester
Lindsay Vernon, No7 Business Manager, Boots, Arndale Centre
Alexa McDonald, Team Manager, Boots, Arndale Centre
9.1.2 O2
Telefónica is a world leading integrated operator in the telecommunications sector, providing
communication, information and entertainment solutions. It has a strong presence in Europe and
Latin America, and operates in 25 countries. As of March 2012, Telefónica had 309.4 million
customers globally. It is a privately owned company, with more than 1.5 million direct shareholders.
Telefónica UK Limited is part of Telefónica Europe plc, a business division of Telefónica S.A. which
uses O2 as its commercial brand in the UK, Ireland, Slovakia, Germany and the Czech Republic,
and has 58.1 million customers across these markets. This research was conducted with O2.
Telefónica UK Limited is a leading communications company the UK, with 23 million mobile, fixed
line and broadband customers as at 31 December 2011. The company offers services for both
consumers and businesses. Telefónica UK employs around 11,000 people in the UK and has 450
retail stores.
The O2 brand is considered a source of competitive advantage and shareholder value. The
company approach is to focus on the customer theme, putting costumer experience at the heart
of everything. Company values help to define the brand:
•
Bold: “We take a dynamic approach to everything we do and say.” This has particular
implications for behaviours and practices within the themes of leadership, people and
processes.
•
Open: “We make space for fresh thinking.” This impacts on the way processes are
implemented within the business and the leadership direction.
•
Trusted: “We do what we can to help our customers.” This impacts on the way customer
experience is shaped.
•
Clear: “We make sure we talk to our customers simple.” Again this reinforces the focus on
the customer theme; particularly customer experience and effort.
Key contributors
Ronan Dunne, Chief Executive
Ann Pickering, HR Director
Sally Cowdry, Marketing Director
Mark Evans, Chief Financial Officer
Feilim Mackle, UK Sales and Service Director
Derek McManus, Chief Operating Officer
Anthony Soothill, Head of CEO’s office
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9.1.3 Ricoh UK Products Ltd
Ricoh is a global document and IT solutions provider with its headquarters in Japan, and offices
around the world employing some 109,000 people and with a net sales of 1,903.4 billion yen (year
end 31/3/2012). The company has regional headquarters in the USA, UK, Singapore and China,
and specialises in tailoring solutions to meet specific customer needs. Ricoh UK Products Ltd
(based in Telford and Wellingborough) works under licence with Ricoh (Japan) as part of its
production division. Services include streamlining costs, enhancing business processes and
increasing staff productivity through offering:
•
•
•
•
Managed Document Services
Production Printing
Office Solutions
IT Services
Ricoh UK Products Ltd designs and manufactures a complete range of print and document
management, hardware, software and customised services. Its devices print, copy, scan and fax
documents as an integrated part of the IT network and enterprise content management system.
Ricoh provide software that audits usage, manage document flows, simplifies business processes,
controls print expenditure and provides secure access. It has three main direct customers: Ricoh
Europe (for a full range of products – 90% of sales), Ricoh Europe Service Parts Centre (for parts)
and Ricoh UK Ltd.
The company considers itself very much to be a service-oriented company, working with customers
to offer an end-to-end approach to improve and manage document-heavy processes. Customer
requirements are at the core of Ricoh’s offering. The company is investing up to 6% of its annual
revenue in research and development annually, focusing on technologies that support future work
methods, and that support businesses in accessing and sharing information. Ricoh’s research and
development focus areas are:
•
•
•
•
Environment: contributing to a more sustainable society at every stage in a product’s life cycle
e.g. use of biomass-based plastic materials.
Office solutions
Printing
Imaging/devices
The brand proposition of Ricoh is that change is driven by imaginative thinking. The two words
describe the way in which Ricoh employees work with each other, the way in which the organisation
brings value to its customers’ businesses, and the way in which the company interacts with the
market. It expresses the organisation’s belief in the creative potential of individuals and
organisations, and its emphasis on forward thinking and positive results.
Strategic targets or SMOs – strategic management objectives – are set annually, aligned to five key
weighted business themes (finance, customer, process, learning and growth, and the environment),
across a balanced scorecard and are tracked regularly and assessed annually. Ricoh UK Products
Ltd has a philosophy of continuous improvement and has actively used the EFQM Excellence
Model since 1999.
Ricoh UK Products shows a strong commitment to the improvement of processes, and this links
to the engagement of people. The company’s Kaizen Continuous Improvement approach
ensures full employee engagement in the continuous improvement of its individual processes,
directly supporting its strategic management objectives. Ricoh UK Products is also particularly
strong in Sustainability Leadership.
Ricoh UK Products’ mission is “Enhancing Ricoh’s competitive position in the European
marketplace”, and its vision is “Providing customer focused products and solutions faster than the
rest.”
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Key contributors
Tim Webber, Executive Director
Rod Baggott, Company Secretary and Director
Colin Weaver, Engineering General Manager
Chris Nicholls, Manufacturing General Manager
Phil Hawkins, Business Strategy Assistant General Manager
Rob Jackson, Business Performance Manager
9.1.4 Siemens Industry Automation and Drive Technologies (IA&DT)
Siemens is a global company with its HQ in Germany, and has been in existence for more than 170
years. Siemens operates in nearly 190 countries, has gross sales of over 74 billion Euros and over
360,000 employees. Its core business areas are:
•
•
•
•
Industry
Infrastructure & Cities
Energy
Healthcare
Siemens has operated in the UK for 169 years. In fiscal 2011 (1 October 2010 – 30 September
2011), Siemens’ sales to customers amounted to 4.367 billion Euros. Siemens currently has
approximately 13,000 employees in the UK.
The corporate values – ‘responsible’, ‘excellent’ and ‘innovative’ – are the basis for Siemens'
success.
Siemens Industry Automation and Drive Technologies (IA&DT) was formed in 2008 following a
major global reorganisation and reports as part of Siemens plc UK. Its main customers cover a wide
range of industries: oil, gas and power; water treatment; pulp and paper, automotive; metals and
mining; chemicals; pharmaceutical; technology; hospitality; food and beverage; major events,
construction; biotechnology; and airports.
Siemens is a business excellence organisation. A review of the way the business is run is
undertaken annually. The company finds it particularly helpful to have third parties looking at it and
asking questions. Other organisations help with benchmarking, and best practice sharing events
are held with the BQF and North of England Excellence.
Siemens is particularly innovative in employee, customer and stakeholder engagement
covering the customer and people themes and demonstrating sustainable leadership. Its
innovative mood indicator provides a live snapshot of employee engagement levels on a weekly
basis.
Siemens’ vision is “Investing in Britain’s industrial future” and its mission is “Delivering answers to
UK industry for a sustainable future through our innovation, people and passion”. The report
focuses on Siemens IA&DT which is referred to as Siemens throughout the report.
Key contributors
Juergen Maier, Managing Director
Jim Harris, Sales Director
Andrew Peters, Divisional Director Drive Technologies
Brian Holliday, Divisional Director Industry Automation
Simon Ellam, Business Unit Manager
Andrea Jones, Finance and Commercial Manager
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9.2 Glossary
Balanced Scorecard: This is a conceptual framework to measure financial and non-financial
performance. It considers financial metrics as the main indicators for company success, but
supplements them with three additional measures: customer, internal processes and learning and
growth (Kaplan and Norton, 1992)88.
B2B: Business-to-business
Blogs: A blog (a portmanteau of the words web and log) is a personal journal published on the
World Wide Web consisting of discrete entries (‘posts’) typically displayed in reverse chronological
order so the most recent post appears first. Blogs are usually the work of a single individual,
occasionally of a small group, and often are themed on a single subject. Blog can also be used as a
verb, meaning to maintain or add content to a blog.
Business process re-engineering (BPR): BPR involves the analysis and (radical) re-design of
workflows and processes within an organisation to achieve dramatic improvement89. It began as a
private sector technique to help organisations fundamentally rethink how they do their work in order
to dramatically improve customer service, cut operational costs, and become world-class
competitors. A key stimulus for re-engineering has been the continuing development and
deployment of sophisticated information systems and networks. Leading organisations are
becoming bolder in using this technology to support innovative business processes, rather than
refining current ways of doing work.
BQF: British Quality Foundation (http://www.bqf.org.uk/)
CIPD: The Chartered Institute of Personnel and Development (http://www.cipd.co.uk/)
Climate and Culture: According to Lok (1997)90 definitions of culture and climate depends on the
academics specific background. He argues that there is a clear and important distinction between
organisational culture and climate. Organisational culture emphasises the beliefs value and norms
shared by groups of people. Organisational climate refers to the psychological environment in which
the behaviours of individuals occur and may be conceptualised as the mood.
Consumer behaviour: This is the study of when, why, how, and where people do or do not buy a
product. It blends elements from psychology, sociology, social anthropology and economics. It
attempts to understand the buyer decision making process, both individually and in groups. It
studies characteristics of individual consumers such as demographics and behavioural variables in
an attempt to understand people's wants. It also tries to assess influences on the consumer from
groups such as family, friends, reference groups, and society in general.
Customer Effort Score (CES): Dixon et al (2010) outline that CES is measured by asking a single
question: “How much effort did you personally have to put forth to handle your request?” It is scored
on a scale from 1 (very low effort) to 5 (very high effort). Subsequently the authors propose that
CES is a greater metric and predictor of consumer behaviour than customer satisfaction (CSAT)
and the Net Promoter Score (NPS).
CMLG: Customer Management Leadership Group. A non-competing customer management best
practice benchmarking group chaired by Professor John Murphy, O2 Professor of Customer
Management at Manchester Business School. Dr Jamie Burton is the Research Director for the
CMLG and Jan Kitshoff provides consultancy support. (https://research.mbs.ac.uk/customerleadership/)
CSR: Corporate Social Responsibility91 is a process that is concerned with treating the
stakeholders of a company or institution ethically or in a responsible manner. ‘Ethically or
responsible' means treating key stakeholders in a manner deemed acceptable according to
international norms. Social includes economic and environmental responsibility. Stakeholders exist
both within a firm or institution and outside. The wider aim of social responsibility is to create higher
and higher standards of sustainable living, while preserving the profitability of the corporation or the
integrity of the institution, for peoples both within and outside these entities. CSR is a process to
achieve sustainable development in societies.
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Crowd sourcing: This is a distributed problem-solving and production model. In the classic use of
the term, problems are broadcast to an unknown group of solvers in the form of an open call for
solutions. Users – also known as the crowd – typically form into online communities, and the crowd
submits solutions. The crowd also sorts through the solutions, finding the best ones. These best
solutions are then owned by the entity that broadcast the problem in the first place – the crowd
sourcer – and the winning individuals in the crowd are sometimes rewarded. In some cases, this
labour is well compensated, either monetarily, with prizes, or with recognition. In other cases, the
only rewards may be kudos or intellectual satisfaction.
Customer-centric: Describes an organisation that is operated from its customers' point of view,
conceptualising value as ‘value in use’ by the customer, rather than the traditional view of value in
exchange. For example, the organisation makes certain it can be easily contacted by its customers.
It is about creating a positive consumer experience at every point of interaction but also pre- and
post-interactions. A customer-centric approach can add value to a company by enabling it to
differentiate itself from competitors who do not offer the same experience.
EFQM: Proprietors of the EFQM Excellence Model (http://www.efqm.org/)
e-listening: This is the process of listening and tracking conversations and opinions of customers
about an organisation and then using it to address a specific problem or opportunity. It is also used
to understand and track competitor activity and exposure.
Enterprise Application Integration (EAI): This is a computing term concerning the integration of
business information systems, generally involving consolidation and integration of legacy
applications with new platforms (Liu et al, 200892).
Employer of Choice: “An employer of choice is one who inspires highly talented workers to join
them and stay within them.” This definition comes from the book How to become and Employer of
Choice by Herman and Gioia93
Enterprise Resource Planning: Computer systems managing business information systems
across whole organisations beyond organisational silos and outside the organisation to external
touch points.
Employee voice: This is the ability of the employees to participate in the decisions related to their
jobs, and the possibility to give their opinions about work-related issues. It is considered an
important driver of employee engagement (Alfes et al, 2010).
Exponential Engagement: According to Towers and Watson, fluctuating economic trends and
environmental or organisational changes can make employees inefficient even if they are engaged.
Therefore they propose the concept of ‘Exponential Engagement’, which includes three elements:
empowerment, teamwork and cooperation and leadership (Towers-Watson, 2011).
e-WOM: (Electronic Word of mouth) According to Hennig-Thurau et al’s (2004, p.39) definition:
“Any positive or negative statement made by potential, actual, or former customers about a product
or company, which is made available to a multitude of people and institutions via the Internet.”94
Fuzzy logic: Fuzzy logic is a form of many-valued logic; it deals with reasoning that is approximate
rather than fixed and exact. In contrast with traditional logic theory, where binary sets have twovalued logic: true or false, fuzzy logic variables may have a truth value that ranges in degree
between 0 and 1. Fuzzy logic has been extended to handle the concept of partial truth, where the
truth value may range between completely true and completely false
ICS: Institute of Customer Service (http://www.instituteofcustomerservice.com/)
IES Conference Board: The Institute of Employment Studies (IES) was established in 1969 to be
an independent, national centre of expertise on productivity, manpower planning and labour market
change. Since that time it has expanded and diversified to become the UK’s leading independent
centre for research and evidence-based consultancy in employment, labour market and human
resource policy and practice. It is not-for-profit, its activities being funded through research and
consultancy
commissions,
and
from
its
corporate
membership
programme.
(http://www.employment-studies.co.uk)
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JIT: This is a production strategy that strives to improve a business return on investment by
reducing in-process inventory and associated carrying costs. Just-in-time production method is also
called the Toyota Production System. To meet JIT objectives, the process relies on signals or
Kanban (看板 Kanban) between different points in the process, which tell production when to make
the next part. Kanban are usually 'tickets' but can be simple visual signals, such as the presence or
absence of a part on a shelf. Implemented correctly, JIT focuses on continuous improvement and
can improve a manufacturing organisation's return on investment, quality, and efficiency. To
achieve continuous improvement key areas of focus could be flow, employee involvement and
quality.
Kaizen: This is a continuous process, of productivity improvement and humanisation of the
workplace. It aims to eliminate excessively hard work (‘muri’), and teaches people to eliminate
waste in business processes by identifying unnecessary activity and resource consumption, through
scientific experimentation on their work practices. "The idea is to nurture the company's human
resources as much as it is to praise and encourage participation in kaizen activities."95
Lean: According to the Lean Enterprise Institute, the core idea is to maximise customer value while
minimising waste. Simply, lean means creating more value for customers with fewer resources. A
lean organisation understands customer value and focuses its key processes to continuously
increase it. The ultimate goal is to provide perfect value to the customer through a perfect value
creation process that has zero waste. (http://www.lean.org/)
Mechanics: Clues emitted by things. Anything that can be perceived or sensed -- or recognised by
its absence -- is an experience clue. Any clue given by the product, the physical setting or the
processes in place to serve customers can be classed as a mechanics clue. In short mechanics
concerns the actual functioning of the good or service.
Micro Blogs: Blogging broadcasts. Micro blog content is usually smaller in actual and aggregate
file size. Micro blogs “allow users to exchange small elements of content such as short sentences,
individual images, or video links96.”
MBS: Manchester Business School (http://www.mbs.ac.uk/)
NBO: Next Best Offer is targeted offers to customers of products or services that they are likely to
be particularly interested in to buy. NBOs can be created if organisations have a decent customer
knowledge base that helps them understand customer wants, preferred product and service
attributes and purchase context. The offers are made in real time by using complex analytical
engines that track customer’s recent online movement and combine it past purchases and sites
visited to identify a need even before the customer realises the need.
Net Promoter Score (NPS): This is a metric developed by Reichheld (2003) to gauge customer
loyalty measured using a single question: “How likely is it that you would recommend our company
to a friend or colleague?” It is scored on a scale from 1 to 10; where customers are grouped into
promoters (9-10 rating – extremely likely to recommend), passively satisfied (7-8 rating), and
detractors (0-6 rating – extremely unlikely to recommend). To work out the NPS subtract the
percentage of detractors from the percentage of promoters. Reichheld (2003) states that
organisations with world class loyalty regularly receive a NPS greater than 75%. It is suggested that
the NPS is a particularly prominent indicator of loyalty because if a customer recommends an
organisation, they are putting their own reputation on the line; consequently, Reichheld (2003)
asserts that a customer will only take that risk if they are intensely loyal to an organisation.
Open innovation: This is a paradigm that proposes that companies should use not only internal
but also external ideas and paths to market. It considers the use of inflows of knowledge to
accelerate internal innovation, and outflows of knowledge to impulse external use of innovation
(Chesbrough et al, 2006).
Operant: Refers to a resource that operates (usually people) on something else.
PDCA/PDSA – Plan-do-study-act (Deming 1986): According to Ronald Moen97, “the PDCA
[where c=check] cycle had its origin with Dr. W. Edwards Deming’s lecture in Japan in 1950. He
modified the Shewhart cycle: design of the product, make it, put it on the market, test it through
market research, then redesign the product.” The Japanese interpretation of the ‘Deming wheel’ in
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Dr. Deming’s lectures of 1950 and 1951 lead to the plan-do-check-action or PDCA cycle. This cycle
was integral to the Japanese QC, TQC, and QC circle activities.
Second life: “An online virtual world developed by Linden Lab. A number of free client programs, or
Viewers, enable Second Life users, called Residents, to interact with each other through avatars.
Residents can explore the world (known as the grid), meet other residents, socialise, participate in
individual and group activities, and create and trade virtual property and services with one another.
Second Life has an internal economy and internal currency, the Linden dollar (L$). L$ can be used
to buy, sell, rent or trade land or goods and services with other users. Virtual goods include
buildings, vehicles, and devices of all kinds, animations, clothing, skin, hair, jewellery, flora and
fauna, and works of art. Services include ‘camping’, wage labour, business management,
entertainment and custom content creation. L$ can be purchased using US Dollars and other
currencies on the LindeX exchange provided by Linden Lab, independent brokers or other resident
users.”98 (http://secondlife.com/)
Servitisation or service infusion: Servitisation 99 is a movement in which companies consciously
drive their businesses into services to gain competitive ground (Vandermerwe and Rada, 1988).
Six Sigma: Originally referred to the ability of manufacturing processes to produce a very high
proportion of output within specification. Processes that operate with ‘six sigma quality’ over the
short term are assumed to produce long-term defect levels below 3.4 defects per million
opportunities (DPMO). Six Sigma's implicit goal is to improve all processes to that level of quality or
better.
Social CRM: This is the use of social media services, techniques and technology to enable
organisations to engage with their customers. As an emerging discipline, interpretations of Social
CRM vary, but the most frequently quoted definition is from Paul Greenberg,100: “Social CRM is a
philosophy and a business strategy, supported by a technology platform, business rules, workflow,
processes and social characteristics, designed to engage the customer in a collaborative
conversation in order to provide mutually beneficial value in a trusted and transparent business
environment. It's the company's response to the customer's ownership of the conversation.” Social
CRM is often used as a synonym for Social Media Monitoring, where organisations watch services
like Face book, Twitter etc for relevant mentions of their product and brand and react accordingly.
However, this is too narrow an interpretation, as Social CRM also includes customer communities
managed by the organisation themselves.
Strategy map: This is a visual representation of the relationships between the different
components of the organisational strategy. It accompanies the Balanced Scorecard, in order to start
defining the strategic objectives and then select the metrics that will be used for each of them.
Strategy maps link critical processes and intangible assets to the value proposition and the financial
and customer outcomes (Kaplan, 2010).
Times 100 best companies: Since 2001, The Sunday Times has annually published a list of the
best companies to work for. The results are based on a staff satisfaction survey101.
TPS: Toyota Production System business improvement model. According to Steven Spear102, there
are four rules and, “The rules rigidly specify how every activity – from the shop floor to the executive
suite, from installing seat bolts to reconfiguring a manufacturing plant – should be performed.
Deviations from the specifications become instantly visible, prompting people to respond
immediately with real-time experiments to eradicate problems in their own work. Result? A
disciplined yet flexible and creative community of scientists who continually push Toyota closer to
its zero-defects, just-in-time, no-waste ideal.”
TQM: Total Quality Management is a management approach focusing on the improvement of
products and processes.
Twitter: This is an online social networking/micro blogging service enabling users to send and read
‘tweets’, text-based posts of up to 140 characters. Tweets can be made publically available or
restricted to just a sender’s ‘followers’ (‘subscribers’ to their tweets). Tweets can be made via the
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Twitter website, compatible external applications (e.g. apps for Smartphones), or by Short Message
Service (SMS). (https://twitter.com/)
Value Innovation: This is the simultaneous pursuit of differentiation and low cost. Value innovation
focuses on making the competition irrelevant by creating a leap of value for buyers and for the
company, thereby opening up new and uncontested market space. Because value to buyers comes
from the offering’s utility minus its price, and because value to the company is generated from the
offering’s price minus its cost, value innovation is achieved only when the whole system of utility,
price and cost is aligned.
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Wheatley, M. (1999), Leadership and the new science: discovering order in a chaotic world, San
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Journal of Work and Organisational Psychology, 8 (1), pp.33-48
Zaccaro, S.J., Rittman, A.L. and Marks, M.A. (2001), Team leadership, The Leadership Quarterly,
12 (4), pp.451-483
40
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Volume 3: Leading with Vision, Inspiration and Integrity
9.4
Reference notes
1
Grint (2000; 2011); Conger (2011); Rickards (2011)
Potts (2009)
3
Weber (1978 trans.)
4
John (2006); Rickards (2011)
5
Northouse (2011); Daft (2008); Rickards (2011)
6
Collins and Porras (1997); Branson (1999)
7
Antonakis et al (2004)
8
Ralph Stogdill (1974)
9
Lord et al (1986); Hersey et al (2008)
10
See Bryman (1996) for an influential review
11
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Boal and Hooijberg (2000)
13
Rickards and Clark (2006); Avolio and Bass (1991)
14
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15
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Rickards and Clark (2006)
17
Yukl (2011)
18
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19
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24
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Puccio et al (2006)
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34
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Krugman (2008)
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40
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41
Dirks and Ferrin (2002)
42
Roberts and Dydyk (2000)
43
MPRI (2012)
44
Rickards (2011)
2
41
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Puccio et al (2006)
Moger (1997)
47
de Cock (1991)
48
Amabile and Kramer (2011)
49
Puccio et al (2006)
50
Chesbrough (2003)
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Von Stamm (2003)
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George and Sims (2007)
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Anonymous (2012), Vision Statement: What keeps global leaders up at night, Harvard Business
Review, April 3, pp.2-33
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Ozler (2012)
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Zaccaro et al (2001)
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Rickards and Clark, (2006)
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Gryskiewicz (1999)
66
McCauley et al (2003)
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Bryman (1996)
68
Bass (1998)
69
Avolio and Bass (1991)
70
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Brown et al (2006)
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73
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75
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76
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Gabriel and Connell (2010)
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Gabriel et al (2012)
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The others are visionary and values-driven.
80
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82
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Moss Kanter (2011)
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Such as the 2050 policy which aims to reduce raw material usage by 48% by 2050.
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46
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Volume 3: Leading with Vision, Inspiration and Integrity
89
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Harvard Business Review, September-October 1999, p.1
43
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