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The pace of change in global business has never been more relentless and successful managers and leaders are the ones who innovate their style and processes. Gary Hamel sets the agenda in his new book ...

The pace of change in global business has never been more relentless and successful managers and leaders are the ones who innovate their style and processes. Gary Hamel sets the agenda in his new book “What Matters Now” and Helen Power speaks to two London Business School alumni who occupy positions at the highest level about how they have mastered upheaval.

This was first published in AlumniNews, Issue 130, July 2013. Find out more about our alumni community at http://www.london.edu/alumni

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    • In a changing world, it’s time to adapt
    • The pace of change in global business has never been more relentless and successful managers and leaders are the ones who innovate their style and processes. GARY HAMEL sets the agenda in his new book “What Matters Now” and HELEN POWER speaks to two London Business School alumni who occupy positions at the highest level about how they have mastered upheaval. With the global economy in a state of flux and trust in financial institutions at an all-time low, GARY HAMEL, London Business School’s Visiting Professor of Strategy and Entrepreneurship, believes good leadership has never been more vital, or – perversely – harder to deliver. “In today’s creative economy, audacity, imagination and zeal are the ultimate wellsprings of competitive differentiation... Individuals choose each day whether or not to bring these gifts to work, and as we’ve seen from the data, they mostly choose not to.” PROFESSOR GARY HAMEL IN WHAT MATTERS NOW In his latest book, What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation, Professor Hamel, one of the world’s most influential business thinkers since the 1980s, calls on business leaders to rethink fundamental assumptions about the structure of their organisations and indeed capitalism itself. Professor Hamel, who has worked for organisations as diverse as General Electric, Time Warner, Microsoft and Nestlé, argues that leaders are facing an unprecedented period of change with once-innovative companies close to extinction and 100year-old business models rendered obsolete overnight thanks to the development of the internet and social media. The author also points to a change in attitude of institutional investors, who are increasingly willing to confront highly paid executives, and amongst graduates, who are voting with their feet when choosing employment, preferring the culture of small start-ups to blue-chip corporations. For Professor Hamel, the answer is to throw out the old rulebook, foster innovation and battle bureaucracy to outrun change and reverse the global tide of commoditisation. Two School alumni – DAVID PYOTT, MSc13(1980), Chairman and Chief Executive of Allergan Inc., and TIM BREEDON, MBA23(1987), Independent Director of Barclays Bank and former Group Chief Executive of Legal & General – have made their own substantial marks on corporate leadership in the last 20 years. Although operating in two very different sectors – David in healthcare and Tim in financial services – the two men have presided over periods of dramatic change at the companies they have worked for.
    • David joined Allergan in 1998 and has transformed the company from a small eye care business into a global speciality pharmaceutical and medical devices giant. Allergan’s expansion was born in part out of the Botox revolution, which saw the cosmetic surgery procedure once only used by Hollywood film stars become a globally available must-have beauty treatment. “Botox was an orphan drug for a rare eye disease and we converted that into a worldwide market where putting botulinum toxin into your face has become a normal practice,” says David. “And, by the way, customers do it every four months.” The California-based Allergan boss, who was made a Commander of the British Empire in 2006, has come a long way from his native Scotland. But in fact his business beginnings were much closer to Tim’s than Botox is to insurance. “I put a premium on maintaining an ability to listen. People have their patter but they also have sensitive issues they don’t want to bring up.” DAVID PYOTT MSc13(1980) Chairman and CEO of Allergan Inc. “Way back then, I was actually a banker,” says David. “And I like to say now that I’m a recovering banker and management consultant.” Despite the sector shift, David believes the analytical skills he gleaned in professional services stood him in good stead, helping him to deal with multiple stakeholders and different constituencies within his business. But he argues it is emotional intelligence that is the key to being a leader. “For most people being a leader requires a fairly broad set of skills. Some people are outstanding in one area, but have a real blind spot,” he says. “That can be a real problem, because you need a good combination of IQ and emotional intelligence. “I put a premium on maintaining an ability to listen. People have their patter but they also have sensitive issues they don’t want to bring up, especially when they feel this could be interpreted as criticising somebody else in the group. You need to be able to find a different venue where you can bring those things up.” While some leadership qualities are common to every walk of life – from politics to the army to business – David argues some essential skills are peculiar to the corporate world. “Political leaders have to invest a lot more time and have the skills for coalition building. If you have been elected as Prime Minister, President or Party Leader, you won’t have made it unless you have the skills to work across various factions in your own party, let alone across aisles,” he says. “In the business world it’s better if you have the fortitude to make tough decisions on your own. That said, decisions need to be sufficiently grounded so staff and stakeholders can say, ‘It’s tough, but intellectually, I can sign on.’ If the leader does something that’s not aligned with the organisation’s values, they will lose support pretty quickly.”
    • “Most organisations are set up for manageable amounts of change but find it difficult to cope when the extent and pace of change become potentially overwhelming.” TIM BREEDON MBA23(1987) Independent Director of Barclays Bank For Tim and his new colleagues at Barclays Bank, this skill will be particularly important. Censured by regulators for its role in the Libor-rigging scandal, shorn of its Chairman and Chief Executive last year and – like most big banks – generally reviled by the public, Barclays as an institution still has a lot of apologising to do. “The banks have an enormous challenge. It is a sign of the commitment of Barclays’ new Chairman and Chief Executive to repairing its reputation that they asked me to join the Board. They knew that creating a purpose-led organisation, with strong values and principles, was at the core of the culture-change programme I had initiated at Legal & General five years ago and probably felt that Barclays needed to embark on a similar journey.” Tim served 25 years at L&G, six-and-a-half of them as Group Chief Executive before retiring last year. In that time, the insurance industry was at risk of being engulfed in the credit crisis of 2008 and the subsequent banking collapse. The L&G boss also became Chairman of the Association of British Insurers (ABI), helping to push the agenda of the insurance industry as a whole at this critical time, including persuading nervous regulators that the sector was not exposed to the same risks as banks and was therefore not short of capital.
    • He expects both these experiences to be helpful at Barclays. “Most organisations are set up for manageable amounts of change, but find it difficult to cope when the extent and pace of change become extreme and potentially overwhelming. Strong leadership really matters at these times, as the choices made can have a profound impact on a company’s direction and future success,” he says. “If I look at when I took over as CEO of L&G there were a lot of drivers of change evident in the financial services industry. It is clear that those who positioned their companies well, and navigated their way successfully through a period of upheaval, have since pulled away from their competitors.” “It is very tempting, isn’t it, for leaders to attribute failure to fundamental changes in the market. But leaders are not only responsible for anticipating change and reacting to change, but also for shaping the business landscape in which they operate, taking into account wider social and economic considerations. It is wrong to say that the ‘rules of the game’ are set by the market or by third parties and that we therefore have no responsibility for them. This is a key lesson of the banking crisis, and an area in which insurance companies did a far better job than the banks.” David, who is also the Lead Independent Director at Avery Dennison, a manufacturing giant founded in 1935, believes the leaders of fast-growing and mature companies need to utilise slightly different skills. “I think I can add value as a director of Avery Dennison, but the compare and contrast makes me remember how good it is at Allergan,” he says. The only way Avery Dennison can please Wall Street is to get cost reductions and productivity improvements, but I think I have a strong bent for that. I’m a gene-modified Scotsman who was trained by the Swiss [at Novartis].” The two men agree that education is crucial to leadership and that this is where academic institutions such as the School can contribute. “Here’s an observation,” says Tim. “It seems to me that for many years there was too much focus on the science of management rather than equipping managers to lead. This changed in the 1990s, but then there was an over-focus on the personality of the Chief Executive. Leadership doesn’t just happen at the Chief Executive level. “Leaders should always be trying to reduce the dependency of the company on individuals, including themselves. Creating an effective leadership team through careful selection, training, mentoring and effective delegation is rightly seen as one of the most important duties of a Chief Executive. Done well, it increases organisational capability and resilience by fostering a culture of leadership, and creates bandwidth to deal with the unexpected.” For David, his academic studies taught him valuable lessons about how to avoid mistakes throughout his successful career. “Good analysis and good work in the academic community are really important,” he says. “I think there are always great case studies that you can look at to emulate other peoples’ successes and hopefully to avoid the banana skins. I don’t spend that much time reading books on management – I’m too busy reading reports on Allergan and our competitors. I’ve only had a week of formal education since my MBA at the School, but I rely on what I learned in the past and then go back to the listening thing.” This was first published in AlumniNews, Issue 130, July 2013. Find out more about our alumni community at: www.london.edu/alumni