How successful leaders manage performance to deliver superior results: Using SPHERE Corporate Systems – the standard for managerial control

How successful leaders manage performance to deliver superior results Using SPHERE Corporate Systems – the standard for managerial control „Be the change you wish to see in the world“ Gandhi S P H E R E Advisors AG | Untermüli 7, Postfach 4440 l CH-6304 Zug (ZG), Switzerland l T: +41 41 758 08 17 F: +41 44 683 15 96 l contact@sphereadvisors.com

Greater Challenges, but Hurdles and Barriers Everywhere Higher dynamics are the norm … but, when control fails we install more of it. …but, when we lose sight, we Complexity increases with size ask for more detail – higher precision. … but, with higher Uncertainties challenge the strategy uncertainty we revert to giving orders. … but with higher ambiguities, we Ambiguities require room to move set new rules and limit the boundaries. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 2

Corporate Systems Enable a Culture that Delivers Superior Results in Challenging and Other Times Results • Good decisions drive performance • An enabling culture is needed to support the desired behaviors • Managerial systems need to be designed to enable good decision making and to translate decisions Decisions into actions and results-oriented behaviors Culture Systems Systems that do not fit the organization create bureaucracy, hamper performance, limit growth and make leaders ineffective! As such, leaders focus on the wrong things, spend time on unimportant issues and waste their energy. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 4

Systems provide a shared way of doing things • Routines – common way of doing things • Replicability – hit the ground running as you expand • Predictability – know what you‟re going to get • Reliability - Confidence that you are going to get it Which means that they can reduce • Transaction costs • Friction • Management effort © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 5

Systems enable effective leadership Features Benefits Outcomes Enable informed decisions Shared understanding Employees who perform, **** **** take on acceptable risks, Focus attention Shared mind-set capture opportunities in line **** **** with strategy and values Determine what things get Shared agenda *** done **** CEOs who delegate with **** Shared beliefs and more traction, greater Calibrate how things get behaviors flexibility and reduced done **** complexity **** Shared norms Frame what is „in‟ and what is „out‟ © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 6

Modern managerial systems need design! “The energy of people to systematically beat the System is rather high!” “If you only have a hammer, every problem looks like a nail“. A.H. Maslow © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 7

Second, a map or navigation system keeps you on the right track to reach destination First, you need the diagnosics that informe you about speed and the state of the vehicle And fifth, brakes are Fourth, the gaz pedal tells the needed! engine what to do. Third, the engine generates the power and transmits it on to the road. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 9

For sure, you would want a car, Where the brakes fit your engine power Where diagnostics allow right decisions Where navigation gets you to your desired destination – in time Where the accelerator meets your driving experience A car with systems that meet your needs. Good cars have well-aligned systems! © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 10

This Metaphor Translates Right into the Corporate World with 5 Control Systems Direction Boundaries Diagnostics Beliefs Actions © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 11

Corporate Systems …. Need to tell us what is going on - Diagnostics Should provide a map for where we need to go - Direction Tell us who needs to do what - Actions Show what we are good (and not so good) at - Beliefs Clearly define responsibility and accountability - Boundaries © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 12

As such … … diagnostics enable informed Publication decisions “Organizing the Direction CEO’s Sphere of Power How to build Direction focuses attention on the management important things systems to help people make smart decisions “ Action establishes what needs to Boundaries Diagnostics Beliefs get done Beliefs calibrate how things are being done In CriticaEye Action Online Boundaries frame what is inside June-August 2005 and what is outside the limits © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 13

Diagnostics Enable Informed Decisions Diagnostics are the „ears, eyes, and nose“ of an organization towards Direction • Stakeholders: Clients, owners, employees, society, market, competition, and regulators. They deliver feedback for intelligent decisions Boundaries Diagnostics Beliefs and behaviors. Diagnostics are the foundation for information and feedback loops. Action They enable a shared understanding. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 14

How effective is your organizational dashboard? Does it fit your organization, strategy, leadership style? In my own organization and Strongly Disagree Neutral Agree Strongly management team … Disagree Agree Our data We measure 1 2 3 4 5 6 7 8 9 supports performance and decision provide feedback to making where the work is being done © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 15

Diagnostic Tools Create a Shared Understanding Low-Performance High-Performance Organizations Organizations Focus on financial metrics; set Use a balanced set of critical Metrics and fixed internal targets performance variables; agree on standards relative customer performance objectives Measurement, Restrict information to need to Make information freely information, and know; limited, delayed accessible; real time, data feedback feedback, used to deliver based feedback used to consequences guide/adapt performance Data for the top; Data where the work is being Sense making Communications translates done; deep understanding of decisions what the organization is all about Reporting and P&L/BS – based; Value based measurement Cost and top-line focus systems © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 16

Direction Focuses Attention on the Important Things As sort of a „compass and a map“, direction focuses attention on relevant Direction opportunities and potential risks. Direction delivers the responses to the challenges as a strategy, identified potential, and clarity on investments. Boundaries Diagnostics Beliefs With this employees guide their decisions aligned with the strategy. Action An attractive and clear strategy enables a shared intent. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 17

How effective is your organizational navigation system? Does it fit your organization, strategy, leadership style? In my own organization and Strongly Disagree Neutral Agree Strongly management team … Disagree Agree We use systematic, 1 2 3 4 5 6 7 8 9 We are formal approaches able to to guide our respond to collective thinking challenges about future challenges © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 18

Direction Tools Enable a Shared Intent Low-Performance High-Performance Organizations Organizations No strategy or little Strategy articulates a strong Strategy and articulated; business plans brand and value proposition; strategic plans plans direct corporate development Strategy creation Strategy as a once-a-year off- Strategy creation is learning and resource site event, budgets allocate through a continuous allocation resources process; resources are allocated on demand A conversation among top Leaders encourage Strategic dialogue management employees to contribute Strategic An erratic way to inform the A shared approach to management board and investors corporate development © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 19

Action Establishes What Needs to Get Done Action translates strategy into objectives and action steps for implementation. It explains the Direction roadmap for the team. Leaders delegate and interact with employees on performance goals, measurement criteria and action plans to establish those things that Boundaries Diagnostics Beliefs need to get done. Performance reviews help clarify accountabilities and support good decision Action making. This enables a shared agenda. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 20

How effective is your organizational „engine“? Does it fit your organization, strategy, leadership style? In my own organization and Strongly Disagree Neutral Agree Strongly management team … Disagree Agree We can We implement with 1 2 3 4 5 6 7 8 9 track what clear goals and we are action plans that we doing regularly review © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 21

Action Tools Establish a Shared Agenda Low-Performance High-Performance Organizations Organizations Kept at a strategic level; Plans explain performance Performance plans plans remain in cupboards, targets and the action plans to and reports and are hardly followed up get there Create plans through a top Planning as a rigorous Performance down annual event; multiple conversation on performance planning and review priorities but do little well throughout; few priorities and do many things well Focus on telling people what Rich conversation on Decisive dialogue they did wrong priorities and performance Performance Financial forecasting and A process to share, align, and Management budgeting coordinate © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 22

Beliefs Calibrate How Things Get Done Beliefs work like the “gas pedal” of leadership. They determine performance, Direction behaviors and attitudes. Beliefs create a sense of being a part of an organization. As vision and values, beliefs calibrate how things are being done. Boundaries Diagnostics Beliefs This enables the alignment of individual decisions and goals. Action Shared beliefs work like a source of energy. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 23

How effective is your organizational accelerator? Does it fit your organization, strategy, leadership style? In my own organization and Strongly Disagree Neutral Agree Strongly management team … Disagree Agree We are Our vision, values 1 2 3 4 5 6 7 8 9 flexible and goals help us enough to change and adapt to react new challenges © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 24

Beliefs Tools Enable Shared Aspirations Low-Performance High-Performance Organizations Organizations Articulated, but little linkage to Define organization purpose; Vision, values, goals priorities, initiatives and day to employees describe their contribution; and incentives day work; values are at high values identify behaviors and are level and often ignored referenced in decisions and actions Cascaded objectives throughout Individual objectives are linked Management by the organization with a to motivation and purpose; objectives comprehensive process, agree on individual, negotiate fixed annual contracts inspirational goals Performance A once a year formal A continuous review of conversation conversation with the boss individual contributions; actions are taken on non-compliance Pay rewards on individual Reward shared success based Rewards performance; programs are on top-tier performance systems often decoupled from performance expectations © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 25

Boundaries Frame What is Inside/Outside the Limits Boundaries work like the “brakes“ for organizations as they establish clear Direction accountabilities and limits. In addition to the beliefs, they calibrate decisions, behaviors and performance through clear boundaries to what is Boundaries Diagnostics Beliefs acceptable and what is outside the limits. Boundaries enable a high degree of freedom for entrepreneurship, but within clear limits. Action Boundaries work best as shared norms. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 26

How effective are your organizational brakes? Do they fit your organization, strategy, leadership style? In my own organization and Strongly Disagree Neutral Agree Strongly management team … Disagree Agree We have adequate 1 2 3 4 5 6 7 8 9 Can we policies and norms balance in place that trade- establish the offs? boundaries for our decisions and actions © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 27

Boundaries Establish Shared Norms Low-Performance High-Performance Organizations Organizations Mission, Unclear and fluctuating Articulated boundaries; proper principles, structure boundaries; limited authority by authority to do the work; and risks supervision and detailed encourage risk taking procedures; limited risk taking Risks are not known A frequent and rigorous Risk assessment of all risk Management aspects of the business Leaders take decisions Leaders coach their Risk Dialogue employees on taking risks Governance and Standard operating Clear and consistent set of employee policy procedures principles © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 28

An Integrated and Aligned Corporate Management System Opportunity Space Beliefs Boundaries Action Targets Diagnostics Intended Inputs Outputs Realized Processes & Initiatives Direction Direction Emergent Direction Opportunity Space © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 30

Tools to Cope with Greater Challenges … Controls For times, when higher Focus rather than dynamics are the norm “check on people”! Processes For times, when complexity Diagnostic leadership increases with size rather than more detail! Delegation, trust and For times, when uncertainties Practices interaction rather than challenge the strategy deciding yourself! For times when, ambiguities Shared and embedded Principles require room to move principles, rather than detailed prescriptions and rules! © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 32

High-Performance Organization Enable Effective Leadership and a Culture that Delivers Results Low-Performance High-Performance Organizations Organizations Controls Tell people what to do Focus attention Processes Set goals and allocate Facilitate thinking and budgets enable feedback Practices Check on people Trust abilities, release energy Govern through Principles standard operating Lead through a clear procedures set of principles © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 33

Systems and Culture are a Competitive Advantage They cannot be copied easily They do not walk away! Building a culture takes time. Systems less! But, systems are the levers to enable the desired culture. Both, culture and systems are quickly destroyed. Hence, they need careful design and ongoing maintenance. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 34

Are Your Corporate Systems … • Aligned: f. ex., does planning fit your leadership style? • Integrated: Do things add up to a coherent approach? • Shared: Are leadership processes shared and conducted similarly throughout the organization? © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 35

They need an up-date, with … • A new CEO: With new leadership Systems that do not fit the organization • A new structure: When your organization grows fast or create bureaucracy, changes its structure hamper performance, • A new strategy: When your postitioning and direction changes limit growth and make leaders • Additional complexity: With new products, markets, ineffective! As such, leaders locations, functions or hierarchies focus on the wrong things, spend time on • Increasing market dynamics: With a changing environment unimportant and competitive dynamics issues and waste their energy. • A new business model: When the nature of your business changes • A new change: During a strategic renewal, restructuring or an M&A situation © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 36

One Size Does not Fit All! Low-Performance High-Performance Organizations Organizations Start-up: Small, Entrepreneur leads through Leader establishes structures entrepreneurial personal reach and builds the team firms Growth firms Establish functional Maintain behavioral specialization and lead boundaries and through incentives performance standards Established, Decentralize into profit Balance delegation and market-based profit centers control centers Mature: Product, Segment and combine scale Coordinate and align regional, segment with local reach through formal controls matrix firms © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 37

Re-jigging managerial systems is critical, sensitive, and potentially risky 5 reasons to engage SPHERE: - An expertise that is inefficient to own - Experience for solutions at lower risk - A diagnostic, intelligent, outside capacity -We work with your team to get it done -Projects with a fast turnaround time © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 38

How Effective is your Corporate Leadership? Take the test with the SPHERE Corporate Diagnostic Strongly Strongly The diagnostics reviews your My organization scores as follows: Disagree Neutral Agree disagree agree management systems in 1 Our data supports good decision making and 1 2 3 4 5 6 7 8 9 support of effective corporate employees share the same understanding of the leadership: Web-based or context in which the make decisions. workshop diagnostics with over 2 We use formal processes to guide our collective 100 factors reviewed. thinking. They establish clarity on direction and 1 2 3 4 5 6 7 8 9 create a shared mind-set. We say what we think. 3 We share the same agenda and get things done. 1 2 3 4 5 6 7 8 9 We can anytime track what we are doing. 4 Our shared beliefs are flexible enough to help us 1 2 3 4 5 6 7 8 9 adapt to new challenges. We know how to do things. 5 All our employees clearly know what is inside and 1 2 3 4 5 6 7 8 9 outside their boundaries. We do what we say. Ad your scores: _____ Test our diagnostics: www.spherediagnostics.com With scores above 40, your leadership performs at the peak Your challenge is to sustain your advantage. With scores between 25 to 40, your leadership is in parity with others: Contact us for peak performance! Scores below 25 mean that you run considerable risks and lose your competitive edge: Contact us before it is too late. © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 39

SPHERE Corporate Systems Tools for effective corporate leadership 5 Systems 5 Diagnostics 5 Design Options 5 Steps Analysis Direction 2 Definition 3 1 Diagnosis Boundaries Diagnostics Beliefs Design 4 Implementation 5 Action Results Leadership Cycle Leadership Models Tool Box Scorecard © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 40

Publications: Tools for Effective Leadership All our articles can be downloaded from our website: www.spherediagnostics.com © COPYRIGHT 2002-2009 l S P H E R E Advisors AG | www.sphereadvisors.com and www.spherediagnostics.com 41

Join us on our web 2 platforms: SPHERE Advisors: Coaching www.sphereadvisors.com and advice for CEO and the Management Team SPHERE Diagnostics: www.spherediagnostics.com Services for Staff Leaders and Publications, resources, forum, blog Control Professionals Presentations for download, free Diagnostic trial Group: Peak Performance in Corporate Leadership http://www.linkedin.com/groups?gid=1884954 Copyright © 2002 – 2009 S P H– 2009 Advisors R E |Advisors AG | All rights reserved | www.sphereadvisors.com and www.spherediagnostics.com Copyright © 2002 E R E S P H E AG All rights reserved | www.sphereadvisors.com and www.spherediagnostics.com 42

Peak Performance at the Top We support CEOs and Senior Executive deliver peak performance in corporate leadership Advice: CEO Coaching, Senior Executive Workshops Diagnostics: Corporate and individual effectiveness Communications: Stakeholder, content and impact management Infrastructure: Board relations, management systems, CEO Office Our client list reads like the „Who„s Who“ of the leadership of firms, non-profit organizations in Europe, the U.S. and the Middle East. Trust is the foundation of our business. This is why you do not find names here. Contact us for peak performance S P H E R E Advisors AG Tel: +41 41 758 08 17 Untermüli 7, 4440 Postfach Fax: +41 44 683 15 96 CH-6340 Zug (ZG) contact@sphereadvisors.com Switzerland www.sphereadvisors.com Copyright © 2002 – 2009 S P H E R E Advisors AG | All rights reserved | www.sphereadvisors.com and www.spherediagnostics.com

How successful leaders manage performance to deliver superior results: Using SPHERE Corporate Systems – the standard for managerial control

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