MIT Sloan Management Review

Earlier this month we told you we’d be interviewing Michael Watkins, author of Your Next Move. We invited you to submit questions to Watkins, an expert in leadership transitions. Here, as promised, are his responses.

Let’s start with a turnaround question. The first things a new leader at a company with a turnaround challenge has to do is assess the external and internal environments. What happens if the two aren’t aligned? For instance, what if the external market for your products is good but your products are doing poorly?

It’s a bad news, good news situation. The bad news is that your products are not presently meeting customer needs. The good news is that your industry is healthy, even in your business is not. This obviously is much better than being in a dying industry where you would be forced to radically shift the focus of the business.

The challenge (and the opportunity) here is eliminate the external-internal misalignment by rapidly bringing more attractive products or services to market. It’s here that you need to focus and get some early wins. Are there some modest adjustments you can make quickly to buy you some time? Are there products already in the pipeline on which you can place bets and organize to accelerate? Are there opportunities to license or acquire products to help fill the gap?

The fact that you are in a turnaround situation also is quite helpful. It means there already is a sense of urgency that you can use to create momentum. People are unlikely to be in denial about the need to take action and that will help you to drive things forward.

How can an employee transition from a small company (<100 employees) to a large one? (submitted by "jijesh")

This is a tough transition. The bad news is that most small-to-large company transitions mean you have to accept positions with narrower scope, as well as adjust to more convoluted processes, e.g. for approvals, and increased organizational politics. This can be a very hard adjustment for someone who has thrived in the broader, more flexible environments that characterize most successful small businesses. The key is to be prepared to accept these shifts and not rail against them. You need to pledge to yourself never to utter the words, “things were so much easier when I was at…” At the same time, keep in mind that successful larger companies do offer significant advantages to talented people. These include more resources that can be devoted to “big” projects, as well as greater opportunity for advancement, and (potentially) greater recognition from colleagues, friends and family that you work for a leading company.

Would love Michael’s insight/suggestions on the 50+ year old’s transition from a long term relationship with one company to the “wild-wild” west of job search and potentially a new industry/company. (submitted by Deborah Exo)

The key here is to demonstrate to potential employers that you have the learning agility and drive to thrive in a new environment. Potential employers will be primed to worry that your long-term commitment to one company signals either an aversion to change or a lack of ambition or both. So you need to craft a convincing story about why this is not the case. If you can authentically point to a record of advancement and achievement in your old company, and can make the case that you stayed for good reasons, then that’s what you should do. As to drive, one way to signal that the fires still burn is to come into interviews with an aggressive plan for what you would do in the first 30/60/90 days. Undergirding all this, of course, is the experience and wisdom that you bring to the table, something no 30 or 40-something can match.

Finally, of the transitions you list in the book, which is the most difficult and why?

I think the realignment challenge is the most difficult. Realignment is about proactively changing an organization, and not responding to a crisis/turnaround. Turnarounds are easier because the problem teaches the people; the severity of the issues facing the organization virtually guarantees that a sense of urgency exists. People may be in despair, but they are not in denial. In realignment situations, however, the storm clouds are on the horizon, but the storm has not yet broken. You need to teach people that there is a problem. And this can be extremely challenging because people may have entrenched interests that they seek to protect, or be in denial of the need for change, or both. So success in realigning organizations required a nuance understanding of the alignments of interests in the organization, very strong persuasive skills, and a whole lot of patience.

Are you managing a career transition? Please let us know about it in the comments below.

Next week we’re going to be interviewing Michael Watkins. He’s a cofounder of Genesis Advisors and he’s best-known for The First 90 Days, a primer for making sure that your first three months in a new position work out as well as possible. (We’ve all seen what happens when someone starts a new job and finds himself or herself adrift.)

Watkins has a new book, Your Next Move, which considers how best to handle all sorts of career transitions: promotions, international moves, and more. What do you do, for example, when people who were your peers last week are now reporting to you?

When I write we’ll be interviewing Watkins next week, I really mean we. You have plenty you’d like to know about making the right moves. Here’s a chance to find out from an expert in leadership transitions. Put your questions for Watkins in the comments box below and he’ll answer the best of them. Career transitions are moments of great risk and opportunity. Here’s a chance to ask an expert how best to transition into your next role.

One of the challenges to successful management or process innovation in an existing business is the array of organizational structures that are designed to keep current processes running smoothly – and, as a result, may resist changes.  In a recent blog post on The Wall Street Journal site, management thinker Gary Hamel offers a case study about an employee empowerment initiative at The Bank of New Zealand that illustrates this point well.

Hamel describes how, when the bank’s general manager for retail banking allowed one bank branch to set its own hours, word spread to other branches — and other managers soon also wanted to set their own branch opening and closing hours, to suit the needs of local markets. The general manager agreed to give the branch managers that freedom.

The challenge?  At headquarters, this change in policy resulted in concerns from HR, risk management, IT and corporate marketing. “While many of the objections [from headquarters functions] were more political than practical, some were well-grounded and soon led to policy adjustments,”  Hamel observes.  For example, to avoid objections from the bank’s union, branch managers were required to get employees’ agreement before changing a branch’s opening hours.

Hamel’s post is well worth reading, and it contains an implicit lesson for would-be management innovators in established companies: Keep in mind that, if you unleash change, institutional forces may resist it — and you may need to compromise with them and work with them.

Here’s an interesting finding: A new working paper suggests that national labor laws that make it harder to dismiss employees have a positive effect on innovation — and even  on economic growth. Researchers Viral Acharya, Ramin Baghai-Wadji, and Krishnamurthy V. Subramanian analyzed labor laws and U.S. patents and citations from five countries (the U.S., Germany, the U.K, France and India) over more than three decades. And, because several of the countries had changes to their labor laws during that period, the researchers were able to look at the effect of those changes on changes in innovation rates, too.

The authors report that they found evidence that strong labor laws in general foster innovation  but have a negative effect on economic growth. However one aspect of such laws — more stringent  laws regulating employee dismissal  — had a strong positive effect on both innovation and economic growth in a country.

Why would laws that make it more complicated for employers to let workers go have a positive effect on innovation? One reason, the authors suggest, is that such laws may make employees more willing to take the greater risks associated with attempting innovation.

The Wall Street Journal today contains an interesting article about companies that map their organizations’ informal communication networks in an effort to improve communication and productivity.  Readers of MIT Sloan Management Review will be familiar with this line of research, known as social network analyis: Rob Cross, who was quoted in The Wall Street Journal article, coauthored an article on this topic (“How ‘Who You Know’ Affects What You Decide,” with Robert J. Thomas and David A. Light) in the Winter 2009 issue of MIT Sloan Management Review. 

Cross also was one of the authors of “Six Myths about Informal Networks — and How to Overcome Them,” a classic primer on using social network analysis in business that appeared in MIT Sloan Management Review in 2002.

We blogged earlier this month about some companies trying creative responses to the recession, including reducing employees’ hours rather than laying staff off. The New York Times this week reported that there’s a trend: An increasing numbers of organizations are seeking to cut labor costs but avert or limit layoffs – so they are trying measures such as reducing workweeks, offering or requiring unpaid time off, or eliminating bonuses. According to The New York Times,  

Companies seem particularly determined to find alternatives to layoffs in this recession, said Jennifer Chatman, a professor at the Haas School of Business at the University of California, Berkeley. “Organizations are trying to cut costs in the name of avoiding layoffs,” she said. “It’s not just that organizations are saying ‘we’re cutting costs,’ they’re saying: ‘we’re doing this to keep from losing people.’ ”

Also this week, Caterpillar Inc. announced that it will it will cut compensation for executives and managers (but particularly executive compensation, which the company may cut by up to 50% for 2009) and offer a voluntary buyout option to U.S. employees.

In this era of widespread telecommuting and geographically dispersed teams, more and more business leaders need to know how best to manage employees who are seldom in the company offices. Two recent articles take a look at emerging trends in managing telecommuters and remote workers:

• In an article in this month’s edition of Business Insight, two researchers discuss the management challenges — and benefits — represented by a new breed of autonomous, high-level workers who are rarely in the corporate office.  The authors note that, if managed well, these self-starters can offer significant benefits to the corporation, as they can free up management time by not needing close supervision; they also lower traditional overhead costs such as real estate. But managing such employees isn’t easy. One suggestion? “Macro-manage” high-level remote workers  – giving them broad goals to achieve. 
• On a similar note, CIO.com recently featured a three-part series about a 35-person software company, Chorus, that decided to eliminate its corporate offices and, in effect, send the entire company to home offices. While Chorus reports higher productivity now that employees all work at home,  communications in an all-virtual company requires new approaches. One tool Chorus uses: a report that everyone receives each day that lists all of the projects each company team has in progress.  

It was the airline industry’s travails that particularly occupied MIT professor and leading workplace dynamics thinker Thomas Kochan in a Q&A interview published in the Fall issue of MIT Sloan Management Review. Since that interview, Kochan has Gone Washington (at least for a spell), first as an advisor to the Obama campaign—and author of numerous interesting commentaries as a Huffington Post blogger—and now as co-leader of an Obama transition team reviewing certain aspects of labor relations practices. See the Review interview for Kochan’s insights into the emerging demands on both employers and employees who want to survive, and possibly thrive, in challenging times.

Here at MIT Sloan Management Review we’re big fans of the folks at 37 Signals. We use some of their software and we try to follow their ideas about simplicity in everything from product to process. Indeed, their notions about underengineering dovetail nicely with Clayton Christensen’s much-repeated but still timely theory of disruptive innovation.

In a recent post on the 37Signals company blog, entitled Hire managers of one, CJ Curtis writes that businesses should try to bring on board

…someone who comes up with their own goals and executes them. They don’t need heavy direction. They don’t need daily check-ins. They do what a manager would do — set the tone, assign items, determine what needs to get done, etc. — but they do it by themselves and for themselves.

These people free you from oversight. They set their own direction. When you leave them alone, they surprise you with how much they’ve gotten done. They don’t need a lot of handholding or supervision.

Particularly at a time when organizations must be particularly careful about who they bring on board, that’s excellent advice.