Look at your around in the business world. Some companies are growing well. On the other hand some others are not growing well and they are failing. It is clear that we are entering into a hypercompetitive business world. Of course this creates new difficulties and also opportunities.
Strong leadership and management is a key factor in creating of growth, profitability, competitive advantage, and high customer value, fostering innovation, unlocking the potential of the company workforce, and ensuring organizations have the right strategies to drive the productivity and organizational agility.
Remember Fortune 500 companies after 1955, you will see that many of them failed.
According to my experience, many organizations are failing to achieve their full potential due to managerial shortcomings, weakness in experience and know-how, and a lack of strategic thinking, problem solving and decision making before than others.
Companies should overcome these weaknesses and improve their leadership and management capability. They have to develop and implement a culture of self-reliance and dynamism for now and future.
How is the situation in today's hypercompetitive business world?
Now we can look at the research results about the effect of strong leadership and management in growth and profitability.
1- Most of the leaders are thinking that they are good leaders. In reality only about 18% of leaders are truly high achieving leaders (Jay Hall, Teleometrics International) and remaining 82% is average or worse leaders.
2- Ineffective management costs £19billion to UK economy per year in lost working hours (Department BIS, UK).
3- 43% of managers defined that their own line managers are ineffective and only one in five (20%) are efficient or qualified in the UK (Department BIS, UK).
4- Companies fail to choose the right talent for the job is about 82% (Gallup).
5- Nearly 75% of companies in the UK have a deficit of management and leadership skills in 2012.
6- Average leadership, or worse leadership, or poor leadership or incompetence or bad management of company executives causes 56 % of corporate failures (Department BIS, UK).
7- 63% of employees worldwide are not engaged in their jobs (Gallup). This is relevant to the managers or leaders. It is clear that effective management can significantly improve levels of employee engagement. This is a reality.
8- If you improve a single point in management practices (rated on a five-point scale), this will create an increase of output at 25% in labour force or 65% increase in investing capital (Dep. BIS, UK).
9- A study showed that developing and implementing a best-practice management can result in a 23% increase in organisational performance measures. This shows that strong leadership and management are critical for the success of a business in today's tough economic climate and increasing international competition.
10- Employee engagement is very important for business performance. For example engaged employees have less sickness absence as 2.69 sick days per year and the disengaged take 6.19 per year. This creates a cost value to the UK economy as £17bn a year in 2011 (Dep. BIS, UK).
The consequences of average leadership and management
1- You will have business costs. For example in the United Kingdom, the annual poor leadership and management cost is about over £19 billion.
2- Incompetence and poor management will create failures in 56% of companies and can be saved 40% of business failures if professional support or hiring good leadership and applying good management before than failure.
3- When we look at Fortune 500 after 1955, many of them failed. Because they didn't invest in good leadership, competitive innovation, long-term sector analysis, competitive intelligence, innovation management and changes in customer needs in the long-term. They tried to keep their own business and didn't adapt to new business competition.
What should we do to create good leadership and management?
The practical solution is to work with the truly effective leadership and apply right management in the organization. This can be performed by hiring truly effective leaders who have strong experience, know-how and skills including good emotional intelligence. This is not easy!Because average leaders can hire average people! Be careful!
1- Truly effective leaders have a well planned, developed and implemented long-term marketing and innovation strategy and a clear vision and the capability to communicate and collaborate that vision to others so that they are engaged and inspired to share it and work collaboratively to achieve it faster than competitors.
2- Search, select and hire truly effective leaders/managers.
3- Reconfigure your HR policies and organizational structure and make an assessment with competitors. If there are shoddy or average leaders/managers and/or employees remove them immediately from the organization.
4- You have to work with the best performers.
My question is "Who will be the winner?"
The winner will be the companies that are working with good leaders that are well experienced with strong know-how and developed skills, applying competitive innovation and best marketing strategies, and also creating operational excellence and organizational agility immediately and in the long-term with internationalization.
Who can provide good leadership and management for your business?
I have been 29 years in pharmaceutical and food industries. I see that only some leaders (20%) have a clear strong experience, knowledge and skills to achieve the top performance in operational excellence, organizational agility, innovation management, competitive marketing and brand management, effective selling, competitive intelligence, long-term sector analysis, talent management, problem solving, decision making, research and development, quality, new product or service development and collaborative culture.
For example CEO retirement age in the USA increased to 63 after the financial crisis. On the other hand it is 52 in some countries. This shows that some countries are wasting their potential power on growth and profit experience, know-how and skills or competitive power. I know that this is short-termism.
USA, Japan and Germany have high scores in leadership and management productivity in the business world.
Solution
You have to invest in:
1- Truly effective leadership and management.
2- Operational excellence.
3- Organizational agility.
4- Systematic and competitive marketing and innovation management.
5- Strong power branding and communication with customers.
6- Making local and global networking.
7- Measuring performance against the competition.
8- New product or service development.
9- Entering to new markets and internalization.
10- Mergers and acquisitions.
11- Reconfigurating organizational structure, hiring professional advice and/or hire the best performers while removing shoddy leadership and bad performers.
11- Training and developing organizational skills.
13- Rewarding and celebrating success.
14- Applying long-termism as a business strategy.
15- Making regular and continuous long-term sector analysis and competitive intelligence.
I am confident that innovative companies can enjoy a bright and competitive future by working with truly effective leaders and skilled people. So that they will save money and invest it for sustainable growth, profitability and competitive efficiency. Otherwise they can find themselves in the deep part of the Valley of Death by working with average or poor leaders and applying their short-term strategies.
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