BT Group (formerly British Telecom) is recognized as one of the world’s leading IT and telecommunications players. However, through the late 1990s into the turn of the millennium, the company underwent a major business model transformation. Faced with intensifying competition and a fiercely disruptive industry environment, BT was struggling like any player in the telecommunications space to find the right strategies to survive and prosper.
Disruptive changes of context – usually triggered through technological innovation, deregulation, and globalization – are fundamental events that turn the established rules of an industry upside down. In such times, the strengths of the incumbent industry leaders tend to become weaknesses, as the leaders are, by definition, the ones most successfully embedded in the “old paradigm”. The famous precision engineering skills of the Swiss watch making industry were of no use when the industry moved on to quartz watches. Similarly, the automobile wiped out a whole infrastructure of horse-based transportation, and electronic word processing made the best mechanical typewriter obsolete.
Dealing with the scale of threats and opportunities in times of severe disruption requires an extraordinary degree of organizational agility. Building leadership capability in this situation involves providing a broad understanding of the contextual dynamics of these changes and equipping leaders with the capacity to both exploit today’s business opportunities effectively while exploring emerging markets with novel business models.
The case study tells the story of BT’s ‘Leading Strategy Execution’ program (LSE), a learning initiative that was aimed exactly at the leadership capabilities required to manage discontinuous change. In contrast to traditional executive education programs, which tend to focus on teaching generic skills of strategic and organizational leadership, the case presents a highly contextualized learning initiative that enhances the understanding of environmental turbulence and leads executives to creatively explore business opportunity gaps and – most important – close such gaps through finding and executing innovative solutions. As such, the program is a great example of a truly strategic learning intervention.
Re-visioning leadership development
BT decided in 2005 to invest in an executive learning initiative to build up strategic leadership capabilities for its senior-most leaders. The project was designed and sponsored by BT’s Organization Development unit, headed up by June Boyle. June’s responsibility included practically all aspects of a comprehensive strategic HR function. To develop and implement the new leadership initiative, June brought in Andy Binns, a former McKinsey consultant who had worked at IBM on a similar challenge. Andy’s background in strategic change management and leadership learning made him a perfect choice for the challenge that lay ahead.
From the outset it was clear to Boyle and Binns that the initiative needed a very different approach and could not mirror a traditional leadership program. The challenging context of the industry suggested various objectives that needed to be addressed in a learning design:
Business outcome: It was important to deliver a tangible outcome that contributed directly to a leader’s business in a concrete and specific way. BT had made many investments in executive education with leading ‘brand name’ business schools – including one involving 500 executives. However, traditional case study teaching in academic environments created no discernable impact other than wide spread skepticism towards such initiatives. Educational objectives had to be less important than generating immediate business value.
Strategy Execution: The most critical objective was to develop the capability of BT and its leaders to improve on strategic execution. BT had made many bold strategic bets that would never come to fruition without flawless execution. It was important to root out the management practices that were based on BT’s past, those that were more associated with its history of a near monopoly. The new realities required organizational analysis and change skills of a wholly different order than those that may have worked in previous times.
Context understanding: BT’s specific market is about telecoms, entertainment and information technology, but its disruption follows a pattern familiar to other industries that can be understood and analyzed for strategic advantage. It was important to foster the ability for context analysis and “sensing” as well as provide generic tools of analysis that made the formulation and execution of innovative strategic moves possible.
Leadership Community: The strategy of breaking up BT into four independent units had resulted in insulated silos, despite the fact that each of these lines of business was faced with the same technology and market trends. Building a leadership community across boundaries would not only lead to creative insights and solutions, as every line would contribute a different perspective; it would also strengthen the identity of BT Group as whole and instigate a much needed culture of collaboration.
Such a design focus on delivering business outcome, enabling strategy execution, building context awareness, and fostering leadership community would help them go far beyond the usual mainstream approach, which typically sees leadership development as an investment made for long-term benefit, with the objective to strengthen generic leadership skills, create a leadership pipeline, and ultimately develop a leadership brand.
BT had already made its homework when it came to ‘leadership brand’ style of investments. Their integrated leadership system included
- the BT leadership competency model – a fact-based definition of the practices that differentiate successful leaders from others
- the BT Leadership assessment – a rigorous assessment of the top 500 leaders against this fact-based standard, using 360 survey tools and other methods
- the BT Performance management system – an evaluation of the leaders performance against the leadership capabilities in an annual performance reviews
- the BT Leadership pathway – a coherent educational program online and face-to-face offerings – including coaching – that are aimed at enabling leaders to stretch to meet the new higher standards
While these cornerstones of BT’s leadership development practice had doubtless value in feeding the pipeline, they were not so apparently relevant in the moment of ‘punctuated change’ which BT and the rest of the telecom industry were facing; they did little in helping BT to come up with innovative responses that would reverse the scary losses in their lines of business. When you are in a live or die moment, it is not enough to focus on long-term developmental effort only. The question becomes rather: What tangible contribution can leadership development make in these circumstances, and can it contribute in “real time” to the ‘real work’ of leaders in a time of deep transformation? As June Boyle put it, “We had a leadership framework, but no set of targeted leadership behaviors – we had no clear sense of what our leaders should do in this disruptive environment.”
And the changes in the telecom industry were as radical as they get: Mobile replacing the legacy landline infrastructure, broadband enabling internet telephony and video on demand, the new “social” internet spawning a plethora of innovative and unpredictable business models, and the much talked-about convergence of video, television, and voice finally becoming a reality. Each and every of these developments meant creative destruction, massive shifts that make hitherto successful business models obsolete and fundamentally alter established market models both on the consumer and the business side. the venerable Brit, Charles Dickens, might sardonically have put it, it was the best of times and the worst of times: BTs leaders faced ample opportunities to exploit new markets, but they were being felled by some of the most difficult challenges they had ever encountered. They felt exposed and vulnerable, and in desperate need of new ideas and approaches. Helping them make sense of the complexity they faced and enabling them to develop effective responses was critical.
Let us briefly take a look at some characteristics of disruption to better understand why the traditional model of working with leaders would not be an appropriate response in this context:
Disruptive change is emergent – Sometimes you only know you are in disruptive change when it has already happened. One eye-opening story from BT exemplifies this. At a senior management meeting it was dramatically announced that Google would compete head-to-head with BT within 3-4 years. A few months later, the same presenter admitted that it had already happened. A leadership development system that is based on a ‘rear-view’ mirror of what made leaders successful in the past encourages a false sense of strategic infallibility. The stubbornness to recognize emergent disruptions – a disease very common among incumbent industry leaders – leads to a fatal blindness when it comes to adapting to that type of change.
Disruptive change is uncertain – By definition, when leaders do not know how a major market disruption will play out, the progress and outcomes cannot be predicted. Former IBM CEO Lou Gerstner famously pronounced that ‘the last thing IBM needs is a strategy.’ In other words, uncertainty is a time for placing multiple bets and sensing which works, rather than a time to insist on the right or wrong strategy. Making bets and sensing are adaptive skills; they require a deeper appreciation of context and an ability to iterate solutions depending on outcomes. In contrast, traditional leadership education usually has a fascination for formulas and step-by-step processes. Whether it is ‘Six Sigma’, the many strategy-by-numbers models or even the eponymous ‘GROW’ coaching model, what is usually missing is a focus on assessing, on “sensing” context.
Disruptive change is fast – The fast pace of transformation in times of discontinuity calls for a faster level of activity. Just as molecules move faster when heated up, so must human beings when faced with rapid disruptive change. The event-based approach of traditional leadership learning is too often about turning up on a particular day in a particular place to learn an old formula that ultimately is no longer even valid.
Analyzing the situation in this way made it clear to Boyle and Binns that a more appropriate leadership learning approach had to enable BT leaders to become more confident with uncertainty and unpredictability, and encourage them to drive creative business transformation. “We needed to design learning experiences that created an opportunity for BT’s leaders to challenge their assumptions, think outside the confines of today’s priorities and boundaries, come up with novel ideas, and then drive a smarter, more context aware execution,” stated Boyle.
Designing the Leading Strategy Execution Program
Faced with the challenge of creating a learning design that would address all these ambitious goals, Andy Binns benefitted from his previous experience at IBM, where he had been involved in conducting ‘Strategic Leadership Forums’ (SLF), a learning model that enabled the company to accelerate progress on its own emerging business opportunity growth initiatives.
The SLFs were devised around a 3½-day workshop that blended leadership education with intensive work on problems and opportunities. The workshops began by having participants define a gap statement, challenge their existing strategy, perform a deep root analysis of the specific underlying causes of the performance or opportunity gap, and finally develop an action plan. This process helped IBM line managers share a structured, candid conversation using a common language – and to explicitly link their strategic insight to execution in a disciplined way.
The SLF model attracted Boyle and Binns because it blended action on the real-work of a leadership team with education to not only shift mindsets, but to accelerate ideas and make progress toward solving immediate business change priorities. The method was not fully innocent of traditional leadership development program flaws, such as still requiring a mega-event approach with multiple teams coming together to work on their issues in parallel while attending the educational components of the program together. However, it met three key criteria that the team believed had to operate in the new initiative:
It focused on real gaps that were important and urgent now. Analyzing BT’s opportunity gaps was clearly the most critical task that the company’s executives had to begin performing rather than generalized leadership development work
It was a ‘leader-led’ effort. By encouraging candid and open debate, the model called for people to act as leaders on an immediate basis. Experts and gurus had a role in the educational components, but they were not the main act. Attention and accountability remained focused on each leader in the room, working on his or her issues.
It wasn’t a checklist or step-based methodology. The model did not offer a one-size-fits-all prescriptive approach to change, but demanded a method of inquiry in which leaders were asked to rethink their assumptions, analyze the systems at play in the context of the disruptive situation, and then make adjustments to the structures and strategies.
Boyle and Binns decided to use principles from IBM’s SLF and adapt it to the specific BT context, dubbing it Leading Strategy Execution (LSE). LSE was aimed at delivering a rigorous process that would enable BT’s leaders to move more quickly and smarter to exploit the emerging market opportunities, while also raising the quality of strategy development and execution at senior levels across the group. At the same time, it would contribute to creating a stronger sense of community and a more collaborative culture among BT leaders that could help capitalize on the diversity of perspectives and build a network of mutual support. Exhibit 1 summarizes the overall objectives of LSE.
Exhibit 1: LSE Objectives
To get a sparring partner and a sounding board to support her learning team in achieving these ambitious objectives, June engaged Michael Tushman, a scholar and seasoned expert on disruptive change management who Andy knew well from his work with IBM on the their Strategic Learning Forums. Together they formulated the foundation for the LSE “journey”, a process that would take leadership teams who had a strategy execution responsibility – either at the business unit, market sector or geography level – through three phases of work:
(1)The discovery and consequently detailed definition of a relevant performance or opportunity gap,
(2)An intense 3-day workout session to reframe the leader’s cognitive maps, provide conceptual and operational tools, and formulate a concrete project to address the gap, and
(3)The execution of the selected project with a support infrastructure of coaches and advisors.
June Boyle was the Group Organisational Development Director at BT Plc during the period of time of the LSE events, having joined the company in September 2003. Her role covered a number of areas including Training and eLearning; Leadership Development, Culture and Change Management, and Performance Management. She had previously worked as Group Head of Organisational Development at the Royal Bank of Scotland from 2000-2003 and as Group Organisational Development Director, Downstream, for BP between 1998-2000.
Andy Binns was Head of Leadership Development for BT Group PLC during the time of this article. His team designed and delivered leadership development interventions to support the business in executing its strategy, including senior leadership team action learning programs, talent education and leadership capabilities. He previously worked as an internal and external consultant for both IBM and McKinsey & Co. He holds an M.Sc. in Organization Behavior from Loyola University, Chicago.