Leadership for Risk Management: Navigating the Haze with Modern Techniques (Future of Business and Finance) 3030694062, 9783030694067

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Future of Business and Finance

Lidewey E. C. van der Sluis

Leadership for Risk Management Navigating the Haze with Modern Techniques

Future of Business and Finance

The Future of Business and Finance book series features professional works aimed at defining, describing and charting the future trends in these fields. The focus is mainly on strategic directions, technological advances, challenges and solutions which may affect the way we do business tomorrow, including the future of sustainability and governance practices. Mainly written by practitioners, consultants and academic thinkers, the books are intended to spark and inform further discussions and developments.

More information about this series at http://www.springer.com/series/16360

Lidewey E. C. van der Sluis

Leadership for Risk Management Navigating the Haze with Modern Techniques

Lidewey E. C. van der Sluis Learning Vision Aerdenhout, The Netherlands

ISSN 2662-2467 ISSN 2662-2475 (electronic) Future of Business and Finance ISBN 978-3-030-69406-7 ISBN 978-3-030-69407-4 (eBook) https://doi.org/10.1007/978-3-030-69407-4 # The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Forget Everything And Run

F EAR ha s T WO m e a nings The choice is yours. -Zig Ziglar

Face Everything And Rise

Foreword

Out of the Haze In March 2020, it took us three days to send the majority of our colleagues to work from home while at the same time the crisis called for all hands on deck. Both at a personal and an organizational level, many certainties were challenged and the situation called upon each and every one of us to improvise while at the same time learning to deal with new strict health regulations. A healthy and engaged team is key to our success, yet it struck me that in our day-to-day leadership challenges this issue had rarely been at the top of our agenda before. I love to sail. When you go sailing in the haze, the one thing you need to arrive healthy and safe on the other side is good radar. Radar transmits a signal and, even more importantly, listens very accurately to the reflections coming back from its environment to paint a clear operational picture and create clear situational awareness for the crew on board. As leaders, we are the radar of the organization. By creating transparency through the information and questions we transmit and listening to the answers and feedback we receive from our internal and external environment, we are able to build a shared operational picture that empowers everyone from the bottom of the ship to the teams on deck to make the right decisions at decisive moments when navigating in the haze. For everyone who depends on others to create mutual success, this book is your radar to come out of the haze as a better person and a better company. It provides you with a complete set of concepts and questions to align on shared principles and direct everyone’s energy to arrive safely and together at new destinations. Thales Netherlands B.V. Hengelo, The Netherlands

Job van Harmelen

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Preface

Leadership for Risk Management This book has been written for leading professionals who can identify with an image of themselves as the skipper at the helm of an organization in turbulent seas. The circumstances in which this organization finds itself are complex, opaque, and hard to predict. Leadership and risk management are the order of the day. In conditions such as these standing at that helm is an enormous responsibility. Things could take any number of turns, and it is a considerable challenge to pilot an organization through such periods without incurring too much damage. Contemporary concepts can offer some guidance. That is why this book has been written. It encompasses new models with their associated practical examples and questions for discussion. It is therefore more of a workbook than a reader. By means of a clear framework and structured content it provides contours for leaders’ thinking and doing when risks appear. It gives guidance in situations where they have 100% of the choices to make with 50% of the needed information. Leadership for risk management includes being aware of known, calculated risks and unknown, uncalculated risks. In that sense, leadership for risk management means steering with all the dangers and uncertainties that it entails. It is all about navigation. This book hands leaders, directors, and management teams conceptual models and instruments for navigating during economic changes, market downturns, disruptive technologies, unexpected competition, and other forces that shape the future of organizations.

Management Talk This book is not a playbook to follow in times of uncertainty and under unusual circumstances. It is a self-help book for those at the head of a team, an organization, or a country in times of great change. Facing the reality of a crisis and responding in the right way at the right time can make a big difference. Such moments are moments of truth for leaders. This book offers leading figures in organizations instruments to ix

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Preface

be prepared for that crucial moments in the history of companies and in the careers of leaders. Navigating in the haze demands the ability to think, the resilience, the imagination, and the vitality of the skipper. Navigating in the haze requires a knack for steering; it requires leadership techniques such as risk management. This book provides instruments for those. Those instruments consist of concepts, ideas, illustrations, and talk: management talk.

A Nautical Approach to Lockdown This book was written during the first period of lockdown in the Netherlands due to the coronavirus. Within a very short time, much changed between the time before March 12, 2020, and after that historical day. Many organizations saw the ground disappear under their feet even as they scrambled to regain a foothold. In surfing terms, their setback was their platform for their comeback. After the wipe-out of the drastic measures taken by the authorities to call upon people to stay at home as much as possible, organizations did their utmost to survive. They did what they could, resuming entrepreneurship’s adventure with all its associated risks. All this asked much of leaders: much teamwork, much gumption, much improvisational ability. It was all rather burdensome. After all, no one knew what was the right thing to do, and everyone veered between opportunities (“falling angels”) on the one side and risks (“falling knives”) on the other. Nautical language offers guidance for leaders’ risk management. It is for that reason that this book has been written out of that idiom. Nautical language is also frequently employed by the Dutch prime minister and his team to describe reality. It helps to give meaning to an ever-changing situation and to the risk management choices they face as leaders. Markets and society as a whole were like a turbulent sea, for a virus was circulating and it was unclear how long that would last. Everything was hazy because the impact of the measures on the economy and on organizations was unpredictable. As a result, sailing (as this book’s metaphor) was more risky and difficult than usual; tried-and-true channels had been abandoned and routines fallen away. In such circumstances organizations at the least had to continue cruising forward, preferably in the right direction. So, great responsibility for leaders and managers. What did they do? What did the managers of our country, of public-order jurisdictions, of organizations do? How did they keep the ship moving forward? How did they pilot their organization through the risk-filled environment? How did they hold their organization on course? What was their compass? What guiding principles did they find to be true beyond any doubt? The answers to these questions have been researched and analyzed. This book comprises the insights from those analyses. It thereby offers managers struggling with opaque circumstances or risk-filled situations insights into effective leadership in times of turbulence, uncertainty, and

Preface

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complexity. Because the world and the economy are becoming ever more dynamic and complex, these are useful and relevant.

Acknowledgments Writing this book occurred during a period in which everyone seemed stuck in the same boat. Yet nothing could have been further from the truth, since each individual’s life wends its very own course, driven by personal circumstances. After all, each individual is unique. Thus, it was that during the lockdown there arose a collective channel sailed by many sorts of vessels: boats noisily hoisting their sails, cautiously cruising yachts, rescue ships, canoes with busy flashing paddles, loud motorboats, bobbing barges, and drifting party boats. My own boat carried forward with a crew on board offering plenty to build on. I would like to thank them for the support and refuge they provided. In particular, up there on the bridge were publisher Sandra Britsemmer, editor Margot Limburg, and English translator Michael A. Olson; below decks were my husband Pieter Jelle, son Bernhard, and daughter Hannelore. Thanks for being willing and flexible crewmembers in the historical year 2020. I will always remember your love and energy during our journey in that period. Aerdenhout, The Netherlands

Lidewey E. C. van der Sluis

About This Book

The market is like the sea: it gives, and it takes away. That became apparent once more when the economy went into “intelligent lockdown” due to the coronavirus outbreak. That lockdown left behind deep traces in the market. Some organizations were given to us; others were taken away. The organizations still standing have to deal with considerable uncertainty. They are navigating in the haze and deal with calculated and uncalculated risks. How is one to navigate in such circumstances? How as leader can you become master of disaster? That is a difficult and concerning question, for there is no route map available. Only sea charts. It is “all hands on deck!” just to stay upright in the market; so much is happening all at the same time. Organizations will either sink or swim, and only the pros will keep their heads above water. This workbook helps you as leader or manager to sail by sight. It would not lead you by the hand, but will help you with your responsibility for piloting the organization through misty times. The book supports you when it comes to management and strategic questions which are currently present within every organization’s cockpit. This “cockpit” stands for the boardroom where directors and management teams outline the course, where they determine the route and the speed, and where steering is based upon quality, value creation, and innovation, online or off-line. You will feel solid ground under your feet with the knowledge and insights provided here designed to fix your position on that sea chart. This knowledge is embodied in compact conceptual models that you can grasp in a glance. Through the practical cases, these models come to life. In addition, each chapter features discussion questions. With these you can discuss the conceptual models with your fellow managers and discover to what extent you are on the same wavelength. By using this book as a workbook, you along with your colleagues can harmonize along the same strategic issues and then arrive at well-thought-out management decisions. To this end you are provided a number of handy management models, firstly the three-phase model with which you can localize in which phase your organization finds itself. You then gain insights into your anchor points and beliefs as manager. Together with your fellow leadership you discover which market principles you believe in, and upon which guiding principles your organization is based. You do this using the navigation model. xiii

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About This Book

After this you are provided a governance model you can use to fit out your organization as a nimble and flexible entity. In consultation with your fellow leadership, you can implement this conceptual model in the organization, whether on a small or large scale. Finally, you are provided with a management matrix with which you can set things in motion. With this model, thinking is transformed into doing, into action. This book helps you and your colleagues to avoid adhering all to the same line when it comes to the relevant course to be sailed, and also to the organization’s movement. This movement stands for the rhythm and intensity with which work is done in the organization—the pulse of the organization. In short, take a look at the models and take advantage of them. Use them to make up your own dashboard, to navigate like a pro. Bon voyage!

About This Book

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Contents

1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Discussion Questions and Reflection Questions . . . . . . . . . . . . . . 1.3 Management Deliberation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Structure of the Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

1 1 2 2 3

2

Three-Phase Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Phase Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Route Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 In Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Three Phases Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.1 Phase 1: Response Phase . . . . . . . . . . . . . . . . . . . . . . . . 2.4.2 Phase 2: Recovery Phase . . . . . . . . . . . . . . . . . . . . . . . . 2.4.3 Phase 3: Reconstruction Phase . . . . . . . . . . . . . . . . . . . . 2.5 Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5.1 Leadership in The Netherlands During the Coronavirus Outbreak in 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. 5 . 5 . 5 . 6 . 7 . 7 . 9 . 11 . 14

3

Navigation Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Beliefs and Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Working Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Compass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Navigation Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.1 Five Starting Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.2 Four Dimensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 Business Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6.1 ASML and Tribes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . .

4

Governance Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 4.1 Organization as Ecosystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 4.2 Network Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

. 14 . 15 17 17 18 19 20 20 23 25 26 26 27

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Contents

4.3 4.4 4.5 4.6 4.7 4.8 4.9

Agile Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holocracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Theoretical Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risks of Ecosystems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above-Decks and Below-Decks . . . . . . . . . . . . . . . . . . . . . . . . . Work Methods for Risk Management . . . . . . . . . . . . . . . . . . . . . . Business Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9.1 KLM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9.2 Illy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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31 32 34 34 35 36 37 37 38 39

5

Management Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Purpose-Driven Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Shockproof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Management Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Management Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 4D-Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5.1 Dream . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5.2 Dance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5.3 Deliver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5.4 Destination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6 Business Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6.1 Nestlé . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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41 41 42 42 44 46 46 47 48 49 51 51 51

6

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Insights and Lessons from the Chapters . . . . . . . . . . . . . . . . . . . . 6.1.1 From Chap. 2: Three-Phase Model . . . . . . . . . . . . . . . . . 6.1.2 From Chap. 3: Navigation Model . . . . . . . . . . . . . . . . . . 6.1.3 From Chap. 4: Governance Model . . . . . . . . . . . . . . . . . 6.1.4 From Chap. 5: Management Matrix . . . . . . . . . . . . . . . . . 6.2 Ten Lessons to Lead for Risk Management . . . . . . . . . . . . . . . . . 6.2.1 Risk Appetite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.2 Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.3 Human Image . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.4 Way of Working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.5 Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.6 Dependence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.7 Craftsmanship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.8 Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.9 Digital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.10 Too Big to Be Great . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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53 54 54 54 55 56 56 57 57 57 58 58 59 59 60 61 61

Afterword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

List of Figures

Fig. 2.1 Fig. 2.2 Fig. 2.3 Fig. 2.4 Fig. 3.1 Fig. 3.2 Fig. 3.3 Fig. 3.4

Leadership Three-Phase model in Risk Management . . . . . . . . . . . . . . Leadership Three-Phrase Model in Perspective . . . . . . . . . . . . . . . . . . . . . Worksheet—My Three-Phase Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . Reconstruction of the Leadership Three-Phase Model after coronavirus outbreak in NL . . . . . .. . . . . . . .. . . . . . . .. . . . . . .. . . . . . . .. . . . . .

6 7 13 14

Navigating Scales . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . Navigation Model . . .. . .. . .. . .. .. . .. . .. . .. . .. . .. .. . .. . .. . .. . .. .. . .. . .. . . Navigation Matrix—After Lockdown Navigator# .. . . .. . . .. . . .. . . . My Navigation Model—Personalized After Lockdown Navigator# . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18 23 24

Fig. 4.1 Fig. 4.2 Fig. 4.3

Holocracy as Governance Model . . . . . . .. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . Holocracy: Two-dimensional system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Holocracy Governance Process Model . . . . . . . . . . . . . . . . . . . . . . . . .

32 33 38

Fig. 5.1 Fig. 5.2 Fig. 5.3

Management Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management circle .. . .. . .. .. . .. . .. . .. .. . .. . .. .. . .. . .. .. . .. . .. . .. .. . .. . .

43 44 46

Fig. A.1 Fig. A.2

Example: Navigation Model of Directeur@Carano . .. . .. . .. . .. . .. . . Example: Navigation Model of Directeur@Covidius . . . . . . . . . . . . . .

65 66

25

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List of Table

Table 6.1

Leadership Overview for Reflection and Discussion . . . . . . . . . . . . . .

60

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1

Introduction

There is no playbook for leadership.

Leadership is taking action in the face of risks. Leaders navigate in the haze while taking challenges and opportunities for granted. Managing resilience is becoming a rule rather than exception for evermore managers. Flexibility is required, since every situation is unique and tomorrow everything can be entirely different. Risks constantly lay in wait, and so do opportunities. What matters is identification as well as imagination. Modern management literature and real-world practices provide various insights that shed light on these crucial leadership techniques. This book covers some of these insights and can serve as guide when taking on risks, when exercising leadership in uncertain times, when facing complex situations, or metaphorically, when navigating in the haze. In this book, these insights stand central as leadership techniques and management concepts, with targeted attention for their application in the practical world of management teams and boards. The purpose of the book is to help leaders to continue steering the ship without sinking or damaging it, with the ship as metaphor of the organization.

1.1

Usage

This book is not about what is correct or mistaken, nor what is true or false. It is about enabling leaders to make decisions with a strong foundation when that is expected of them. The book gives leaders the knowledge and the instruments with which—when in unforeseen situations, and with full self-confidence—they can provide direction and manage risks. Delivering the right choice at the right moment is a challenging task. After all, no one can look into the future, not even leaders or managers. Making a choice is # The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 L. E. C. van der Sluis, Leadership for Risk Management, Future of Business and Finance, https://doi.org/10.1007/978-3-030-69407-4_1

1

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1 Introduction

inherent to taking a risk. What the correct choice is will only be clear after the fact. Much will depend on current and future circumstances. Beliefs, personal preferences, and social aspects often play a decisive role in the background. Decision-making processes within the cockpit of an organization are discontinuous, dynamic processes dependent upon circumstances and the personnel involved. So leadership means taking risks and making choices with the knowledge available at the moment, and at the same time making clear the intentions of the collective, of the organization. It is against this background that this book was written. It is thus emphatically not just a book for reading, but also a workbook. It treats the reader not only as a reader, but also as a user.

1.2

Discussion Questions and Reflection Questions

Next to cognitive knowledge in the form of conceptual models and insights, this book is full of questions. These are questions addressed to the reader which help him or her undertake a conversation about and discussion of key matters with his or her supervisory team. The thought behind these discussion questions is that, in uncertain situations, it is important that there be agreement within the cockpit about the compass being used to steer, as well as the contours within which that is to happen. It is also desirable that there be accord over the course to take as well as the commitment to that. The discussion questions contribute to the streamlining of leadership principles within the organization. Next to discussion questions there are reflection questions. These have as their goal helping the reader develop his or her own leadership and risk management skills. These questions are meant to stimulate reflection on how one goes about things, on choices already made and to be made. By bringing the discussion questions and reflection questions to the table, supervisors, and management teams can use this book to reflect in a targeted and structured way on calibrated strategic questions such as “Why are we even doing this?” and “How can we remain relevant?” In order to learn from real-world practice which references the knowledge, concepts, and instrument-panel set forth in these chapters, each such chapter has a concluding paragraph with practical examples. These are illustrative and can contribute to a better grasp of the concepts put forward.

1.3

Management Deliberation

When circumstances in and around an organization continue to be unclear and uncertain, extensive mutual deliberation and discussion become important. This book helps that to happen and provides direction to such deliberation. Using the concepts and questions provided, leaders can consistently and systematically

1.4 Structure of the Book

3

re-evaluate how things are proceeding. Additionally, the book offers the prospect of setting up one’s own management dashboard. This book’s readers and users will gain a better view of such important strategic questions as: • • • •

What is the situation in which we find ourselves? What are our guiding principles as an organization? What is our governance model? How can we get to where we want to be?

1.4

Structure of the Book

The structure of this workbook is based on these four strategic questions. In each chapter, a conceptual model is presented to help management teams and supervisors answer these questions. In this sense, the book is a self-help text for business-unitlevel managers, leaders, and supervisors. It provides a common language, conceptual governance tools, and contemporary insights for the optimal fulfillment of their core duties. Chapter 2 provides the reader/user with a Three-Phase Model. With this model the situation in which an organization—or a sub-component—finds itself can be mapped out. Chapter 3 provides the reader/user with a Navigation Model. With this model, the guiding principles of the organization can be laid out systematically. Chapter 4 provides the reader/user with a Governance Model. With this model, the organization can be fitted out to set sail. It is designed to show the organization as a learning ecosystem, one that is supple, nimble, flexible, and adaptive. Chapter 5 provides the reader/user with a Management Model. With this model, the organization can manage its internal processes in order to improve its quality of work. The models that each chapter offers as instruments, supplemented with practical examples and discussion questions, provide leaders with a basis upon which to proceed. And that is both useful and necessary for navigating in the haze. It is risk management that demands a knack for steering; it demands mastering leadership. This book is written to be able for risk managers who want to serve organizations as professional masters in leadership.

2

Three-Phase Model

Things we cannot change, change us.

2.1

Phase Model

In unprecedented situations, it is the responsibility of the leaders to pilot the organization through the difficult, stormy period without too much damage. According to management literature, that responsibility can be differentiated into three capacities. These three capacities follow a route map as shown in Fig. 2.1. This model is based on academic research by Farney, Kibler, and Down (2019) and is known as the Three-Phase Model for rebuilding communities of practice. Their study suggests that leaders in countries, regions, and organizations hit by a crisis follow the steps as shown in the Three-Phase Model. As components of their crisis- and risk management they manage their community in three stages; the classical route as known in the crisis management literature. This route reflects a leadership approach from Response to Recovery and from Recovery to Reconstruction. Underlying this stage model is the assumption that leadership in turbulent times means a dynamic approach to management. Leadership during Phase 1 is of a different sort than during Phases 2 or 3. Changed circumstances require shifting frames of action. Applying this model requires flexibility in both thought and action. Leadership in times of uncertainty is thus situational, adaptive, dynamic and to a certain degree pragmatic.

2.2

Route Map

This phase model functions as a nautical chart for business leaders. Leaders could zoom in on details in the operation, but it is better to zoom out and to see in what phase the company is. The model helps leaders to navigate from a strategic executive # The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 L. E. C. van der Sluis, Leadership for Risk Management, Future of Business and Finance, https://doi.org/10.1007/978-3-030-69407-4_2

5

6

2

Response

Phase 1 Focus: Feelings of Security Need: Compassionate Empathy

Recovery

Phase 2 Focus: Affecve Solidarity Need: Collecve Hope

Three-Phase Model

Reconstruction

Phase 3 Focus: Collecve Confidence Need: Harmonious Passion

*Source: Farny et al. (2019), Collective emotions in institutional creation work. Academy of Management Journal, 62(3), 765-799

Fig. 2.1 Leadership Three-Phase model in Risk Management

level, recently coined by Damian O’Doherty as the “go-pro perspective” (O’Doherty, 2020). Becoming “go-pro” helps to see and delimit the contours of situations, including related risks and responsibilities. The go-pro perspective together with knowledge of the Three-Phasemodel are useful for leaders to read the circumstances in which they operate and to keep the overview. This helps to understand what should be done in changing situations and adapt in the right way and at the right time. The Three-Phase model is not a route map. A route map is a plan for going from point A to point B using the in-between distances shown in the Three-Phase model. Organizations navigating in straitened situations use the Three-Phase Model as their GPS system. This gives them an overview and puts situations in perspective—to be sure, with uncertainty, but still enough confidence to open up and mark out a space of not-knowing. This can be risky but marks the work of a leader who creates the conditions for the employees in the organization. Here, leadership is about taking responsibility for the approach to adaptation. It is not just about sharing information about what stage the organization is at. From a leadership perspective, the threephase model identifies what approach leads to adaptation. In phase 1, leadership is a response goal to be in control. In phase 2, leadership is a response process to cope with the new situation. In phase 3, leadership is a transformative process to develop towards a new equilibrium, a new normal.

2.3

In Perspective

One can place the model in perspective by arraying the phases along two dimensions: time and context. In this way, phases correspond to the circumstances of a given period. In model format, that looks like what is depicted in Fig. 2.2. On the horizontal axis, the three phases are depicted in categories: 1, 2, and 3. On the vertical axis circumstances are also depicted in categories: Darker, Transition, and Lighter. Those represent three distinct levels for calculated risk: High, Medium, and Low. Those levels are often indicated as Code Red, Code Orange, and Code

7

Reconstruction

Transition Darker

Context

Lighter

2.4 Three Phases Defined

Recovery

Response Time Phase 1

Phase 2

Phase 3

Fig. 2.2 Leadership Three-Phrase Model in Perspective

Yellow, indicating the levels of risks in organization, countries, regions, or business sectors. Moreover, the phase in which an organizations find itself, can differ by sub-unit. One part of the organization can be in Phase 1 and another in Phase 3, etc. It is up to leaders to correctly identify the situation per team or department. This requires an overview and the ability to manage different tracks at the same time. Valuable leaders are able to do the right things at the right moment for the right employees.

2.4

Three Phases Defined

2.4.1

Phase 1: Response Phase

Phase 1 entails creating a common consciousness and offering timely or perhaps contemporary solutions. Specifications of Phase 1 are Mood: Guidance from: Metaphor: Goal: Result:

Code Red—Emergency, dark skies, bleakness Response Group Navigating in the haze Bringing order to chaos Sense of togetherness and solidarity

When an organization finds itself in Phase 1, it is threatened by unprecedented events in the external environment. This is what we call Code Red. In this phase leaders are overwhelmed by circumstances they do not know, did not foresee, and which they hope they can cope with. What to do, then, to respond and keep your head above water? There are a number of very relevant actions for going through Phase 1 and, thereafter, entering Phase 2.

8

2

Three-Phase Model

2.4.1.1 Actions in Phase 1 Action 1: Create a New Consciousness Goal: In this phase, all team members realize that the world looks quite different than it did before. There is a new reality and it is a serious transition. Here it is imperative for leadership to provide as much communication as needed to create an umbrella of resilience. This can be done by creating awareness of the nature of the challenges and acknowledging the collective stress situation. Furthermore, leadership in this phase includes the recognition of the organizational vulnerability but also the ability to cope with the new situation. This action comes with leadership that expresses a “sense of urgency” and communicates quickly and effectively. Action 2: Indicate to Employees Their Responsibilities Goal: In this phase employees realize they mainly have to focus on themselves, to bring themselves to safety. The field of vision within an organization is kept small: people are managed towards self-orientation. After that, the next step could be that they assist direct colleagues with reaching safety and feelings of security. Action 3: Provide Employees with Emergency Assistance and/or Material Support Goal: In this phase, leadership is about offering material support where necessary. They direct their attention to people and their primary life-requirements. Are they safe? Do they have enough food? Are they under shelter? Can they sleep and live a sheltered, shallow, physical existence? Paying attention to—and providing—these basic needs is a pre-condition for getting people (back) to work. Action 4: Ensure Employees Feel Safe and Secure Goal: In this phase, leadership acts as a caring father-figure—namely as a leader who exudes the confidence that he/she is someone upon whom employees can rely, as a solid rock in the storm, as a shelter in a seemingly hopeless situation. “To lead” functions here as a verb meaning providing employees with support and relief so that they gain a sense of safety. That is important: the more threatening the situation, the more such a shelter is needed to bind people to each other and motivate them. Any leader in Phase 1 that misses this point increases the risk of damage to the social fabric that holds a community or organization together (Sapirstein, 2006). What people want to see is a dominant attitude like: “This is my aircraft!” Action 5: Bonding and Uniting Employees Goal: In this phase, leaders function also as a caring mother-figure. In a crisis event, there is always the danger that everyone will only look out for themselves, that each loses sight of the other. And that is not good for the collective force that is necessary to pull the organization out of the mire. That is why a leader connects employees and bring them together. By this, people will hear each others’ story and thereby will feel united again. According to the motto “Sharing pain halves the pain,” this action functions as facilitator of the collective emotions in the organization. By bonding

2.4 Three Phases Defined

9

and uniting employees, the leader justifies collective emotions and increase feelings of togetherness and collectivity again. These actions lead to the attainment of Phase 2. Discussion Questions List What You Have Learned of Phase 1 Leadership Question A:

Question B:

2.4.2

Which actions work for you? What would you do in addition during this phase? What would you not (or in some other way) do? How do you provide direction in Phase 1, a time of uncertainty? What do you find to be most important to do in this phase?

Phase 2: Recovery Phase

Phase 2 entails channeling energy and building on mutual confidence and shared vision. Specifications of Phase 2 are Mood: Guidance from: Metaphor: Goal: Result:

Code Orange—Regression, the storm breaks Recovery Group Cut to the chase Increase support and stewardship Collective hope

When an organization finds itself in Phase 2, the workforce has regained a hold on the situation. Glimmers of light break through on the horizon. It is Code Orange: still a time to be cautious, but people are once more gaining enough energy to take up their work again, to resume their activities. What to do to awaken that energy and get the wind back in the sails? There are a number of very relevant actions for going through Phase 2 and, thereafter, entering Phase 3.

2.4.2.1 Actions in Phase 2 Action 1: Building Collective Trust Goal: In this phase, belief grows in the steering ability of the leader and his/her management team. Leaders gain the confidence of employees. Mistrust and belief still clash, but belief in each other emerges as the winner. The “must-dos” of Phase 1 for the crisis management team yield to a display of leadership, responsibility, spirit. Leaders gain trust above all when they leave well enough alone where that is possible but show iron resolution where that is required. Through this action, employees are able to build upon that leadership and come to believe that everything will turn out well.

10

2

Three-Phase Model

Action 2: Work on a Common Vision Goal: In this phase, leadership works on creating clarity over the organization’s compass and common starting-points. What really matters? What do we believe in? From which principles do we work? What are the rules of the ship? Leaders must make this vision clear via values and norms, and then follow those. Once their validity is (again) crystal clear, people are glad to turn to them for guidance. These principles can also serve as points of orientation to which people can hold each other accountable, from which they can make demands on each other. In this sense, this action streamlines the conduct of all an organization’s employees. Action 3: Work with Symbols and Metaphors Goal: In this phase leaders make clear what is the ultimate aspiration of the journey of the organization. This can be done via symbols and metaphors. These can appeal to employees and can give them something to relate to or to echo. The result is a living belief with a shared purpose and common language. This has a unifying effect. At the same time could a symbol or metaphor be a source of hope and comfort. In the past, there was much done by leaders with metaphors. Some caution with this is important though. For example, sports metaphors are quite popular. However, in sports, the rules of play are always and everywhere the same, something that can hardly be said of contemporary organizations. Pyramids and houses are also used quite often as metaphors, but since these are also rather static concepts then perhaps a ship sailing through the fog and against the wind, on a rolling sea, is a better metaphor for organizations in modern times. Or else an airplane dealing with the same sort of interactions with the elements. Action 4: Nurturing Mutual Solidarity Goal: In this phase, leaders concentrate on the collective, on solidarity. We are all in the same boat, in that we are all pulling in the same direction and believe in what we are working on. The “boat” here is the organization, the “same direction” is to the common destination, i.e., the organization’s very meaning, and what we are working on is its activities and services. This action also drives home the realization that each of us can only make it by depending upon others. In order to be able to steer on the basis of mutual solidarity, leaders need to emphasize that this mutual cooperation and assistance is important if the destination is ever to be attained. Action 5: Provide Employees Hope Goal: In this phase leaders rouse employees’ innate desires. They point to the results to be gained if everything goes well. In this way, employees gain hope as well as the desire to attain that situation. And it is via that desire that ambition arises, and via that ambition movement. Desire and hope are important drives for people at work. Put another way: hope gives you life. Then again, hope is different from optimism. Hope you gain from others; optimism from yourself.

2.4 Three Phases Defined

11

Thinking positively and managing yourself to remain optimistic in life are things that work inside-out. As for being hopeful and maintaining a vision of how to keep going, no matter what: those are outside-in. The outsider here is the leader, and for the employee, the one who provides hope is his/her leader. Hope grows when someone or something else provides perspective. In the closing phase of Phase 2 all employees have regained hope and function as each other’s hope-givers. Discussion Questions List What You Have Learned of Phase 2 Leadership Question A:

Question B:

2.4.3

Which actions work for you? What would you do in addition during this phase? What would you not (or in some other way) do? How do you provide direction in Phase 2 in a time of uncertainty? What do you find to be most important to do in this phase?

Phase 3: Reconstruction Phase

Phase 3 entails developing collective intentions, enterprise, and general alertness. Specifications of Phase 3 are Mood: Guidance from: Metaphor: Goal: Result:

Code Yellow—Clearing weather, lighter skies Reconstruction Group Hoist all sails, all hands on deck Individual responsibility, involvement, and active participation Shared dreams, spontaneous actions, and common goals

When a ship finds itself in Phase 3, a new horizon beckons. Perspective has been gained, and the crew is in the mood to get going. Employees find each other again and resume cooperating to contribute to the organization’s very meaning—as an individual, a team, or a collective. It is Code Yellow. Yes, circumstances are still uncertain and turbulent, but the means to proceed full speed ahead has been found. How to keep hold of that, how to maximize that flow of energy within and between individuals? In Phase 3 they drive each other crazy! There is true passion, in the sense of a shared love for their work. What they missed in Phase 1—namely, working towards a dream—they find again in Phase 3. There are a number of very relevant actions for attaining Phase 3 and remaining there.

2.4.3.1 Actions in Phase 3 Action 1: Develop Collective Intentions Goal: In this phase, land is in sight, so the question arises: Where do we drop anchor? Establishing a common goal is of great importance in this phase. An organization is not a democracy and therefore this action requires leadership. Leaders should not

12

2

Three-Phase Model

just proceed via conversation towards a desired destination, the organization’s ultimate aspiration. Rather, they must make clear just why the ship is proceeding and to where it all must lead. Leaders must raise this common goal above the waterline and keep it there. Once its validity is (again) crystal clear, people are glad to turn to it for guidance. That goal functions as an orientation point towards which all work is directed. In this sense, the action streamlines the conduct of all an organization’s employees. One part of this action is that the leader makes clear that the organization is not there for the employees, rather the employees are there for the organization. This action must lead to a collective desire to attain the common goal. Action 2: Shake Employees Awake Goal: In this phase, all employees realize that things have gotten serious. Employees are shaken awake, realize that the margin for success is tight and that they must rely upon each other. “All hands on deck” is the signal radiated by leadership. “Relaxation” and “balance” are words that do not belong here. Evolution and dynamic resilience are more applicable. This action can lead to employees becoming alert to opportunities and to sudden changes that may present a challenge or discontinuity. It is up to leadership to put employees in such an awoken, alert state and keep them there. That can be done by urging them to make them aware of the relevance of their resilience and make them responsible for being resilient. For this, it is useful to empower employees and to be open for their ideas and suggestions. What works, is leadership that could be described as communication by conjunction with open avenues for constructive ideas and plans for action. Action 3: Build Up Collective Confidence Goal: In this phase, employees become convinced that things will work out well. This belief boosts the confidence in the organization’s powers in terms of support as well as effectiveness. Believing turns into trust and knowing for sure; believing in each other becomes the foundation of work relationships. Employees take up their responsibility for their own work and for the quality of their co-workers. Together, they put their shoulders to the work and develop each other. By this, all employees build the company, as individuals (including leaders), as related co-workers, and as one workforce. In this phase, the power of their quality all the employees and the power of their relationships are the building blocks of the company. Gradually, there arise mutual relationships in the organization that lead to cooperation and effective social networks. Action 4: Spark and Inspire Each Other Goal: In this phase, energy flows within and between individuals. Employees inspire each other to do their very best in such a way that the organization functions optimally. For this, it is useful if leaders communicate often and clearly that employees should want to contribute to the ultimate aspiration of the organization. That should be the focus and source of inspiration. Then, employees do their work out of love for organizational purpose, for the work that has to be done, for the colleagues, and/or for the intended goals. What arises from such action is flow: an

2.4 Three Phases Defined

Response

13

Recovery

Reconstruction

Phase 1 My focus as leader:

Phase 2 My focus as leader:

Phase 3 My focus as leader:

My gi to the organizaon:

My gi to the organizaon:

My gi to the organizaon:

Fig. 2.3 Worksheet—My Three-Phase Leadership

internal state in which people lose their sense of time as they become absorbed in their own activity and their work with others. Action 5: Become an Ecosystem Goal: In this phase, employees get to know each other better. They begin to see the human being behind their colleague. Connection arises based on communalities, beliefs, values, emotions, talents. There grows a common ground with helping and building colleagues. The organization gets a building culture. There also arises “connection in common responsibility.” Employees who feel connected help each other to become better. Leaders stimulate this by connecting employees to each other and by committing themselves to what they will do and to be clear about what they do feel responsible for. Discussion Questions List What You Have Learned of Phase 3 Leadership Question A: Question B: 2a:

2b:

In which phase does your organization now find itself? How did that come about, in your opinion? Make your action plan. On the basis of the Leadership Three-Phase Model and the knowledge and insights associated with that, indicate per phase your desired leadership focus. Figure 2.3 can be used for this as your worksheet. Apportion responsibilities per phase among the members of your team. On the worksheet put down after the desired leadership actions your name and those of your colleagues. Do this on the basis of the (potential) qualities held by each of you.

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Three-Phase Model

2.5

Case

2.5.1

Leadership in The Netherlands During the Coronavirus Outbreak in 2020

By February 2020 the outbreak of the coronavirus in the Netherlands was a fact. The seriousness of the situation quickly became apparent. The Dutch government took action with measures that forced organizations into a crisis situation. The country found itself in heavy weather. Phase 1 broke out on 12 March when it was announced that everyone was required to work from home, with the exception of people working in what were defined as vital occupations. A reconstruction of the leadership and policy points during the several periods according to the Three-Phase Model. See Fig. 2.4. Discussion Questions Question 1:

What sort of traits did you see in the leadership of the Dutch government during the corona pandemic?

Phase 1. Response 2. Recovery 3. Reconstruction

Question 2: Question 3:

Period

Trait 1

Trait 2 (if needed)

The way things turned out was by no means self-evident. Why would government leaders have made the choices that they did? What can we learn from this approach about B.V. Nederland’s leadership?

Response

Recovery

Reconstruction

Phase 1

Phase 2

Phase 3

Communicaon focus: Direcve prescribing lockdown

Communicaon focus: Staggered closings

Communicaon focus: Design of the 1.5m society

Main pracces: Offer of medical care

Main pracces: Prospects for loosening

Main pracces: Address of personal responsibility

Main management focus: Data and numbers

Main management focus: Enforcement

Main management focus: Health informaon

Fig. 2.4 Reconstruction of the Leadership Three-Phase Model after coronavirus outbreak in NL

References

15

Reflection Question Question 1:

What traits would B.V. Nederland’s leadership have shown if it had been up to you? Please clarify your answer per phase.

References Famy, S., Kibler, E., & Down, S. (2019). Collective emotions in institutional creation work. Academy of Management Journal, 62(3), 765–799. O’Doherty, D. (2020). The Leviathan of rationality: Using film to develop creativity and imagination in management learning and education. Academy of Management Learning & Education, 19(3), 366–384. Sapirstein, G. (2006). Social resilience: The forgotten dimension of disaster risk reduction. Jàmbá Journal of Disaster Risk Studies, 1(1). https://doi.org/10.4102/jamba.v1i1.8.

3

Navigation Model

Performance never comes in isolation.

3.1

Beliefs and Principles

Whatever phase in which the organization finds itself, there has to be leadership. And in order to lead, anchor points are needed. Leading principles could be considered as that anchor points. They provide insight into the leadership orientation. These anchor points are guiding principles behind leadership, representing points of departure. In order to get an organization in motion and develop it in the desired direction, it is essential that these principles are crystal clear among leaders and managers. Moreover, it is even better if these principles are known throughout the entire organization. That streamlines the mindsets of all the people on board, the crew of the organization, and that is more than welcome in a dynamic world of work. Events like environmental disasters or contentious crises can provoke tensions in the boardroom, depending on how a particular crisis relates to the ideological proclivities of individual directors and management teams. This underscores the importance of exploring board ideology and basic beliefs at the individual and team level among executives. Leaders and managers may differ in their cues of doing right and making the right decisions. For example, liberals and conservatives often disagree about what constitutes normatively appropriate behavior. ‘ Ideology refers to a bundle of core values that capture a set f beliefs about the proper order in society. In western societies, the construct corresponds to a conservative-liberal continuum, and a rich research tradition shows conservatives and liberals differ in their fundamental moral assumptions and preferences. More specifically for boardrooms hold that liberals and conservatives fundamentally disagree about the approach that should be taken to two main issues, namely the barriers to the economic market and the size of the government. In general, liberals # The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 L. E. C. van der Sluis, Leadership for Risk Management, Future of Business and Finance, https://doi.org/10.1007/978-3-030-69407-4_3

17

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Navigation Model

prefer an open market and a small government and conservatives prefer a closed economy and a large government. As a result, the ideological orientations of firm leaders manifest in different preferences and decision-making within ideologically strategic domains. Knowing who prefers what and what principles are behind these preferences is therefore a meaningful step to get an organization in motion.

3.2

Working Method

Knowing the underlying principles of the practices and performance of the organization plays a motivating role in board service. Serving an organization as a leader requires an in-depth understanding of the basic principles from which your thinking and the things you do for the organization springs. Also, knowing the ideology of your fellow leaders and managers is helpful. What do they believe in? Are they liberalists, or in current terms, in Schumpeterians? Or are they conservatives, or in current terms, neosocialists? And what is my ideology? Figure 3.1 shows the model that could be used by board members and management teams to investigate their ideology as the driver for their strategic decisionmaking. The model shows the two scales as described and could serve as navigating scales in searching for the dominant ideology in the boardroom. With the Navigating Scales, you can begin to explore the dominant ideology in the boardroom. It serves as a tool to investigate ideologies and the mainline of thought in the boardroom. With this model, you are offered a conceptual framework to that end: the Navigation Model. It has two functions:

Surveillance

Schumpeterian

Market

Open

Closed

Technofix

Neosocialism

Large Fig. 3.1 Navigating Scales

Government

Triple P

Small

3.3 Compass

19

1. The identification function, for rediscovering guiding principles and the leading ideology. 2. The mirroring function, for showing the differences between guiding principles now in place and those actually desired. First-mentioned above is the identification function. As a leader or team, you can use the Navigation Model to systematically reflect upon the guiding principles in your leadership and/or organization. Second-mentioned is the mirroring function. As a leader or team, you can use the Navigation Model not only to reflect upon current guiding principles, but also to confront with the question whether these are in fact the guiding principles that are desired. If there is a difference between those two outcomes, then you have some work to do to close that gap. The mirroring function then leads to an analysis of that difference, a so-called gap analysis. An organization’s guiding principles form the compass for action, which is both binding to the leader, guiding to the managers, and transparent for the followers.

3.3

Compass

Our society witnesses all sorts of beliefs, values, and norms cheek by jowl. Many opinions and visions color our multiform society. That can also be the case within organizations. When circumstances are suddenly disturbed or otherwise change, it can happen that people lose track of each other, literally or figuratively. Often disruptive change leads to a cacophony of opinions about solutions for escaping the crisis. This holds true not only within the organization but also among people, families, and other groupings around it. Such developments are blips on the radar. It is important for leaders to pick up on these, but any overview is by definition incomplete. It is impossible to capture everything in the picture. Therefore, it is unreasonable to let such radar images completely determine the course. Good managers in times of change and uncertainty do not steer entirely on the basis of radar, but also by the compass: the compass of their beliefs and anchor points. This should also be the case for guiding principles within an organization as a whole during times of uncertainty. How do we discover these guiding principles for leadership in times of uncertainty? According to biologists, most fish and birds depend for a large part of their navigation on assistance from the Earth’s magnetic field (Eder et al., 2012). These animals have available a sort of internal compass they use to sense magnetic fields so they can adjust their direction of movement to them. Via the compass cells in their nose, they determine the direction and speed of their movement. The harmonization between them is both vertical—that is, between them and the Earth—and horizontal—that is, between them and the rest of the school or flock. According to psychologists, sociologists and anthropologists, people find their way in a like manner: that is, instinctively and intuitively. In fact, people can do even

20

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Navigation Model

more than that. They wield the power of the imagination as well as the unifying force of language. Here they distinguish themselves from animals. What is more, from a social-economic viewpoint people (certainly professionals, at least) have the responsibility to take care not only of their own situations, i.e., not only of themselves, but to expand that responsibility wider. In times of uncertainty, that responsibility lies primarily with leaders and managers. It is precisely for them that a compass of guiding principles is no longer a mere luxury: such a compass keeps their grip on reality.

3.4

Navigation Model

Given this background and leaders’ extra responsibility, the question is just what this leaders’ compass looks like. This compass has been developed out of contemporary knowledge, together with insights into economy and entrepreneurship, as the After Lockdown Navigator#. The After Lockdown Navigator helps leaders and managers to fix the coordinates where they are moving. Because leaders are responsible for the direction and speed with which an organization moves, this instrument is relevant by virtue of its identification and mirroring functions. It can contribute insight into the coordinates of just where the organization is moving within the management landscape. This insight can help to steer and lead the organization in a directed and persuasive way, whatever phase it may find itself in. The After Lockdown Navigator comes from the inside. The beliefs of leaders and managers determine the orientation-coordinates. The After Lockdown Navigator is therefore a compass specific to the organization. It is adjusted to a particular organization, established by leaders and therefore a unique instrument—unique because it is custom-made and is not available except within a human context.

3.4.1

Five Starting Points

Generally speaking, organizations can be steered using five starting points, paradigms, ways of thinking, or guiding principles. Type 1 Technofix—Beta Style—Thinking Medically/Technically—Technocracy

Description

Assumption Goal Focus

This thinking is technocentric and is based upon the principle that Man can rein in and master Nature and the Market using scientific knowledge, technological progress, and social innovation. Man is dominant, and the future is plastic. Optimal control and a quest for perfection. Technical renewal, innovation, patents, and charters.

3.4 Navigation Model

Tempo Wanted Examples

21

High. People such as inventors, technocrats, doctors. Organizations that couple their positioning and strategic course with technical knowledge, digitization, and technological innovation: the Erasmus Medical Center, Tesla, and GlaxoSmithKline.

Type 2 Schumpeterian—Alpha Style—Market Thinking—Survival of the Fittest— Darwinism

Description

Assumption

Goal Focus Tempo Wanted

Examples

This thinking is capitalistic and ecocentric. The dominant principle is that Nature and the Market are complex dynamic systems in which people can play a role if they adapt to Nature’s and the Market’s proportions. Man has the possibility of influencing reality by moving agilely with the Market and adjusting to natural phenomena. The starting points are “Adapt or die” and “Eat or be eaten.” To compete, emulate, be supple and participate. Market positioning and processes. Somewhat high. Those best capable of adjusting themselves quickly to circumstances and exploiting opportunities, such as hustlers, hard workers, entrepreneurs, social climbers, clever thinkers, etc. Organizations that couple their policy and strategic objective-setting to entrepreneurship, nimbleness, and adjustability: Albert Heijn, Audi, and Hilton.

Type 3 Triple P—Rhineland Model—Shareholder Model—ESG—“Polder” Thinking—Circular Economy

Description

Assumption

Goal

This thinking is pragmatic and optimistic, based upon the principle that Man can and must take responsibility to do good within the “Three-P Triangle” framework of “people, planet and profit.” The guiding principle behind Triple P is stewardship: namely, when you relate (according to means, and sense of honor and conscience) to your environment as agent and keeper for what you have been entrusted with. Consensus and support are necessary to help the world progress forward. It is more important to arrive all together than individually, even if faster. To gain enough support to do good in the world’s eyes: to matter.

22

Focus Tempo Wanted Examples

3

Navigation Model

Consultation, convincing and achieving a Dutch-like “polder” consensus. Somewhat low. People ready to come forward for a better world: sodality, sustainability, and society. Organizations that couple their policy and strategic objective-setting to socially responsible enterprise, or to the UN Sustainable Development Goals: NGOs, charitable organizations, and pension funds.

Type 4 Neosocialism—Establishment Thinking—Bureaucracy

Description

Assumption Goal Focus Tempo Wanted Examples

This socialist paradigm is based upon the paternalistic Keynesian principle that, while Man indeed has much in the way of skills and knowledge to do good, too often a pursuit of one’s own interest (driven by in-born egoism) overrules any service to the common good. A society derives benefit from a protector, a servant of the common interest—namely, from a government. Collective prosperity. Government policy. Low. Government officials: helpers and protectors of the people, enforcers of the law. Organizations that couple their policy and strategic objective-setting to service in the common interest, or to contributing to governmental objectives or specific societal interests: unions, governmental agencies such as local administrations and the taxation authority, or public services such as police, fire or public broadcasting.

Type 5 Surveillance—Data Governance Model—Eye in the Sky—Big Brothers

Description Assumption

Goal

This line of thought is elitist and manipulative, based upon the principle that Man derives benefits from being followed and tracked. Data passed on by individuals to third parties deliver information from which those third parties derive their reason for being. Organizations that transform data into information provide individuals with the guidance they need, although not with any retention of their privacy. Following and influencing people: nudging.

3.4 Navigation Model

23 Technofix

Fig. 3.2 Navigation Model

Surveillance

Neosocialism

Focus Tempo Wanted Examples

Schumpeterian

Triple P

Data-capture and -analysis. High. Software developers and data analysts. Organizations that couple their policy and strategic objective-setting to the observation, study, measurement, following, pursuit, and influencing of individuals: Apple, Google, Netflix, Amazon, Booking.com, Zalando, and Bol.com.

In Fig. 3.2 the Navigation Model is depicted. The five starting points, paradigms, and ways of thinking are shown as categorization of the distinguished guiding principles for organizational leadership.

3.4.2

Four Dimensions

Extensive research demonstrates that the Navigation Model is a relevant tool due to its uncovering of underlying dimensions. Those dimensions falling under the Navigation Model are the following. Tech Business Data Society

This dimension qualifies as guiding within organizations where technological developments form the basis for the earnings-model. This dimension qualifies as guiding within organizations where the market mechanism forms the basis for the earnings-model. This dimension qualifies as guiding within organizations where datagathering forms the basis for the earnings-model. This dimension qualifies as guiding within organizations where societal developments form the basis for the earnings-model.

In Fig. 3.3 these dimensions are depicted in relation to the five starting points of the Navigation Model. In combination, they form the After Lockdown Navigator#.

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3

Closed

Surveillance

Tech

Data

Neosocialism

Large

Schumpeterian

Technofix

Business

Society

Open

Market

Fig. 3.3 Navigation Matrix—After Lockdown Navigator#

Navigation Model

Triple P

Government

Small

Reflection Questions Your own intellectual framework as compass Question A:

Fill in the table below to gain insight into your own guiding principles. There are five possible paradigms; think about them as a leader, entrepreneur, and colleague.

Indicate according to your functional role (e.g., leader, entrepreneur, steward) to what degree you think along the lines of the five possible paradigms. On a scale of 1 (not at all) to 5 (quite emphatically). Functional role Schools of Thought Technofix Schumpeterian Triple P Neosocialism Surveillance

Question B:

Myself as leader Leadership

Myself as entrepreneur Entrepreneurship

Myself as colleague Stewardship

Indicate your own preferred intellectual framework graphically in the web-diagram of Fig. 3.4 given the current circumstances of your leadership role. See Appendix B with Figure 3.5 and Figure 3.6 for personalized examples.

Draw blue lines for your leadership. Draw red lines for your entrepreneurship. Draw green lines for your stewardship.

3.5 Actions

25 Technofix

Fig. 3.4 My Navigation Model—Personalized After Lockdown Navigator# Surveillance

Neosocialism

Schumpeterian

Triple P

Discussion Questions Question A: A1: A2:

Reflect on your own intellectual framework, as depicted in the web-diagram, and share these insights with colleagues. Compare your intellectual framework with that of your colleagues or fellow students (groups of 4–6). What sticks out? Are there correspondences or differences? If so, which?

List your insights that were particularly striking for you. Question B: B1: B2:

Take another look at your intellectual framework, along with a colleague of your choice (group of 2). What is most striking for you in your own intellectual framework? How does your intellectual framework compare to that of your organization as a whole?

List your insights that were particularly striking for you. Question C:

Discuss your reflections in a plenary session. This enables the further deepening of insight into your guiding principles as a leader, entrepreneur and colleague within your organization.

List your insights that were particularly striking for you.

3.5

Actions

Question D:

And now what? Translate your insights into concrete actions. Now that you have identified the principles you accept as guiding, as well as others you regard as irritating, you can navigate in a more targeted and convincing manner towards (1) Your

26

D1:

D2: Tip: D3:

3

Navigation Model

organization’s ultimate significance, and (2) The desired way of working. Upon which guiding principles and lines of thought do you want to build the organization’s future? What do you call this management paradigm? Who will be your sparring-partner about your management paradigm, either inside or outside of your organization? Do not forget the Supervisory Board/Board of Directors Make your plan concrete. Which measures will you take to match the demand for labor (quantity and quality of desired employees) with the supply of labor (quantity and quality of your current personnel)?

• Are there employees whom you need to fire, to re-educate, to ignore, or to jolt awake? • If so, what is your plan for that? Make your plan concrete. D4:

Which aspects of your intellectual framework will you explicitly take up in your personnel policy, including labor market and appointment policies? For example, think about:

• The desired focus or underlying goal of your investment. • The new normal in work culture and processes. D5:

To what will you devote extra attention when it comes to external stakeholders?

• Consider to what degree you prefer to do business with people of like mind.

3.6

Business Cases

3.6.1

ASML and Tribes

People who are fit are, in general, the most social, willing to learn, awake, and productive. Employers thus want their employees as fit as possible. The return for investing in them is the highest. So it is not surprising that more and more companies take measurements to find out whether someone is healthy. At the personal level what is measured is heartrate, body temperature, blood pressure, weight, height, sleep rhythms, styles of eating and living, etc. From a privacy standpoint, this is scandalous, yet the law does allow some space for this sort of business espionage. The Dutch Autoriteit Persoonsgegevens (AP: the governmental privacy watchdog) advises employers as

References

27

to how they may monitor the health of their employees, but often is not fully consistent. For example, an employer is not allowed to collect any medical data from employees, yet under strict conditions employees’ temperatures can indeed be taken. At computer chip-maker ASML and Tribes, the international “inspiring workplaces” flex-worker shared-office rental company, your body temperature is your entrance credential. This has been approved by the company’s workers’ council and by the AP. Whoever wishes to enter its office in Veldhoven (motto: “Be part of progress”) will encounter a temperature-camera at the reception. This measures the temperature of each employee and guest who enters. People with a fever are asked to return home; those with a healthy temperature are allowed in. The result of this HR data analytic approach is that only fit and flourishing people are attractive for employers. People who are chronically sick, who sleep or eat poorly, or who have poor habits such as smoking or drinking too much alcohol have a difficult time with employers who use this surveillance paradigm as part of their HR policy. Notes

Date —/—/—

References Eder, S. H. K., Cadiou, H., Muhamad, A., McNaughton, P. A., Kirschvink, J. L., & Winklhofer, M. (2012). Magnetic characterization of isolated candidate vertebrate magnetoreceptor cell. Proceedings of the National Academy of Sciences (PNAS), 109(30), 12022–12027.

4

Governance Model

Think big. Act small.

Organizations’ reliance on pyramid-shaped formal hierarchies is older than the pyramids themselves. It is long past time to consider other approaches (Wellman, Applegate, Harlow, and Johnston, 2020). The Governance Model introduced and discussed in this chapter is aimed to help the organization and especially their board members find new and better solutions to the foundational problem to distribute formal authority among their members. This chapter provides the contours of an organization as a learning ecosystem that moves in a supple, agile, flexible, and adaptive manner—like a ship that plows its way through the water in ever-changing weather.

4.1

Organization as Ecosystem

A century ago the groundwork was laid within management literature for the fitting out of agile and adaptive organizations. The American Mary Parker Follett (1868–1933) investigated and described the functioning of flexible and resilience organizations. From her work, it emerged that organizations which are adaptive are organized internally with a combination of competence, motivation, and solidarity among employees. Follett suggested that organizations function best when all members think and act from a shared purpose to make the best of things and situations in conjunction with each other. The power of that shared purpose turns out to be enormous—enough to set people and their organizations in motion in the same direction. Working together towards one goal gives an organization wings in terms of togetherness and brotherhood. The shared purpose fuels the organizational engine and enables to anticipate, react, and rebuild if necessary. Follett found that organizations that act as strong ecosystems do have an organizational culture and climate with iconic elements such as one shared purpose, mutual respect, shared # The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 L. E. C. van der Sluis, Leadership for Risk Management, Future of Business and Finance, https://doi.org/10.1007/978-3-030-69407-4_4

29

30

4 Governance Model

knowledge, and the motivation to be keepers of each other to be able to move towards that one goal—the ultimate aspiration of the organization. If these elements are there, an organization has a promising future. This would seem an open goal. Nonetheless, in many organizations, things do not work quite that way. Organizational structures and functional groups are often depicted as a pyramid-shaped formal hierarchy, including a clear line of command. Work is divided into functional levels and on those functional levels are work packages made, defined as jobs. In that circumstances, organizations search for people that are able and willing to do the jobs. Basically, this is a static picture of work related to a certain organization. It is quite obvious to assume that this way of organization work is the result of the historically dominant male, top-down style of thinking in the management field. Due to the dominance of this norm within theories of management and organizational science, it has become common to think linearly, in terms of power and status, and ranks and formal positions. Follett’s intellectual legacy—which can be coined as feminine—seemed to have succumbed to oblivion for a while. But it looks like the tide here has turned. It is true that in past decades most organizations have been “directed” top-down out of a hierarchical standpoint, by a select group of employees, but in modern organizations it is a non-linear, cyclical, dynamic, and more holistic perspective on organizations as living systems that dominates. The generally accepted view has become more integral, with a more rounded view of the organization. Balancing an organization toward a more harmonious holistic entity can be accomplished in various ways. In this chapter, the light is shedding on the organizational structure as a manner in which the board member can build the organization as an agile and fluid ecosystem. We will discuss how they can motivate and inspire employees to deliver relevant contributions and to serve the company the best they can.

4.2

Network Structure

Within organizations, all employees function dependent on each other. That begins with the selection of a new employee: someone has to open the door for the candidate, without that they cannot become a new employee. The same holds true for leadership. No one is born a leader of a company. An individual only becomes a leader of a company when someone else sees him or her as a potential leader or as a candidate for the leadership position. The person who “sees” the potential, is the person that could “give birth” to a leader. This is transformative selection and is grounded in interpersonal imagination and trust. In other words, working in organizations always occurs within a web of dependence. To function well, that web of people, the so-called social network or ecosystem, is one of the main assets of the organization. The awareness and understanding of this mutual dependence are fundamental to network structures and ecosystems. The related ecocentric paradigm forms the basis of this design principle behind modern organizations that want to be flexible and adaptive. This does not require

4.3 Agile Organization

31

building up a fixed structure, but rather sketching fluid lines, lines that represent relations in which people learn from each other and collaborate and coordinate throughout the organization. Within management science, these relationships are termed as social capital, often depicted in an overview as social network. The employees represent the individuals, the human capital of the organization. The more relations between employees, the more lines, the more potential social capital in the organization, and the more dynamic the social network. The better the relations, the better the social capital, and the more effective the learning- and work-processes in the organization.

4.3

Agile Organization

The work of Mary Parker Follett’s work, and later also that of Arthur Koestler, Brian Robertson, and Jody Hoffer Gittell, have called the functionality of pyramid-shaped authority structures of organizations into question. In particular, such hierarchies can reduce teams’ and individuals’ adaptability and innovation by preventing them from incorporating the insights of lower level employees and by increasing conflict and dissent. These drawbacks are particularly relevant in today’s organizations, which must operate in uncertain and ambiguous environments in which collaborative decision making is thought to be most important. Scholars and executives have considered alternatives. The “leaderless” organization with self-managing teams became an option, in which no formal hierarchical differentiation exists. Further operationalizations obscured the fact that a pyramid is not the only way that formal authority within organizations might be structured. Since then, many new insights have been developed into a unique sort of organization design that aims to generate an adaptive, agile, and fluid whole. This is what is called an agile organization. How an ecosystem can be agile and flexible can be seen from nature, for example, in the way that animals move. Consider first bees and ants, then fish and birds. Look into how swarms move as well—a group that apparently moves as one whole. What do you see? Ecosystems are adaptive and agile due to underlying relations between the units within them. The power of relations between ants is greater than that of the entirety of ants as such. It is also apparent how an ecosystem such as an anthill does not exist so much due to the power of the separate units (the ants) but rather of the underlying relations between those units (coordination among the ants). Through relations and interactions, movement results. The nature of that movements then determines the front, back, upper, and lower sides of the moving system. Organizations that want to be agile can learn much from this. And indeed, this is what modern organizations do; they want to act as swarms, focus on interpersonal connections, optimize human relations, organize the organization as an ecosystem.

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4.4

4 Governance Model

Holocracy

On the basis of these insights, organizations which want to develop as ecosystems will have to change the mindsets of the organizational members, probably followed by altering the formal hierarchical structure. The organizational mindset as shared narrative as well as the formal hierarchy are both relevant as powerful norms of relationships between organizational members. In traditional hierarchical organizations a few members possess high levels of authority. Those organizations have a stratified structure, a pyramid shape with a pyramid mindset that lies the focus upon individuals and their positions from a one-dimensional vertical perspective. In modern, flexible organizations that we call a holocracy, the level of authority is evenly divided between experts who are the master specialists in the external organization and leaders who are the master executives in the internal organization. The external masters are employees with a high level of relational collaboration which reflects the quality and quantity of interactions with clients, patients, customers, etc. The internal masters are employees with a high level of relational leadership which reflects the quality and quantity of interactions with colleagues with lower level of formal authority and responsibility. These notions of an holocracy are depicted in Fig. 4.1. In an holocracy, there exists a bimodal authority distribution with differences in formal authority between junior and senior employees. The holocracy mindset lies the focus upon individuals, their connectivity, and relationships from a two-dimensional perspective. Such thinking results into a system in which workand learning-relations between people who stand central and form a fluid system that gives the organization agility, flexibility, and fluidity.

Relational Collaboration Relational Cooperation Relational Cooperation Relational Leadership Fig. 4.1 Holocracy as Governance Model

4.4 Holocracy

33

Relational Collaboration Relational Cooperation

Process

Content

Relational Cooperation Relational Leadership Fig. 4.2 Holocracy: Two-dimensional system

Figure 4.1 shows a vertical and horizontal system of dependencies. As the figure indicates, an agile nimble organization can be depicted as a holocracy. The concept of holocracy is derived from the Greek word holos, meaning “whole” or “entirety.” The idea here is that the organization forms a unity of people who all want to do the same thing, namely make a contribution to the organization’s goal. They make themselves available to the organization—in return for pay—and so as individuals are on loan to it: voluntarily, that is true, but not commitment-free. Each employee has the responsibility to deliver a contribution to the organization’s goal. One can also see in Fig. 4.1 a ship as a metaphor for holocracy: with work both above-decks and below-decks. The horizontal black line on the horizon is the dividing line between these two sides of the organization. In Fig. 4.2 the organization is seen from the rear. The darker underside of the ship represents the internal organization below the waterline. This side of the organization carries the light-colored upper part. The outside world cannot see that darker side or its associated activities, but knows that it is there and what is happening there. The light-colored upper part of the ship represents the external organization above the waterline. The outside world has a direct view and effect upon this side of the organization and its associated activities. The ship’s beam indicates the activities that take place both above- and belowdecks: to the left, activities mainly having to do with the details of production; to the right, activities having mainly to do with processes and relations between people. If everything is working right, these two sides of the ship hold each other in balance. On board a ship looking to set sail one can speak of a balancing act between the left and right sides of the organization’s activities.

34

4.5

4 Governance Model

Theoretical Concepts

The applicable terms for this in management science are relational leadership, relational co-production, and relational cooperation (Gittell & Douglas, 2012). • Relational leadership takes plays within organizations between colleagues. Relational leadership is taking care that co-workers feel bonded with one another due to their common goal. A relational leader knows how to make it clear within the organization’s inner world that it is the collective interest that matters. The shared purpose should determine the behavior, motivation, and collaboration of employees. All other interests are subordinated to that. • Relational co-production takes place between the organization and the outside world. Relational co-production is working in partnership with external parties towards better products and/or services from the organization. The interchange between employees, on the one hand, i.e., the internal masters in expertise, and interested parties from outside the organization on the other hand is meant to be creative in the direction of common value. Working on mutual benefits as common interests is the underlying mechanism. • Relational cooperation takes place between organizational members that work on the same content in the organization; either below-decks as administrators, directors, managers, and team leaders, or above-decks as specialists, contentexperts, and others who have direct contact with the outside world. Relational cooperation means helping each other to function well and building the future of the organization together. That can be expressed in all sorts of ways, from listening to each other to calling each other to order. The characteristics that mark relational cooperation is that employees show their engagement and social identification as members of the organization. The ultimate signals of relational cooperation are expressions of pride and safety and the perception of oneness and the sense of belongingness in the organization.

4.6

Risks of Ecosystems

All the organizational members of an organization realize that they run the risk while underway of encountering all sorts of unknown and/or unexpected things. Except that there do exist differences between organizations: one organization may take more risks than another. It is for individuals as potential crew-members to determine which organization they select as employer of choice, or else to build their very own ship as entrepreneur. People who join an existing commercial organization do that under the conditions of the employer’s saying: “I never promised you a rose garden.” In an open market, it is just as on an open sea: Plainly, the journey undertaken is risky and offers no guarantees. No guarantee of a job satisfaction, no guarantee of success, no guarantee of personal growth, etc. It all depends. Working in an organization, as a crew member or a captain, implies dependencies as well as risks. With one notion for

4.7 Above-Decks and Below-Decks

35

sure: “No guts, no glory.” If risks are substantial, the potential return is substantial as well. Reflection Questions Question A: Question B: Question C:

4.7

In what kind of organization do you prefer to work? What kind of organization are you steering, as executive or company leader? Is there a difference between your answers to 1 and 2? If so, what are you going to do about it?

Above-Decks and Below-Decks

Working above-decks is suitable for people with “sea legs,” people who find working in the wind, in the haze, in the front line pleasant and are good at it. Working below-decks is suitable for people who prefer contributing behind the scenes to the smooth running of core processes above-decks. Above-decks work is dependent upon below-decks work. The better people above-decks are reinforced by people below-decks, the better they can function together. Working above-decks is an expression for work that relates to the core business of the organization. This part of the organization offers possibilities for people who want to develop the core business, think of innovations, and work on creative solutions, and those who want to become a master in a certain specialization. Working below-decks is an expression for work that relates to the employeeoriented work in the organization. This part of the organization offers opportunities for people who want to support their colleagues and standardize core processes, and for those who want to become a master in leadership. Functional guiding people is the leadership that takes place below-decks. Leadership stemming from mastery of one’s craft, related to mentoring, takes place above-decks. The combination of the vertical dimension of functions and careers, on the one hand, differentiated as either above- or below-decks, and the horizontal dimension of functions and careers on the other, provides greater perspective on the sailing ecosystem concept. This helps attract new crew-members and also helps the organization work with varying roles. Supporting services, the “staff,” can be found both above-decks and below-decks and are functionally part of the support staff. Discussion Questions Question A:

Using the Governance Model, draw up an organizational chart of your organization. Define roles and careers both above-decks and below-decks there.

36

4 Governance Model

1. Where do you operate? 2. Are you in the right place, given your qualities and ambitions? Question B:

On the basis of the Governance Model, do a quick scan of your crew. Discuss their current composition.

1. Which of your colleagues would make a better account of themselves in another position? 2. It cannot be assumed that every co-worker will remain on board indefinitely. How can you bring this up as an employer? As an employee? Question C:

Use the governance model to sketch out career paths.

1. What are the career paths of frontline workers in your organization? Draw lines between the various roles of craftsmanship and mastery on the upper part of the company structure, what was called the deck of the ship. Define these particular paths as the “expert route.” 2. What are the career paths of workers in management roles in your organization? Draw lines between the various management positions in the lower part of the company structure, what was called the keel of the ship. Define these particular paths as the “generalist route.”

4.8

Work Methods for Risk Management

In an organization with a holocratic structure as its governance model, one works holocratically. So each employee bears responsibility to contribute to the organization’s goal. That means that all crew-members basically have the same task, which is to take care that the organization can handle the risks, remain seaworthy and relevant. This holds true for all organizational members regardless of the sort of work or length of engagement. More concretely, it means the following: Whichever side of the ship one works, the emphasis is upon collective service-delivery. And “being in service” (Whether the contract is temporarily, flexible, fixed, or else) in a holocracy has a more literal meaning than with its the twentieth century variant. Where it previously was mainly about the rights associated with holding fixed employment, in modern organizations, it is more about the associated obligations that flow out of an employment relationship. In thinking about work engagement and employee relations, the right to employment has given way to the duty to contribute to the organization’s objectives. In a holocracy it is assumed that each employee satisfies that obligation—after all, every employee is liable for that, and each and every

4.9 Business Cases

37

employee—from boilerman to cook to captain—will assume that of their co-workers. In such a constellation the art lies in giving everyone on board enough autonomy and motivation to fully use the opportunities and develop their human and social (¼relational) potential. Crew-members who refuse to join in but just “do their own thing” to “become the best versions of themselves” do not belong in a holocracy. There, it is always about working together to attain a common goal and aim for the collective aspirations and shared purpose. You can see that in the very word: It refers to holos but also to “holy:” something that is set apart, separated from the rest. Anything “holy” is placed upon a pedestal to receive the reverence it is due, and not to be swallowed up by the ins and outs of daily routine. You prefer anything holy to be constantly and prominently on the scene. So by “holocracy” is also meant an organizational form within which the common goal is considered the “holy” orientation point. The ecosystem moves towards that goal. Discussion Questions “Those who only watch from shore always consider themselves the best helmsmen.” This saying contains much wisdom. It refers to those “helmsmen” who will not get their feet wet, yet are glad to opine from the safety of shore upon (for example) the ship’s course or the work that should be done. Question A: Question B: Question C: Question D:

Who are these people within your organization? To what extend do they annoy you? Delight you? How can you best profit from these people? Make an action-plan. What is the attitude of your Supervisory Board of Management Board? Express your answer using this metaphor and indicate the Board’s position within the organogram and based on the Governance Process Model of an holocracy in Fig. 4.3.

4.9

Business Cases

4.9.1

KLM

KLM’s governing model comprises some 30,000 employees, from which 12,000 work directly with the airplanes and 18,000 on all other tasks around that. More specifically, of those 12,000 “blue” employees there are 3,500 pilots and 8,500 stewards and stewardesses who can be in the air at any given time. Of those 18,000 non-flying employees on the ground, some of them work at the headquarters in Amstelveen, Netherlands, and others at Schiphol Airport, for example, maintaining the aircraft. KLM organizational governance proceeds according to a logical examination of its reality.

38

4 Governance Model

External focus Customeroriented Employeeoriented Internal focus

Fig. 4.3 The Holocracy Governance Process Model

“Under the waterline” there are 18,000 employers, including members of the Management Board “bearing a leadership role” in the internal organization. There the focus of attention is the organization’s leadership, hierarchic from bottom to top and relational from left to right, and vice-versa. “Above the waterline” the other 12,000 employees work, headed by the pursers and pilots as “icons” of the external organization. There the focus of attention is the quality of the services provided on board the airplane, relevant from top to bottom and relational from left to right, and vice-versa. Source: Wikipedia, accessed 20 April 2020.

4.9.2

Illy

The coffee-brand Illy also boasts a holocratic governance model. The directors and management function as the carrying “under water” power for supporting where possible the “above water” organization. This vertical leadership runs from bottom to top within the organization and is anchored in both technology and ethics. The “above water” part of the Illy organization is the above-decks part where coffee and associated equipment, products, and services are sold. There the emphasis is on beauty and a pleasant experience. At Illy there exists above-decks very intensive cooperation with market participants. This relational co-production is an important success factor for the brand. The relational cooperation is interwoven into the organization’s collegiality, a product of its pursuit of excellence as a core value. Notes

Date —/—/—

References

39

References Gittell, J. H., & Douglass, A. (2012). Relational bureaucracy: Structuring reciprocal relationships into roles. The Academy of Management Review, 37(4), 709–733. Wellman, N., Applegate, J. M., Harlow, J., & Johnston, E. W. (2020). Beyond the pyramid: Alternative formal hierarchical structures and team performance. Academy of Management Journal, 63(4), 997–1027.

5

Management Model

“Adapt. Or die.”—Charles Darwin (1809–1882)

The Three-Phase Model as discussed in Chap. 2 makes clear in which phase the organization finds itself, the Navigation Model as discussed in Chap. 3 detects which guiding principles are applicable for the organization as anchor points, and the Governance Model as discussed in Chap. 4 shows how an agile organization is organized for resilience in terms of governance. Here, in this chapter, the central theme is purpose-drive management. This chapter deals with the question of how an organization can be set in motion in the direction of the ultimate aspiration of the whole entity. To that end, a Management Model is provided. The model is meant to enable leaders of an organization to build the organization as a learning ecosystem that adroitly tacks and maneuvers, and which corrects its course when that becomes necessary due to changed circumstances.

5.1

Purpose-Driven Management

A chameleon can quickly change its color and so adjust to its environment, but it is still just a chameleon, with its own individuality, its own characteristics. The same is true with organizations that drift with the circumstances. Truly agile, adaptive organizations do move according to circumstances, are interactive, and also have the ability to adjust or change themselves. Organizations need that speed of change too. The ability to adjust congruent with challenges and opportunities is required in order to move in a flexible and adaptive manner, as an ecosystem, or metaphorically as a swarm. Also, a good foundation, as fundament for flexibility, is an essential ingredient of resilient and sustainable organizations. Adaptation has not so much to do with being the strongest or best, but with the ability to be the most adaptive out of one’s own individuality. # The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 L. E. C. van der Sluis, Leadership for Risk Management, Future of Business and Finance, https://doi.org/10.1007/978-3-030-69407-4_5

41

42

5.2

5

Management Model

Shockproof

Each individual has within their own individuality the ability and willingness to see, judge, and act upon an opportunity. These aspects of the individual determine to what degree circumstances work out as risks or chances. Strong personalities are those who are “antifragile,” as the revitalizing thinker Nassim Nicholas Taleb put it in his book of the same name (2012). Organizations that encounter risks are in need of leaders that make the organization antifragile, i.e., shockproof. Leaders of a shockproof organization know how to navigate changing circumstances in a constructive manner. An organization that deals with heavy circumstances has to be vital and flexible. This desired flexibility and symbiotic relation with the outside world increase the demand for leaders that lay the foundation of the organization with defining the leading principles as guiding rules or company compass. Leadership as risk management includes the definition of these guidelines as the management statement.

5.3

Management Statement

A management statement is the fundamental bedrock for leadership in volatile, uncertain, complex, and ambiguous circumstances. From previous chapters, we can derive two basic elements of the management statement. The first element is the principles. In Chap. 3 we discussed how the guiding principles for work are essential components for leadership as risk management. Without such principles, leadership is a loose part of the authority line in the organization within any internal coherence and alignment with the identity of the organization. Principles have power, thrust: when leading an organization, the principles are the rules of the game everyone has to work with. Guiding principles are therefore important to establish. Principles are one of the two parts of the management statement. The second element is the purpose. Purpose is the other important part of the management statement. Within this book, it has emerged several times how essential it is for an organization to have a direction, a course, an ultimate goal. Having a goal provides pull power. If the goal or reason of existence is not clear, the organization will miss direction. The motivation to operate efficient and effective will be low and the eagerness to stay relevant will be absent. That is why it is important to determine purpose as the second element of the management statement. See Fig. 5.1 for a format of a management statement: to the left, the purpose of the organization could be defined. This part links with “why do we exist”—and “what is our dream”—questions. To the right, the principles of the organization could be listed. This part links with “how do we work together”—and “how do we dance”— questions. It is up to the management and/or executives to fill in and/or supplement these elements. The concepts “dream” and “dance” reflect the organization’s ultimate goal

5.3 Management Statement

43

Fig. 5.1 Management Statement Purpose

Principles

Our

Our Dream

Dance

Pull

Push

and desired culture, respectively. Both concepts will be dealt with in more depth subsequently. Discussion Questions Question A:

Draw up the management statement for your organization, referring to Fig. 5.1.

1. Your purpose: Define your organization’s dream. Why does your organization exist? What ultimate goal do you have in mind? What is the ultimate aspiration of the organization, your “moonshot”? 2. Your principles: Define the core values and norms as the beliefs in your organization. What values and beliefs do you find essential as expressions of the desired culture in the organization? Question B:

Lay out your current mission/vision (Purpose) and core values/ beliefs (Principles) next to the actual practice.

1. Do a gap analysis. Where do you see differences between the is (actual) and should be (ideal) situation? Where do you see overlaps? 2. Formulate a motto or slogan for your organization. This could be a sublimation of the combination of the purpose and principles of the organization. The motto should be written as one sentence of maximum eight words. The result is a management statement for navigating in the haze as image of your leadership in the coming years. An organization becomes shockproof, adaptive, and resilient by living up to this management statement. With this narrative, the organization has a compass and will not be jolted out of the straight-and-narrow by sudden changes, whether inside or outside. It gives needed guidance and helps leaders to oversee the agenda of the organization in times of uncertainty and anxiety. By that, leaders can be concerned

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but open-minded in their challenges and thoughtful in their actions in order to survive environmental disruptions, changing conditions, and socio-economic shocks. By doing so, leaders can alter the functioning of the organization to adapt. Leaders need that ability. The ability to get neutral about events around them in order to think clearly, no matter the problem, is crucial part of the leadership skill set. Having a management statement including a clear purpose with clear principles helps to gain that ability.

5.4

Management Matrix

In order to activate an organization, you can work in many different ways towards the ultimate aspiration, the purpose. The two extremes are working strategically and working incrementally (Foss & Lindenberg, 2013; Ployart, 2015). Working strategically could be described as following a plan from A to Z, which is possible when the needed work is fairly predictable. Working incrementally could be described as taking small steps from A onwards is preferable when uncertainty is the norm and when circumstances are not static but dynamic. In times of major change and uncertainty, an incremental approach reflects leadership as risk management. This could be effective if small steps are taken adapted to circumstances, while keeping the ultimate aspiration of the organization constantly in mind. This leadership approach can be defined as: Thinking Big, Acting Small. This leadership approach is linked with the Management Statement in a practical way. In other words, the two parts of the management statement, the purpose, and the principles, become to live in the leadership approach. In such a way that the purpose reflects the thinking of the leader and the principles reflect the acting of the leader. In Fig. 5.2 the leadership approach is depicted in relation to the two elements of the Management Statement. Here, (1) the dream/moonshot reflects the purpose of the organization, and (2) the dance/action reflects the principles in the organization. Act Small

Fig. 5.2 Management Matrix

2. Dance

3. Deliver

Acon

Output

Internal

Share

External

1. Dream

4. Destination

Moonshot

Outcome

Think big

5.4 Management Matrix

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Additionally, the results of the dream and dance are included in the management matrix in terms of (3) the delivery and (4) the destination. The management model, depicted as the management matrix in Fig. 5.2, reflects a strategic process of thinking, sharing, and acting. Thinking is the cognitive aspect of managing, sharing is the relational aspect of cooperation, and acting is the goaloriented aspect of the functioning of organizational members, including leaders. The combination of these three aspects forms the basis for the learning- and work processes in and of the organization. The relation between these three aspects of the strategic management process in organizations is depicted on the vertical axis of Fig. 5.2. On the horizontal axis is depicted the difference between work that occurs internally and externally. Internal work takes place in relation with colleagues and external work occurs in interaction with customers, clients, and others external parties and/or partners in the outside world. The result is a quadrant of four collections of management standing orders, comprising the management process for streamlined, holistic, future-proof organizations. The Management Statement is the foundation of the Management Matrix. By following the management matrix, leaders could set an organization in motion and organize recovery and speed for adaptation. The Management Matrix is a conceptual management model derived from the management literature. It provides a framework for the strategic elements of crew resource management (CRM), human resource management (HRM), strategic talent management (STM), or whatever term is in use for managing people and processes in an organization. Reflection Questions Question A:

What is your management style?

1. What sort of management style do you take to naturally? Working to a master plan from A to Z, or incrementally, taking small steps from A onwards ? 2. Reflect on your leadership style with the Management Matrix. What parts of the matrix are close to your nature? And what quadrants of the matrix should be part of your leadership development journey? 3. How have you organized your sounding-board, your critical mass? • By always being open to feedback from a friend or coach. • By listening to peers/colleagues and their recommendations. • By taking part actively in leadership development sessions with colleagues outside the organization and learning from gained insights. • By other means, namely:

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4D-Management

Derived from Fig. 5.2, leadership for risk management could be highlighted by four capstones: From Dream to Dance to Deliver to Destination. If these four management capstones are in place, the management system in the organization is assumed to be a closed system like a chain of management practices. The matrix can be depicted as a diamond or a circle. Here, we choose the title Management Circle. It reflects a closed management path with a shape that includes the four capstones as defined in the Management Matrix. The Management Circle is also known as the 4D-Management Capstone Framework for leadership in times of turbulence. See Fig. 5.3. for a graphical outlook of the Management circle as representation of the 4D-Management Capstone Framework.

5.5.1

Dream

Dream is the ultimate aspiration, the purpose, the why, the moonshot, the dreamedof impact of the organization. Without a dream an organization has no power and no drift. The dream puts the roles and responsibilities of the organizational members in a broader perspective. It makes the organization attractive to people who want to be part of the organization. And having a dream with the organization is motivational and meaningful for people who are spending their time, using their talent, and doing their work in the organization. Having a living dream in an organization is a pull factor that causes organizational members to serve the organization the best they can. From executives and leaders, it is to be expected that they determine and communicate what the dream of the organization is. Leading an organization going through storms of uncertainty is comparable to leadership for risk management. Metaphorical, it is piloting a ship through changing and treacherous weather. In order to do that well one needs clarity about the goal of being on board. At the Destination

Dream

Deliver

Dance

4D- Management Capstone Framework© Fig. 5.3 Management circle

5.5 4D-Management

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very least, the reasons why the organization exists should be defined and communicated loud and clear. For example, if the leaders of the organization communicate that the organization exists because we want to make a trip to Rome, then all organizational members should understand and agree that going to Rome is the goal, the dream. If there are employees on board who think or desire that the ship should rather head to Reykjavik, then those should either (1) get off the boat, or (2) revise their ambitions and agree with going to Rome as the ultimate aspiration. In order to be flexible and adjustable, all organizational members should be on the same page. Every employee at all levels has to cherish the very same dream. Executives, board members, directors, and supervisors should communicate as much and as good as possible about the shared purpose. By doing so, leaders could manage the risk of questioning the dream. The sharper the dream is formulated and communicated, the clearer it will be what the ultimate aspiration of the organization is and entails.

5.5.2

Dance

Dance is the manner in which organizational members interact with each other within the organization in the direction of the dream. The dance is the organizational culture as the second capstone in the management circle that leads to relevance. The dance stands for the rhythm, tempo, and intensity of the work done in the organization. The organizational dance depends on attitudes, principles, and energy of board members, among many other aspects such as the core values and behavioral norms in the organization. Working means acting and moving, and that action and movement are what we call the dance: in order to dance, everyone first has to get moving. The dance in the organization provides a push for activating individuals and bringing teams and social networks into action. Whereas communication as a component of leadership in uncertain times mostly happens verbally, communication about the dance is also done non-verbal. In any circumstances and especially in times of uncertainty and risks it is the leaders and managers that lead the dance. Through their verbal communication and non-verbal behavior their role is normative for the dance in the organization. If they show enthusiasm and energy, it will resonate in the activity and energy of the rest of the workforce. More specifically, they are responsible for keeping the dream alive and for keeping everyone on the dance floor which is the workplace. The twenty-first century workplace is a place to collaborate, ideate, and innovate and is dominated by digital interfaces. The place could be everywhere which means that the dance could be a virtual meeting via Zoom, a team session via MS Teams, a live chat at the office, a coffee break on the road, or another site where coworkers meet and interact. The behavior of the salon orchestra on board the Titanic is a classic example of this leadership element. Under the direction of Wallace Hartley, the violinist who also helped bring that orchestra together, it kept playing through the night of 14/15 April 1912. They did that for as long as they could, to prevent panic from breaking out.

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Their heroism became a symbol of non-verbal leadership and serving others by keeping on the dream alive and by keeping on dancing. Keeping on playing is coherent with the Holistic Governance Model (Chap. 3) where leadership for risk management refers to the relational aspects of leadership, collaboration, and cooperation. In management science, these aspects are equivalent to steering towards efficiency and operational excellence. The aim is to optimize the return on investment in people that work for the organization. Precisely how the dance should go is determined by principles. These refer to the anchor points and core values on board and comprise the basic agreements and behavioral rules describing desired behavior within the organization. Principles can be explicit or implicit; there can be both written rules and unwritten ones understandable to anyone with common sense and good manners. Knowing how the dance should go provides guidance for knowing what is normal and good for working in the organization. Everyone on board should want to join in the dance. Supervisors and directors can look on from the balcony to see what they think of leaders’ and managers’ dance moves. It is also vital that they check whether the dance is in line with the direction of the organization; i.e., the compass that has been built according to the Navigation Model (Chap. 3).

5.5.3

Deliver

Deliver means what is done, what sort of work is delivered, and what is accomplished by the organizational members. Results are dependent on the manner of the work, the “dance.” Deliverables are individual accomplishments which, if good, stand in relation to the goals set initially. Performance has to have the right reasons and should come out of a good heart. People who perform well but only do so to get on the good side of their supervisors, or only to improve themselves, are on paper good performers, but fragile. In uncertain times such behavior is not sustainable. Volatility requires of employees of an organization that they are willing to put their best foot forward in the cause of striving for the continuity of the organization and for achieving the ultimate aspiration of the organization, for its moonshot. Leadership for risk management is based on the assumption that all employees serve the organization the best possible under de given circumstances. Making mistakes is allowed, since performing under uncertain times often requests improvisation and wisdom. Uncertainty could also blur the lines between good and bad performance because necessity knows no law. Leaders should then detect and identify the good performers very carefully and draw a distinction between those who perform not so good for the right reasons and those who perform very good for the wrong reasons. In line with the Holistic Governance Model (see Chap. 4), this means that in an ecosystem in motion—an apt description for current organizations—employees with a good performance for the wrong reasons are valued less than employees with a weak performance for the right reasons.

5.5 4D-Management

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Discussion Questions Explore and Assess Question 1: Question 2: Question 3:

Question 4: Question 5:

How do you determine who is functioning well in the organization? Which criteria are primary for identifying so-called “high performers”? Do you agree: “In our organization employees with a good performance for the wrong reasons are valued less than employees with a weak performance for the right reasons.” Discuss that statement within your management team, and reach consensus. If necessary, draw up an action plan in order to nail down a set of generic criteria for performance assessment.

Leaders and managers have the important norm-setting task of concretely translating “deliverables” into a concept relevant for expected performance. They will need to keep an eye on the work delivered by organizational members in and around the organization. Keeping an Eye on Deliverables Question 1:

Question 2:

Question 3: Question 4:

5.5.4

How do you ensure that you keep an eye on the performance that your employees deliver? How do you track who has delivered what and when? How do you know which teams are responsible for outstanding performance, and which teams of teams have performed excellent? How do you ensure that you know what factors are behind team success in your organization? How do you ensure that the performance on the individual level and on the team level will improve? What are your deliverables to the organization as a leader? Who can help you to improve them? Make an action plan, with or without an executive coach.

Destination

Destination has to do with the results of work performed in the organization. The difference between “deliverables” and “destination” is what the work of all organizational members actually delivers (deliverables) and lead to (destination). Defining the destination is about the question where does all the work done by the organizational members take us? For example, any individual or team can perform as well as they want, but if the customer in the meanwhile has gone bankrupt or has radically

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changed the preferences in deliverables, then all the work does not translate to better results. And results, not work, are what matter. Therefore, it is better to have unremitting attention to the ultimate goal, the dream, and to carry on functioning accordingly. Then, any individual will contribute to the collective goal of the organization and knows where the collective work lead to. This makes the work done by individuals in the organization meaningful and that helps to achieve the desired outcome together. The destination is the attained goal, also known as the impact of the organization. This impact could be defined in many different ways, like social, economic, societal, long, or short term. Leaders have the responsibility to make the desired impact explicit and report the intentions versus the gained impact. These reflections could be presented in line with the strategic choices as followed by using the Navigation Model (Chap. 3) and could serve as strategic map, as the intellectual framework of the executive board for setting the strategic leadership agenda. Afterward, it is up to the leadership team to adjust the strategic agenda or otherwise intervene so that the organization remains relevant and worthwhile to exist. Discussion Questions Question A:

Gap analysis between Destination and Dream.

1. How do you determine the destination that has been reached? Are the key criteria a mix of financial returns and social the impact or is there another indicator in use? 2. How certain are you that these indicators actually measure what you want to measure? 3. What is the difference between your attained destination (according to the timing and indicators that you choose) and the dream, the moonshot you originally formulated? Make an action plan to build the bridge between your current destination and your dream with the company? Question B:

How robust and resilience is your organization in terms of the ability to counteract high-level risks associated with business continuity? Where does that robustness and resilience come from? Formulate your answer using your own jargon with your answer on a scale of 1 to 5.

References

5.6

Business Case

5.6.1

Nestlé

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Both Nestlé’s name and logo are ripe with meaning. In both, a nest is put forward as the image of company culture. Nestlé stands for an organization oriented to people, where as an employee you are taken up in a nest where there is emphasis upon individual growth and development. Nestlé’s dream as a nest of nutrition-oriented professionals is a world of good food and good lives for everyone: Good Food, Good Life. As an expression of that dream, the company participates in international initiatives for creating value over the long term that makes everyone better off. For example, it works on nutrition products without any prospects for short-term profit, but which can contribute over the long term to a better society. The company also makes structural contributions for the improvement of human rights, gender equality, education, waste management/recycling, and climate change. In general, work at Nestlé is directed to maintaining or increasing market share by product category. Results here are considered deliverables. The cooperative work within Nestlé and with external parties such as buyers and vendors can be likened to a dance. Nestlé’s long-term goal is exerting a positive influence on mankind’s nutrition and life generally. Their Big Thinking about this desired impact functions as a motor behind the dance and deliverables—delivered daily—within Nestlé. When Nestlé employees see that they can indeed ensure that people eat well and live well thanks to the presence of their products, this does the organization good— the result is enormous energy flowing in and among these people. That is observable by anyone in contact with that living nest there at Nestlé. Notes

Date —/—/—

References Foss, N. J., & Lindenberg, S. (2013). Microfoundations for strategy: A goal-framing perspective on the drivers of value creation. Academy of Management Perspectives, 27(2), 85–102. Ployart, R. (2015). Strategic Organisational Behavior (STROBE). Academy of Management Perspectives, 29(3), 342–356. Taleb, N. N. (2012). Antifragile. Things that gain from disorder. London: Penguin Books.

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Difficult circumstances and dangerous paths often lead to the most beautiful destinations.

The sea gives, and the sea takes away. For organizations, the market is the sea. In the twenty-first century, the market is complex, volatile, uncertain, and ambiguous. Leading an organization in these unprecedented times requires managing risks to the max. It demands dedication, perseverance, professionalism, and craftsmanship with the craft of leading an organization for risk management. This book gives professionals who want to improve their repertoire with the use of trade instruments in the form of conceptual models. Leaders can use these models to become a pro in their leadership and executive roles. The models fit perfectly in the twenty-first century toolbox for leaders that have to act as risk managers and people managers at the same time. Although it is possible to lead an organization by feel and intuition, in risky contexts every additional instrument is more than welcome. The book provides extra support that could be necessary to stay upright in a time full of surprises, risks, and unknowns entering the organizational environment. In the twenty-first century is leadership very much the same as risk management. Having a strategy with or without an implementation plan is no longer enough to be prepared for the future. Failing fast and learning forward should be essential elements of strategic leadership. History does not repeat. Every situation and every day within an organization demands adaptation, connection, and adjustment—both reactive and proactive—even as Time pulls you along: sometimes as friend, sometimes as enemy. Leaders will have to get up to speed in improvisation and resilience, to manage hazards and risks, and to lead the organization through periods of flux. This book offers the fundamentals of four modern management models that could be used for this. The models are useful instruments for leaders who have to manage risks.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 L. E. C. van der Sluis, Leadership for Risk Management, Future of Business and Finance, https://doi.org/10.1007/978-3-030-69407-4_6

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How does that work? Drawing from the previous chapters, we recap the lessons for managers from the chapters. Finally, we present more generally lessons with regard to the main theme: leadership for risk management.

6.1

Insights and Lessons from the Chapters

6.1.1

From Chap. 2: Three-Phase Model

• The Three-Phase Model identifies three phases of the organizational status quo. • The Three-Phase Model is useful and relevant as diagnose instrument for indicating the phase in which the organization, or parts of the organization, is situated.

6.1.1.1 Phase 1 If the organization finds itself in Phase 1—the survival phase—put your focus on employees’ well-being. • Where necessary, bring people to safety. • Get a deep comprehension of what every organizational member needs in order to serve the organization in the best possible way.

6.1.1.2 Phase 2 If the organization finds itself in Phase 2—the psychological phase—then keep an eye and ear open for the mental and emotional condition of people in the organization. • Pay attention to mental resilience and mental well-being. • Provide people with inspiring and inviting perspective and be a hope giver.

6.1.1.3 Phase 3 If the organization finds itself in Phase 3—the opportunistic phase—activate people by getting them enthusiastic and motivated about bringing to bear everything they have to offer. • Build upon interpersonal relations and mutual trust. • Give people the opportunity to optimally deploy and develop their talents and qualities.

6.1.2

From Chap. 3: Navigation Model

6.1.2.1 Insights • The Navigation Model indicates strategic orientations as options in boardroom decision-making.

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• The Navigation Model is useful and relevant as strategic orientation tool for top managers and top management teams.

6.1.2.2 Management Lessons • Realize that thinking must come before action. Or in Peter Drucker style: “Thinking eats action for breakfast.” • Make explicit the narrative and lines of thought concerning the leading principles within the organization. • Learn to navigate by using the Navigation Model as a compass for boardroom decision-making. • Use the spider chart to bring focus in the collective beliefs which shape how organizational members think. • Make time to discuss as the top management team which of the five main beliefs underlies the organization’s existence. • Use the radar chart as an organization-specific compass for corporate norms in organizational communication, cooperation, and collaboration. • Give arguments for continuing on the paradigm, or for the possibility to change the orientation points in the boardroom decision-making. • Take good care of the homogeneity of the top management team in terms of their shared mindset about the organization-specific compass.

6.1.3

From Chap. 4: Governance Model

6.1.3.1 Insights • The Governance Model identifies the front line and back-office of an organization that wants to be agile. • The Governance Model is useful and relevant as construction instrument for designing the organization as an ecosystem that drives business value. 6.1.3.2 Management Lessons • Design the organization as a boat, with one part below-decks and another abovedecks. • Divide the work into management activities to be done below-decks and core frontline activities to be done above-decks. • Build the organization as an ecosystem in terms of a structural and functional unit of organizational members. • Provide job and learning opportunities for all people that are willing and able to contribute to the shared purpose, the dream, of the organization. • Create an organizational culture in which employees want to do their best, transform their talent into something valuable, and overall build on the quality, continuity, and identity of the organization. • Be in close contact with organizational members and see how you can help them to perform better.

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• Do not judge. Instead, build organizational members and their teams. Advise where and when that is necessary for your eyes. • Be responsible and solve the problems you can solve yourself. • Make use of diversity in the workforce. Be aware of differences among employees and benefit from it.

6.1.4

From Chap. 5: Management Matrix

6.1.4.1 Insights • The Management Model identifies the four blocks of the value chain of leadership for risk management. • The Management Model is useful and relevant as management instrument for aligning the purpose, practices, and performance of the organization.

6.1.4.2 Management Lessons • Let the world know that the organization exists because of a collective dream. The dream reflects the purpose of the organization, the moonshot. • Make sure that organizational members realize that their individual interests are subordinate to the collective interest. • Be explicit about desired and undesired organizational behavior of individuals and teams. • Manage that all organizational members “walk the talk”. Be a role model. • Value personal relations and zoom in the interactions between employees more than only their individual knowledge and skills. • Make as explicit as possible what good performance within the organization means and appreciate organizational members that try to contribute to the dream and dance of the organization. • Communicate about the moonshot of the organization as often and explicit as possible, in word and deed. • Subordinate egos (i.e., individuals) to the ecosystem (i.e., the organization). • Make learning more important than performing. • Link strategic Big Thinking with operational Small Acting, and vice-versa.

6.2

Ten Lessons to Lead for Risk Management

To summarize, we highlight some major themes that are associated with leadership for risk management. The themes will be presented as one-liners, accompanied by discussion questions and assignments for bringing leadership for risk management to life.

6.2 Ten Lessons to Lead for Risk Management

6.2.1

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Risk Appetite

6.2.1.1 Lesson One High risk, high return

6.2.1.2 Discussion Question How much risk is your organization willing to take to steal a march on the competition? • Make explicit where you stand in the competition. Come to a consensus about the degree to which the organization wants to and/or can take on risk. Promoting risk-tolerance in the organization leads to a different organizational culture with different behavior and work relations than managing with a plea for risk-aversion.

6.2.2

Focus

6.2.2.1 Lesson Two To win, you have to choose.

6.2.2.2 Discussion Question To what do you pay the most attention, and is this in fact the subject you really want to/must be engaged with? • Make a choice in which competition the organization wants to win. Competing in the local consumer market is of an entirely different order than competing on the global market for technological innovations, for example.

6.2.3

Human Image

6.2.3.1 Lesson Three What you see, is what you get.

6.2.3.2 Discussion Question What is your image of the people in your organization? Are they in your eyes a factor of production to be deployed by you and your colleagues from the top management just to make money, or do you see organizational members as building blocks of the organization that are as relevant for the organizational journey as you are?

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• Make clear how you perceive your co-workers and where your own responsibility for their functioning begins and ends—in good and bad times. • Indicate when, if employees are actively managed, their good functioning goes to the credit of leadership, and when that is not the case, i.e., when employees are themselves responsible for their performance and development.

6.2.4

Way of Working

6.2.4.1 Lesson Four Working from home is the new normal. 6.2.4.2 Discussion Question What do you think of “Working from home (WFH): unless . . .” as business principle for work done by all employees, today and the future? How desirable do you consider a hybrid structure of WFH? • Ensure the unity among organizational members in your situation (WHF of hybrid) and start to manage the connection between you and your team members. • Evaluate and/or redefine the concept of productivity and manage people and teams in that direction. • Formulate your vision of the desired way of working of and between employees, including yourself. • Determine to what degree your teams should be all in a line with each other with respect to WFH. • Develop a leadership vision for the WFH era and relate the workplace of the future to this.

6.2.5

Culture

6.2.5.1 Lesson Five “Your dance eats your dream for breakfast”—loosely translated from Peter Drucker’s famous quote. 6.2.5.2 Discussion Question What sort of organizational culture or dance do you assume to be preferable? What are you doing to do to ensure that this culture will be the norm in organizational behavior? How are you going to assess and/or measure this? • Describe the desired organizational dance in your organization in terms of the circumstances under which you and your team would like to function. • Define this desired organizational culture or dance as “the pulse of the organization.”

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• Make that “pulse of the organization” concrete by indicating a number of core elements, such as the desired work rhythm (stable/flexible), work relations (dependent/autonomous), and the ambition level (high/low). • Indicate the criteria by which you can know or measure the extent to which one can speak of desired working conditions—the desired pulse—within the organization.

6.2.6

Dependence

6.2.6.1 Lesson Six Performance never comes in isolation. 6.2.6.2 Discussion Question How does work look like in your organization as it functions as an ecosystem? What work structures and hierarchical lines are present in the organization to manage for (1) relational cooperation, (2) relational leadership, and (3) relational collaboration? • Define the roles of frontline organizational members who are in the lead of craftsmanship and mastery on the one hand and those who are responsible for the work in the back-office in terms of leadership and the management of people, projects, and processes. • Distribute the roles in the back-office among yourself and other colleagues in management positions in the organization. • Think of those who made you into what you now are in the organization. Reflect on those who recruited, selected, and/or appointed you and on who elevated you to where you are. • Reflect on the reason why they believed in you. Try to detect and reflect on the real reason.

6.2.7

Craftsmanship

6.2.7.1 Lesson Seven Leadership is a craft. 6.2.7.2 Discussion Question What does leadership mean to you? What do you understand by that? What image do you have of a leader, next to that of a ship’s captain? What image do your colleagues have of you as a leader? • Make up your own metaphor to depict your image of leading an organization in uncertain times. • Reflect upon your qualities as leader with an eye on risks and opportunities in the digital work environment. Zoom in on your contributions to the continuity,

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Table 6.1 Leadership Overview for Reflection and Discussion My Leadership Learning experiences Moments of insight Description #1 Moments of flourishment Description #1 Moments of joy Description #1

Stage 1 Long ago

Stage 2 My first leadership role

Stage 3 Recently

quality, and identity of the organization in your role as (a) leader and/or (b) risk manager. • Make a social network analysis of you as part of the organization. This gives you an overview of the relations you have within the organization. Besides, it reflects your image of your position in the organization. • Add ++, +, 0, , or – to the most prominent relationships to indicate the quality of that particular relation. • If possible, add the time dimension by indicating the intensity of the relation per phase based on the Three-Phase model (Chap. 2).

6.2.8

Growth

6.2.8.1 Lesson Eight Doing right in the learning zone.

6.2.8.2 Discussion Question Which moments were the most critical learning situations for you as a leader till now? In which circumstances do you flourish? • Reflect on your learning experiences as premium moments of (a) insights, (b) flourishing moments, and (c) moments of joy. Use Table 6.1. • Link your core quality to your leadership style or skills per stage of life: – Stage 1—Long ago, as a kid or young adult What did you learn then that is useful for you as a leader today? – Stage 2—My first leadership role What did you learn then that is useful for you as a leader today? – Stage 3—My current work setting What did you learn recently that is useful for you as a leader today?

6.2 Ten Lessons to Lead for Risk Management

6.2.9

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Digital

6.2.9.1 Lesson Nine Digital is the marriage of technology and people. 6.2.9.2 Discussion Question What does digitalization mean for your leadership? What are the most important advantages and disadvantages of the increase in digital leadership? How do you ensure that the marriage between technology and the employees in your teams will work? • Discuss what in your eyes the advantages and disadvantages are from the increase in digital leadership as a hybrid1 form of leadership. • Define successful digital leadership for you now and in the future. • Explore the generic success factors of working and communicating on-line with your colleagues. • Make a policy concerning the required digital leadership skills within the top management team. • Translate that policy into concrete goals for over 5-year and make them even more concrete in translating that goal to a 1-year goal. Furthermore, translate the 1-year goal to a goal for next month. Next, make an action plan towards these goals aligned within one another and aligned with the dream and dance of the organization.

6.2.10 Too Big to Be Great 6.2.10.1 Lesson Ten The 2-4-10 pizza rule. 6.2.10.2 Discussion Question How do you ensure that your organization flourishes and “flies”? With all involved parties come into a common flow? That people do not stare at risks and uncertainty as a threat, but rather as an opportunity? • Keep the number of people in a team under seven, but certainly do not allow any more than ten. • Make sure organizational members have the sense of belonging and identification. This could be experienced within a circle of people in similar roles or within a group or organization. The feeling, belief, or expectation of membership is a flow driver. 1

A cross-form between on-line and off-line personal contact.

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• Make sure organizational members are known by colleagues as much as possible. Unknown makes unloved. Feelings of not being accepted by a group have a negative influence on the willingness to sacrifice for that group. • Invest in a keeper culture. Be a role model as a leader and a keeper of your colleagues. An organization with members being their brother’s keeper, cooperation is enhanced. Then, people will act as stewards, welcoming and inspiring each other. • Keep to Jeff Bezos’ rule-of-thumb for managing the organization as a multi-team system: Two pizzas—served at 4.00 PM, eaten within 10 minutes—should be enough for every team. Give it a try! Notes

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Afterword

When uncertainty trumps all and everything is subject to change, there is little to fall back on. That holds true for people as well as organizations: it is then that there seems to be nothing in the way of fixed structures, tried-and-true routines, or step-bystep plans to hold on to. Yet doing nothing is not an option either. Are there maybe other things that can function as a sort of outboard motor when traditions and habits fall away? Yes, there are. This book is one of those. It is not any handbook, rather a collection of conceptual models and leadership techniques that can serve as points of contact. This makes the book a workbook serving to inspire leadership standing at the helm of an organization, department, or other group of people, during uncertain, changing, and complex circumstances. This book is intended for them as leading figures, as their vade mecum. Leadership can bring this book to life using their powers of thought and imagination. It can bring about a result going beyond just putting these models and techniques into practice, but towards breathing new life into the organization to which the book is applied. And that is precisely leadership’s assignment: To keep the organization living, or to bring it to life, in order that it may attain its goals. Here, leading stands for risk management in terms of keeping a course in rough waters with poor visibility: that is, navigating in the haze. So that the organization gets ahead.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 L. E. C. van der Sluis, Leadership for Risk Management, Future of Business and Finance, https://doi.org/10.1007/978-3-030-69407-4

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Appendix

Technofix 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Surveillance

Schumpeterian

Leadership Entrepreneurship

Stewardship

Neosocialism

Triple P

Fig. A.1 Example: Navigation Model of Directeur@Carano

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 L. E. C. van der Sluis, Leadership for Risk Management, Future of Business and Finance, https://doi.org/10.1007/978-3-030-69407-4

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Appendix Technofix 4 3.5 3 2.5 2

1.5

Surveillance

Schumpeterian

1 0.5

Leadership

0

Entrepreneurship Stewardship

Neosocialism

Triple P

Fig. A.2 Example: Navigation Model of Directeur@Covidius

Appendix

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