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Roger Martin: Strategy is choice

Posted on by from Changeboard

In an exclusive Q&A, Mary Appleton speaks to Roger Martin, the world’s third top management thinker, about CEOs' challenges and talent development.

What are the big challenges that CEOs face today?

One is the rampant short-termism i the modern corporate world. This i particularly a problem for the CEOs of publicly traded companies because the capital markets are so driven by short-term results.

Investors claim to be interested in companies prospering in the long run but they act in exactly the opposite fashion. This makes it very difficult for CEOs to balance the short-term and the long-term.

Most of them sacrifice the long-term in order to keep investors happy in the short-term. But that catches up with them when investors ask: “What is wrong with you; why aren’t you growing faster?” The answer: “We sacrificed investing for the long run years ago.”

The other is the management of talent. In the last couple of decades of the 20th century, talent woke up to the fact that it had overtaken capital as the most important asset in the economic equation.

Ever since, talent has been extracting more and more of the rents, leaving shareholders ever more frustrated.

CEOs have a tricky management challenge and balancing act. Part of their job is to ensure that they collect, nurture and motivate talent. But another part is to make sure that the very same talent does not appropriate all the value and leave shareholders with nothing. The irony is that CEOs are card-carrying members of the talent class and are extracting ever more value themselves. So for them, self-control is a difficult challenge.

What techniques and strategies do these leaders take to navigate these challenges successfully?

In general, they are not faring particularly well in the face of these challenges.

Many CEOs give up fighting the capital markets and just give them the short-term results that they want and then leave their posts before the consequences of their short-term focus manifest themselves.

And I haven’t found many CEOs yet who have figured out how to handle modern talent particularly effectively. Most complain about how tough it is to manage Millennials.

But I think their focus on Millennials obscures the fact that all talent is getting trickier to manage – regardless of their birth era. I never like to be dour but on these two fronts, CEOs are going to need to do better in the coming years.

How can CEOs win the respect of the people they are leading?

The key to steering boardroom strategy is to engage in a dialogue with the board. Very few CEOs do that. Most prefer to go to the board with a finished product and hope for approval. This approach tends to be unfulfilling for board members who didn’t join the board to rubber stamp the company’s strategy. The best approach is to go to the board with thoughts but be open to members adding value and insight. The mindset can be best characterised as: “I have a view worth hearing but I might be missing something.”

The same mindset is the one that garners the most respect from those the CEO seeks to lead.

What kind of leadership capability will be needed by future leaders?

It will be leadership that balances the need to exploit what the company is great at now with the need to explore to find the next competitive advantage.

It will be leadership that nurtures and motivates talent without letting talent make demands that are so excessive that they damage
the company.

It will be leadership that balances advocacy (“I have a view worth hearing”) and inquiry (“but I might be missing something that you may see”).

How can current leaders develop capabilities in their successors?

By far and away, the best thing a leader can do is model the behaviours that they wish to see emerging talent develop.

Everybody watches the leader of his or her organisation. If the leader is successful, everybody will attempt to mimic them.

So it’s largely impossible to develop talent in a direction that is different from what you do as a leader, unless of course you are an unsuccessful leader, in which case you have a bigger problem on your hands than people development.

What are your expectations for the future of work?

It is bifurcating into two distinct kinds in a way that is really problematic. One kind is jobs that need meaningful levels of independent judgment and decision-making. The other is jobs that involve following a superior’s direction – and not exercising meaningful judgment.

In the modern economy, the former types of jobs are getting better paid, and offer relatively high security and benefits, while the latter are getting worse paid, and provide little if any security or benefits. Even in the most advanced of economies – the US, for
example – the former jobs make up just over one third of the workforce. So the majority of jobs are structurally mired in low wages, security and benefits while a minority of jobs are the opposite. This is a key driver of rising inequality across virtually all advanced economies.

It represents the modern economic challenge – how to transform those ‘routine-oriented jobs’ into ‘creativityintensive posts’ that actually use the minds of the workers rather than treat them like low-end machines.

About Roger Martin

Roger Martin is a writer, strategy advisor and institute director of the Martin Prosperity Institute at the Rotman School of Management, University of Toronto. He is also a professor at the University of Toronto.

Mary Appleton

By Mary Appleton

Changeboard

Mary is Changeboard's editor in chief.

Changeboard

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