Managing Change Blog
A large European bank's executive committee gathered for a two-day meeting to work on a plan to turn the company around. The stakes were high. The bank was not performing well and nearing the limits of its permitted capital ratios. A full turnaround would be required, and everything from redefining the business strategy to restructuring the company, and even exiting whole lines of business, was on the table.
Yet instead of quickly jumping into financing options or other operational decisions, the meeting began with an unfamiliar series of exercises with an unusual goal: to help the leaders in the room get to know one another personally.
Many had worked together for years, but prior to this meeting, something about the executive team had felt wrong, the CEO said. These people would have to lead the bank's transformation, and while they seemed to get along, executives complained about a lack of trust and collaboration. Decisions jointly made rarely seemed to be implemented.
In the workshop, the group spent a full day learning basic details about one another for the first time, like the names of their children, where they had gone to school and their family histories. They also engaged in a discussion of personality types and gave open feedback about what they appreciated about each other, and which behaviors they found problematic.
Given the company's dire outlook, this kind of work might seem beside the point, but after the meeting, members of the group reported a different level of trust. Rather than making assumptions about what team members were thinking, as they once had, they said they were now willing to open up and disagree about some things.
The payoff was much healthier debate, essential as they mapped out the bank's transformation.
The turnaround is still in its early days, but already the leadership team members credit a more open environment and willingness to share conflicting ideas with improved results. The worst-case scenarios for the bank are no longer on the table.
This bank's experience is not an isolated example. It echoes a pattern repeating regularly across corporations of all sizes and in all industries. In today's complex and volatile business environment, it is not possible for organizations to thrive without diversity and different perspectives.
Debate and, inevitably, conflict have become critical. The key to success is healthy debate, grounded in clear rules for tough discussions. Such discussions should be open and fact-based, without personal attacks or games with hidden agendas. Everyone on the team should understand how the group will address and decide on issues. And they must fully commit to team decisions once they are made.
So, what can leaders do to promote productive, healthy debate and conflict in their organizations?
- Work on establishing a culture of trust where team members get to know and appreciate each other, and are willing to share their thoughts openly. This requires spending time together, getting to know each other as individuals, and a willingness to be vulnerable in front of the team.
- Look for and encourage constructive conflict. The team leader, whether a CEO, functional leader or project chief, should help the group define the rules for conflict, facilitate open discussions about conflict and swiftly address any dysfunctional behavior.
- Commit to the outcome. Once the team has come to a decision, ensure that commitments are made, clearly communicated and adhered to.
Many executives subscribe to the idea that conflict is something to be avoided, that the absence of conflict signals an effective, aligned team. This is a myth. In his classic book The Five Dysfunctions of a Team, Patrick Lencioni calls this "artificial harmony," a system in which different perspectives are either suppressed by team leaders or glossed over, and yes-men go back to their own divisions to deride executive team decisions, fueling silos, inward thinking and infighting. Openly debating differences to get to solutions is much more effective.
Once the team makes a decision, the time for debate is closed, of course. Everyone must then put aside their differences and get behind the strategy, a process Amazon executives call "disagree and commit."
Implementation, too, benefits from a culture of trust. The kind of openness and personal connection the bankers experienced bonded them as a group, minimizing the divided loyalty that commonly derails execution. If executives are more loyal to their business units than to their management colleagues, they may bad-mouth the leadership team's strategy to their divisions. This is a certain strategy killer.
By instead building bonds of trust on the executive committee, the bank was able to rebalance loyalties, giving the company's new strategies a much better chance of proper execution and success.
Imeyen Ebong is a partner in Bain & Company's Munich office.