Change is now rapid and relentless, presenting many business opportunities for growth. Harnessing that opportunity requires effective leadership. This whitepaper presents practical steps you can take to become a more effective leader.
Recently Grant Thornton Australia conducted a study which analysed business growth rates in Australia, examining the differences between the growth rate “tortoises” and “hares”. Our study revealed that the leaders of slow growth “tortoises” saw their businesses as stable (72%), while far fewer “hares” (52%) viewed revenue as stable. This highlights a fundamental difference in attitude towards business strategy and risk.
Whilst revenue stability is often seen as valuable by investors, especially in tough economic conditions, it is now becoming clear that businesses following a slow growth “tortoise” strategy will frequently lose to nimble faster growing competitors. The study rated businesses that expect 5%-60% normal growth in FY2015-2016 as faster growers.
Changing market conditions and competitive threats mean that business leaders should focus on lifting their revenue growth rates. Revenue certainty should no longer be favoured at the expense of innovation.
Mid-size businesses are having defined as having turnover between $10-$500 million annually.
INNOVATION IS KEY
Innovation and science are said to be critical for Australia to deliver new sources of growth, maintain jobs and seize the next wave of economic prosperity. Innovative firms are more competitive, more able to capture increased market share and more likely to increase employment.
More than 70 percent of senior executives surveyed by McKinsey say that innovation will be at least one of the top three drivers of growth for their companies in the next three to five years. Similarly, other executives see innovation as the most important way for companies to accelerate the pace of change in today's global business environment.
Furthermore, the Australian Innovation System Report issued by the Department of Industry, Innovation and Science highlights the fact that on average Australian enterprises are comparatively innovative, according to research conducted by the Organisation for Economic Co-operation and Development (OECD). A larger proportion of Australian small and medium-sized enterprises engage in innovative activity than the OECD + average, with Australia ranking in the top five OECD+ countries in terms of small and medium-sized enterprise innovative activity (refer to graph 1).
Australian large enterprises tend to engage more in innovative activity than smaller enterprises but do not perform as well when compared with OECD+ top five countries (refer to graph 2).
In many parts of the economy, businesses founded in the last 20 years have achieved rapid organic growth rates, transitioning from start-up to market leading positions. Local companies such as Kogan, Xero, Atlassian, and Boost Juices can all be described as “hares” that have combined innovation and effective leadership to outperform entrenched, slower growth “tortoise” competitors.
“The manager administers, the leader innovates. The manager relies on control; the leader inspires trust.”
- Wall Stret Journal Guide to Management by Alan Murray
At the same time, internet enabled services with globalised operations and scale have also introduced new competition into segments of the Australian market.
Companies such as Google (advertising), Amazon (IT cloud services, retail), and Uber (transport) have already played a significant role in reshaping the Australian economy.
There is no escaping the consequences of technology’s rapid evolution for any business. ‘Ah, but my company isn’t a technology company,’ some CEOs of mid-sized companies will say. ‘We don’t need to worry about technology,’ they will reassure themselves. ‘It doesn’t affect us.’ Wrong. As Reid Hoffman, the co-founder of LinkedIn and one of Silicon Valley’s most prescient investors has said, every company is now – like it or not – a technology company .
This globalisation of competition and the now widespread availability of sophisticated new Internet based business services have created both opportunities and threats.
Every business now has the ability to grow revenue and scale more rapidly than was conceivable in the past. By adopting Internet based technologies, businesses can offer products and services to a global audience, rather than just a local market.
This means that all it takes is vision and leadership for a small opportunity to rapidly turn into big business.
But the downside is simple. Competitors can emerge rapidly from unexpected directions. Businesses that are relevant today can rapidly become extinct tomorrow.
Even large, profitable, well capitalised firms now need to be constantly looking to the future, and acting before competitive threats materialise.
In fact, the very existence of large successful firms attracts competition, as it signals profitable market opportunities that can be disrupted or undercut by new competitors.
BUSINESS LEADERS IN THE 21ST CENTURY
Some people think leadership means guiding others to complete a particular task, while others believe it means motivating the members of your team to be their best selves.
While we have all experienced leadership at a personal level in our lives, we don’t all react or work together the same way. Some work is handled better using structured processes, while other team tasks require enormous flexibility and creative problem solving. The type of management styles you might need to use within a business can vary quite a lot.
So is effective management the same as leadership?
The simple answer is no. Getting the job done on time and on budget might make you an effective manager, but it does not mean you are a good leader.
Put simply, leaders are people who know how to achieve goals and inspire people along the way.
The biggest difference between a manager and a leader is innovation. A leader strives to change their business even before there is a need for change. They are never happy with the status quo.
A good leader is likely to have effective personal time management, and place a heavy emphasis on listening and gathering feedback. Listening carefully to team members allows opportunities for stronger relationships and more effective teamwork.
It is quite common for effective leaders to spend as much as 50 percent or more of their time in meetings, listening and coaching their team members. It is crucial to adopt habits and tools that make those meetings productive.
Social media and global connectivity also place CEOs and business leaders under a microscope that scrutinises both business conduct and public aspects of their personal behaviour.
The rapid pace of change in the workplace is also colliding with a cultural demographic shift. Attitudes towards work have changed enormously over the last 20 years.
While it used to be common for people to build their careers by climbing the ladder within an organisation, career paths today reflect a very different ethos.
Very few people today imagine a career that involves working for a single employer for more than a few years.
Work is now less about people becoming part of the business, and more about individuals choosing to join a project or follow a leader they admire.
Most working Australians aged in their 30s can now expect to have at least three major career changes before they retire. This career uncertainty has led to a large increase in people adopting freelance and entrepreneurial careers.
“Leaders are people who know how to achieve goals and inspire people along the way.”
Invariably, any change of business strategy is risky, and can be an uncomfortable experience for leaders during times of rapid growth. Accepting that uncertainty as inevitable is important.
Successfully leading teams through periods of ambiguity and complexity is one situation that often lifts leaders from the herd of managers. A high performance team culture can be born from a leader’s actions when charting a path through uncertainty.
TIPS FOR BECOMING A BETTER LEADER
- Have a vision & communicate it
Look beyond the daily grind. Decide where your business needs to head strategically, and start telling the story. Help your team understand, relate the here and now to your overall vision and bring them along on the journey.
- Encourage innovation, learn from failures
Measure and learn, and discuss performance as a team. Diversity within teams enhances creative problem solving and reduces risk. Failure needs to be rapidly accepted and dissected to learn from the experience.
- Become a great listener
Spend more of your time listening and less managing. Ensure your team has better tools for sharing ideas and information. Online meeting tools dramatically improve the effectiveness of regular team meetings while eliminating travel related costs.
- Allow your team to grow
Trust your team and give them space to make decisions. Be there for your team members, and make sure you listen to their concerns and coach them along the way. Teamwork is built on trust not control.
Many small and medium enterprises (SMEs) underestimate the importance of having good leadership skills to keep their business running smoothly. It is easy to lose sight of this while dealing with the cash flow, and daily project and staff management.
Although good leadership is not something that can always be easily quantified, like customer satisfaction or profitability, its impact can always be felt throughout the company.
“As we look ahead into the next century, leaders can be those who empower others.”
- Bill Gates, co-founder of Microsoft
A good leader is an invaluable asset to every company, able to deliver higher levels of team and client collaboration. Some people are natural born leaders, while others have to grow into it. There is no doubt that leadership skills need to be continuously improved to help ensure your business thrives.
“The fact that I had no experience in business or retail or running a store of any kind didn't worry me at all, mainly because I had no idea what was involved - I was so passionate about the product, I was sure everyone else would be too, so I just jumped in and had a go!”
- Janine Allis - Founder & CEO of Boost Juice
“Launching a global business from a small set of rocks in the South Pacific has been a really interesting journey. It's meant we've had to move away from a head office mentality to establish a globally distributed business. Our C-suite is spread right around the world.”
- Rod Drury, Founder & CEO of Xero
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