Imagine you are a shop assistant in a telco shop. A customer walks in with a broken mobile phone. It is clearly a warranty case. Unfortunately, his two-year warranty has expired a month ago. He claims he has been abroad on another continent for two months, he couldn’t come earlier. What do you do? Do you insist on the warranty terms, or do you replace the phone for free?
If we put ourselves in the shop assistant’s place, the first thing we want to know is: are we allowed to take a decision? What is the level of delegation, and conseqently of autonomy and flexibility we can take in this case? As we have explored in a previous article on delegation, if the company wants to react to exceptions and unforeseen events, it better delegate autonomy to the front. And since in our case the company has taken this lesson to heart, we do in fact have the autonomy to extend the warranty ex gratia in appropriate, justified cases.
Is this enough for us to take our decision? We may follow our personal idea of customer satisfaction vs. cost savings, and decide. But from a company’s point of view, this is not enough. Think about the brand’s identity on the market. Whatever the company stands for, it is essential that the identity is seen clearly and strongly by the customers. How does this happen? It is not so much through advertising campaigns, or the visibility of the logo. Rather, it is the consistency of customer experiences such as the warranty case, that creates a strong brand. You see an advert, you go to the shop, you call the company, you get a service person to your home – and in all these cases you have a consistent sense of what the company stands for. You get the company’s “groove”.
Therefore, as a company we don’t want employees to decide how they see fit for themselves. We want them to decide how they see fit in the light of the company’s identity. In our case, the question is how the company stands in the tension between customer satisfaction and cost. If we are a shop assistant working for a discounter, we may want to be more restrictive – and we could explain to the customer that in order to achieve the low prices which they so much appreciate, we unfortunately have to be strict with wavers of replacement costs. On the other hand, if our company is in the premium segment, we will replace the phone without hesitation, because customers expect a premium service for a premium price. The company’s identity serves as an anchor to guide behaviour.
So much for the company’s intention.
I happen to have had a similar customer experience with a network provider which was positioned in the premium segment. I moved house, and in the process bought a longer router cable in the shop. By sheer luck, I tried to connect the router to the cable a few days before the movers came. To my surprise the cable didn’t fit the socket. I found out that as an business customer, I needed another cable than the residential customers, though the router looked the same. Could I expect the shop assistant to know about that? No, because usually business customers do not go to a shop. But what next? I phoned my support, and the right cable arrived just in time before the movers put a huge wardrobe in front of my network socket. So far so good.
But by now my flat was full of cardboard boxes, and as you can imagine it took two months until I found the cable again, together with the receipt. Although the usual period for returning unused goods is 30 days, I had the above story of a warranty waver in mind and went to the shop to have my money back. Here is my experience:
First, the shop assistant checked my story in the computer system: Yes, he could confirm that I had in fact moved house two months ago. Then he excused himself to go discuss the case with his boss. When he came back, he gave me the money, saying: “We accept your claim this time, Sir. But note that we are not obliged to do so. Next time you will want to be more careful and bring back the cable in time. We have to be very scrutinizing, because we have too many customers who try to trick us.” I was speechless.
What had just happened?
Let’s look at this story from a manager’s point of view. In the structural sense of delegation, everything had worked fine. The shop assistant did have the authority to take the cable back after the usual 30 day return period. He did apply this authority to my case, and took back the item. If the manager were to consult the log of the shop’s transactions, he would get the impression that everythig was all right.
But of course it wasn’t.
With his behaviour and comment, the shop assistant nearly lost himself a customer. He conveyed the exact opposite of the “premium service for premium price” identity of his company. In a way, he destroyed the very reason why the authority to be flexible had been delegated to him in the first place. He did not have the correct anchor to guide his behaviour.
Now if, as a manager, we are aware of such cases – how do we improve the situation? What can we do in order to achieve more alignment, more appropriate behaviour in the light of the company’s identity? If we apply any kind of rule or regulation, in the sense of “These kind of cases must always be dealt with like that!”, we in fact withdraw delegation, and move our case towards instructions – the capability to deal with the specific nature of each context is gone. The challenge is to improve alignment, without taking away autonomy. Here’s a method by which we can do so. I call it anchoring. It consists in systematically anchoring the preferred course of action in a specific situation to a general, purpose-giving statement. Many good leaders practice anchoring off the cuff, without thinking.
Anchoring, step one: Timeout Discussions
The key lies in the discussion of individual trade-off cases. Just like the broken phone, also my cable story could be a case worth discussing from the point of view of a shop assistant. Take the team together, and offer the situation for decision, exactly like I did at the beginning: “A customer walks in with a broken mobile phone… – what do you do?” Three things are noteworthy about the choice of case, and the way to present it. First of all, it is a case. Why is this noteworthy? For whatever reason, many managers seem to shy away from the individual example. There is a tendency to drift towards the generic, towards the one rule that covers them all, towards making one statement which is valid for many cases. And, of course, a large part of management practice is about that. But not here. We have to choose an example, knowing that there are many other examples which are slightly different.
Second, the case represents a relevant trade-off decision. Both the broken phone and my cable are examples of the trade-off customer satisfaction vs. cost. Other trade-offs may be speed vs. security. Long-term vs. short term advantages. Standard vs. exception. Our team’s problem vs. a problem for someone else in the value chain. Etc. etc. The reason for choosing our case is exactly that we have noticed, or suspect, a need of alignment, therefore we expect the team members to propose different approaches to the case, and not all will be equally apt.
Third, although we most probably base our case on a past observation, it is important to accentuate the trade-off, stop at the moment of decision, and not give any indication as to how we, or the person we observed, have reacted in the real story. From now on, the real story is of little importance – it’s about the way the situation challenges our values.
The next step is to collect the diversity of answers around the table. I have seen teams simply tell their answer one after the other. While this approach is simple and fast, the risk is that as soon as the first person begins to speak, the others quietly alter their proposed approach based on what they hear. Since at this point we want the diversity of uninfluenced approaches, we need some maturity, and psychological safety in the team to let everyone understand that they should tell their original idea, no matter what the others say, because modifying their idea at this point would defy the purpose of the exercise. Other teams I have observed have team members write down their answer on a paper, and then read them aloud. In any case, it is important that we don’t start a discussion before everyone has stated their approach.
Now that we have the diversity of the team’s approaches on the table, we can open the debate: What is particularly good, what is ok, what is not such a good idea, and what is a no-go? Here, obviously, it is important to let the team speak their mind first, and accept anything that is in line with the company’s intent. Only in case the team comes to a conclusion which goes against this intent, is it time for the team leader to exchange their facilitator role against the role of a judge, and contradict, or adjust, the team’s dominant opinion. In such a case, we take care to legitimize our statement with the anchor, which is described below. At all cost, we need to avoid that the team sees our intervention as arbitrary.
Another thing we don’t do, is end the session with a verdict – and again this is in fundamental opposition to many management practices, where it’s all about decisions. It is not the point of these discussios to come up with a regulation, because no matter what, the next case will again be slightly different. It is exactly the intent of this method to prepare for the next slightly different case. If somebody has participated in timeout discussions of ten cases around a certain topic, when they meet the eleventh case in practice, and stand alone to decide, their decision is in fact substantially more aligned to the intent of the company than before.
To sum up, we may note that the practice of timeout discussions follows four principles which go against what I observe as widespread habits of management. I call them the four EX:
Experience: Focus on collecting individual experiences and augmenting them in exchange with other experiences instead of devising instructions top-down or out of theory.
Example: Focus on alignment across a series of examples instead of creating the one generic rule that is valid for all cases.
Exchange: Focus on exchange and influence in teams instead of individuals learning by themselves.
Experiment: Focus on experimenting and adapting approaches instead of one upfront solution that guarantees success.
By applying these principles to our timeout discussions, step by step we increase the alignment across the team, without inhibiting the autonomy of decision that is part of our delegation, and thus we uphold the organisation’s capacity to react to the exceptional and the unpredicted.
There is, however, another part of the method that remains to be established – the anchor itself: the strategic storyline.
Anchoring, step two: Strategic Storylines
We are in the middle of a timeout discussion. We have chosen our case well, which means there are many different, contradicting courses of action on the table. People argue with conviction, revealing the different values that drive their behaviour. At one point we may invite the team to search for alignment, to come up with some authoritative statement, that helps prefer certain proposed behaviours over others. What is the appropriate form of this authoritative statement? Take for example the above case of the broken phone. WHY is it better to replace the phone? If the answer is just “Because that’s what the company wants” we’ll never get people to use this information for anything else but phone replacements. Team members may even come back and ask for precision. Until how many days after the warranty has expired? What is the maximum price of the phone? How convincing must the customer’s reasons be? – And that is the wrong approach. By comparison, observe the following explanation: “The market for mobile phone subscriptions is dominated by an obsession with price. We are a premium supplier, that means we manage to defend our market position, although we are never the cheapest. This only works under two conditions: First, we have to offer premium quality both of product and service to legitimise our premium price. Second, on every occasion must we lead our customer’s focus away from the price, and towards quality, where we outshine the competition. Our existing customers are very quality aware. By emphasizing the quality argument, we respond to their expectation.”
What is the difference between these two explanations? The second version connects the phone replacement to the company’s strategic positioning – the replacement is not just the thing to do. It makes sense. By comparison, in the first version the connection is just to the company’s intention, no matter how arbitrary this intention may be. This has fundamental pragmatic implications: a team member can use and apply the second explanation for so many more situations, while the first explanation is only valid for replacing phones. Carsten Schloter, CEO of Swisscom at the time and one of the top managers that I’ve observed using strategic storylines, guessed that every company has probably no more than half a dozen storylines on corporate level, that provide orientation and meaning for almost every trade-off decision in the organisation. Next to the corporate storylines, there may be some more storylines on local level, such as the need to replace IT systems, or the fact that you’re the small foreign subsidiary of a large national company, and therefore often overlooked when it comes to applying company decisions abroad. In any case, for an employee there is a manageable number of such storylines that help them make sense of decisions and priorities. A storyline is like a reservoir out of which we can draw the justification of behaviour in an individual case. While discussing the case, the relevant explanation can take as little as one sentence. But the reservoir holds more. As we will see, the full potential of the storyline as an anchor lies in its repeated application to many cases, and that this repetition is recognised by the audience – again: if we have heard the same storyline applied ten times, the eleventh time we can do it ourselves. It is therefore worth thinking them through at a level which may rarely be applied in everyday conversations, but which does justice to its versatility as a reservoir.
Sometimes people make the mistake of creating one big storyline for everything in the company. The consequence is that they mix so many aspects of the company’s reality that it is difficult to understand which parts of it give meaning to which other parts. An essential starting point for a storyline is therefore the choice of focus. What aspect of our company’s reality do we want to emphasise? In the above case we want to explain what it means to be premium. Another company might have a storyline which explains the consequences of growing more internationally than in the domestic market. A car manufacturer may have one to explain the consequences of having a mind-blowing number of product options to choose from. An IT company may have one which explains dealing with the insane speed of technical evolution.
Once the focus is clear, a good storyline has between two and four building blocks, that each respond to their own question. Let us look at them one by one.
- What is going on out there? Anyone’s actions only make sense in their context. Therefore one should not start with what the company does, but what in the company’s context makes its actions look like a good idea. Some may be about the product, the customer, rules of the game of the market, regulations, or supplies. They may have to do with the strategic positioning of the company, or simply with how the business works, e.g. what the key customer interests are. For example, an insurance may start a storyline with the fact that customers are not really interested in insurances, they just want to have one so they don’t have to think about it anymore. And their most regular form of customer interaction is a bill. A hotel having recently become part of a chain may have a storyline about the leverage of customer loyalty, pointing out that if a customer is loyal to a chain, they may prefer a hotel of this chain wherever they go on the globe, whereas for an independent hotel, customer loyalty only makes a difference on the occasions that customers happen to come back to visit the same town. A producer of machine equipment may have a storyline which starts with the fact that due to digitalisation, batch sizes along the value chain become smaller, and therefore the cost of retooling between two batches becomes a more important factor of the cost of each piece. It is important, in this part of the storyline, not to describe the environment in general, but only that part which explains why the next step is a good idea.
- How do we respond? The second step is inward looking. It describes what the company does in order to respond to the context shown in step one. The insurance company may point out that in all interactions apart from sales, the most important effect to create in the customer is ease. Ease of payment, ease of getting information if needed, ease of handing over the paperwork in a case of damage. Therefore, it is important to optimise end-to-end processes across silos, and to avoid creating difficulties, or questions, in other parts of the company. The hotel may point out to what length they expect employees to go in order to produce customer loyalty, what means they are given to do so, and how they should increase interest in the chain, not just in the hotel where they are staying. The machine equipment producer may emphasise the focus on lead time, and that it’s worth the effort to group similar batches in order to reduce retooling time per batch. In this part, it usually happens in one or two steps that the storyline moves from a general statement about the company, to the context for which we want to make this relevant. In the insurance company, the same storyline becomes to the front-end employees a tale about understanding the customer’s needs and reducing the number of interactions. For the back-office, it may be more about process optimisation. The anchor provides relevant orientation for the behaviour we focus on.
- How do we tick in order to make this happen? The third step is optional, and gives a nice twist on how culture can be influenced, not by talking about culture, but by talking about the business. If there is a conclusion to be drawn from the first two points towards mindset and behaviour, then it is helpful to make this obvious. In the first example, making it easy for the customer implies elements of empathy – understanding the customer’s needs, and gaining trust: we are the experts who want to be trusted by the customer – in order to do that we need even more trust across our departments. With the hotel chain it may be about learning about the individual customer and understanding what is important to them. Engaging into conversations with customers has a lot to do with the self-confidence of employees. And in the factory, it may be about a culture of responsibility and collaboration in order to take initiatives that go beyond the blind execution of individual tasks.
- How do we lead in order to make this happen? A second optional element actually depends on the people to whom the storyline is addressed. If they lead others, then it is often possible to draw conclusions to particular aspects or tasks of leadership which become essential – usually related to step three. If you want to increase cross-departmental trust in an insurance company, you should stop the blame game whenever you see it, let people work more together, let your team discover the effects of their work across the value stream etc. If it is about increasing the self-confidence of hotel staff, it has much to do with treating them on eye-level, with how you delegate, praise and blame. And the initiatives you desire in the factory happen more if they are encouraged, and if people have direct access to other departments.
With this structure in mind, we now have he anchor around which to encourage alignment. The key here is repetition. People should recognise the same few storylines in as many occasions as possible. Of course, a systematic use of timeout discussions is a good way to get there. But it can go beyond that. A person is promoted, another one leaves for retirement. In both cases we are asked to give a speech. There are a thousand aspects which we could choose to praise – why not connect the ones we choose to a storyline? Why are we stopping this project, and increasing the resources in that other one – explain it with a storyline. The more we move from the team to higher, more visible levels of management, the more important is the coherence of messages sent into the organisation. Carsten Schloter pointed this out many times:
“Imagine an employee who has the autonomy to act, and they want to take a decision – and they can see: If I choose this path, it will please that top manager, but it will absolutely not please that other top manager. In such a case, the employee will not want to decide. They will try to move the delegation back up the chain of command – the organisation becomes stiff and ineffective. Therefore, it it is absolutely essential that the management team does not send contradicting messages into the organisation concerning the key trade-offs of the company.”
As a consequence, Schloter organised several top management off-sites per year where they conducted something similar to timeout-discussions. They discussed two questions: What is the impact of employee behaviour on the business? And what is the impact of top management behaviour on employee behaviour?
If we take this back to timeout discussions, we can see that for top management, it is not only helpful to discuss cases of leadership, but to discuss cases of the employees in various parts of the company.
In other cases, the anchoring and the alignment effect happens simply because top managers tell stories with the same strategic storyline as anchor. For example, Urs Berger, when he was Swiss CEO of Baloise, had a storyline under the title of “High tech – high touch”. What he meant was that in times of the first e-commerce bubble, many customers wanted to move to digital access, and in the process also called more into the hotline in comparison to the old-fashioned sales agent, or visits to the general agency (step one in the storyline). High tech – high touch meant that the company wanted to be present on both channels, and let the customer choose. This implied for example that there was no difference in prices, although the cost of the various channels was very diverse (step two in the storyline). Berger used this anchor, and the motto, on every occasion he could. I remember once he unveiled a “damage mobile”, a trailer that the company wanted to use in cases of hailstorms – when hundreds of cars had to be checked for hail damage in a region. The trailer could be placed somewhere in the area, customers were informed and brought their cars for inspection. On one side, the trailer had all the equipment necessary for the inspection – notably the special lamps used to discover small bumps in the paintwork. On the other side, there was a coffee machine and a little counter for the waiting customers, and maybe a sales agent who was ready to talk to them about household insurance: high tech – high touch.
Another famous example of the use of storylines were the Dormann Letters. Jürgen Dormann was CEO of ABB in the early 2000s, and in this period sent an e-mail to all employees every Friday. The letters were so famous they were even printed as a book after the end of this period. The key storyline of the period was that ABB did not need a new strategy, but that they had to become much more disciplined in executing on the existing strategy. But very few of the letters are about strategy and the like from a corporate perspective. Most of them are along the lines of: “Last week, I visited a site in the U.S., and here’s what happened…”. Again, it is not the generic statement that covers it all. It is examples, and all of them are different, all of them are typical for something, and not at all typical for many other things. And slowly, the storyline became apparent as the anchor of a series of individual examples.
Today, this idea can be further developed into various forms of management blogs. I have worked with several senior and top management teams who have decided to write a common blog – taking turns in recording examples around a small number of strategic storylines. The effect of this exercise is twofold: First, the staff perceive very clearly the unity of voice amongst the team: different team members may talk about different examples, but in essence, the message is the same. Second, this unity of voice was established in the preparation work. Not the least since many managers do not feel comfortable writing longer stories, they prepared a bunch of blog posts together. And the conversations – guess what! – had an effect similar to timeout discussions: across the examples, team members developed their alignment of mindset and values. And on this basis, their autonomous activities out in the field became more aligned, too.