This is a commentary/analysis of a case posted in Harvard Business Review in Jan-Feb 2019. The entire case can be read digitally on the HBR website. I would recommend reading or skimming through it before diving into this analysis. While developing this discussion over here our aim would be to provide maximum context while keeping it most concise.
Situation: Lance Best is CEO of Barker Sports Apparel, a company that manufactures licensed sports merchandise. The company partners with large brands to bring the apparel to the retail markets. Five years ago when Lance inherited the company from his father Eric, the revenues were 100 million pounds. For a while, the company CFO Damon Ewen and the Head of Sales Ahmed Lund have been in a tussle and havenāt been collaborating. According to the General Counsel and HR, Nina Kelk, these differences are percolating on teams within the organization and leading to a lack of mutual trust.
Aim: To answer the following questions.
Should sales and finance departments be at odds? Can the resulting tension be productive for an organization?
Would this conflict play out differently if Barker Sports weren't a family business?
How should Lance handle the conflict between Damon and Ahmed?
Lanceās actions:
He believed some amount of tension between sales and finance was usual in organizations.
The revenue growth was healthy. 28% and 22% for the last two years, the latter being the latest. He assumed that the tension had no derogatory effects on the company.
Previously, Lance would diffuse the situations by taking sides of the parties that were lesser worse than the other.
Effects of tension:
Lack of collaboration between Head of Sales and CFO.
Distrust between team members.
Increased customer onboarding time (6 months)
Possible Solutions:
Re-consideration to employ a leadership development organization for his senior team. [Recommended by Jhumpa Bhandari the Head of Product, given the messy situation between CFO and Sales Head. Missed opportunity in the past.]
Consideration of a team-building retreat. [Ericās idea]
Increase percentage bonuses attached to company performance. The assumption is that it might increase collaboration. [Ericās idea]
To fire them. [Jhumpa joked]
Analysis/Questions to explore:
Relationship between trust and collaboration: Trust and collaboration might be independent qualities linked via a one-way bridge. Collaboration doesnāt have to entirely rely on trust to take place, individual motivational factors can also lead to collaboration. But then, we also donāt want trust-less collaboration to just get the work done. Trust-less collaboration would probably not lead to innovations. So, individuals should āwantā to collaborate first, the trust would be a result of sustained collaboration effort. To build an efficient workforce, our effort should be to develop this āwantā towards collaboration. Example: To develop a āwantā towards collaboration, Mars Inc. a family business, made the employees realize how collaboration would lead to more success and identified activities that require collaboration.
Identifying healthy and unhealthy debates: Could the situation had been much easily solved when the first differences were noticed? Did Lance make a mistake by taking the side of lesser worse in previous diffusion attempts? One should be able to identify the boundary between healthy debates and personal debates. Healthy debates would develop new solutions, while personal debates would build barriers in the current processes. The boundary would be where debates stop being fun and start being additional work.
Answers:
As quoted in the case. The goal of the sales department is to increase revenues, while the goal of the finance is to maximize profit. Revenues and Profit are both key metrics for the companyās performance, and hence the optimum performance of the sales and finance departments are also important. But what happens when one is stronger than another? Either profit would decrease or revenue wonāt grow enough to reach the intended goal. So the competition to keep these two metrics at equilibrium would be important. But a better way to solve this problem would be if Ahmad and Damon collaborate and calculate mathematically the range of profit that is to be maintained to grow to 500 million pounds in revenues by 2022. Now any conflicts if they go too far can be quantitatively resolved by going back to the projections.
The key effect of Barker being a family business is that Lance inherited the senior team that Eric had built. The team is like a family to Eric, and hence thereās an emotional aspect to decision marking. There are also instances in family businesses where father-son donāt go along, in our case Lance and Eric have mutually agreed goals (revenues to 500 million pounds by 2022) and Eric agrees that the decision to fire is Lanceās. Hence in the Barker scenario, thereās a stable father-son relationship. Normal businesses have the liberty to hire CEOs that are compatible with the team, but in a family business, the team has to cope with new methodologies and structures brought by the CEO. In Lanceās case, we note that even after 5 years of working with the team, thereās a key internal struggle to be solved. This might hint that Barker Sports needed a CEO with stronger human resource skills, while Lance might be stronger in bringing new opportunities (given the new Howell deal and revenue 20% + increase). We can note that team retreats and increased compensation were Ericās ideas that were never implemented previously, which means such conflicts did exist when Eric was the CEO. By being a family business Barker Sports has inherited the āconflictsā weak point, hence not being a family business could have made a difference.
Lance should go through this three-step process to solve the problem:
Check if motivations are aligned: Asking questions like are you loving what you get to do every day? What could the company do to make work more fun? What are the most interesting things that you look forward to at work every day? Bruteforce collaboration (team building activities) wonāt increase the work effectiveness if the āwantā doesn't exist. Check the āwantā (motivations) to collaborate and then design situations that test their collaboration (team building activities/retreats). Motivations could be aligned by increasing compensation, balancing power, or improving the decision-making structure.
Show them why collaboration is important: This step involves holding discussions on questions like, What tasks could be solved by collaboration? What would be the difference in outcome for these tasks if solved individually and with collaboration? (Try to lead these questions towards quantitative terms like, reduction of customer onboarding period by X months, an increase of net income by Y amount). Develop the outcome of this discussion into a framework. [In the context of this case, this point will solve the problem as Damon perceives that giving individual best is all that matters āAnd thatās what Iām doing: my job. Iām the keeper of the bottom line, and that means Iām going to butt heads with a few peopleā ā the team needs to collaborate over the bottom line].
Identify core issues: Core issues to a problem involving corporate tussle would be: lack of communication, lack of compassion, not being a good listener. These can be identified easily as good or bad for the company. So, if misaligned motivations arenāt the factor, the next step would be to break down the complex problem and identify core individual issues. If a leader is identified to be a bad listener, a personal coach could help him develop that skill. But if characters still remain the same, the last option could be to fire the individual.
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Case Analysis: When Two Leaders on the Senior Team Hate Each Other
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This is a commentary/analysis of a case posted in Harvard Business Review in Jan-Feb 2019. The entire case can be read digitally on the HBR website. I would recommend reading or skimming through it before diving into this analysis. While developing this discussion over here our aim would be to provide maximum context while keeping it most concise.
Situation: Lance Best is CEO of Barker Sports Apparel, a company that manufactures licensed sports merchandise. The company partners with large brands to bring the apparel to the retail markets. Five years ago when Lance inherited the company from his father Eric, the revenues were 100 million pounds. For a while, the company CFO Damon Ewen and the Head of Sales Ahmed Lund have been in a tussle and havenāt been collaborating. According to the General Counsel and HR, Nina Kelk, these differences are percolating on teams within the organization and leading to a lack of mutual trust.
Aim: To answer the following questions.
Should sales and finance departments be at odds? Can the resulting tension be productive for an organization?
Would this conflict play out differently if Barker Sports weren't a family business?
How should Lance handle the conflict between Damon and Ahmed?
Lanceās actions:
He believed some amount of tension between sales and finance was usual in organizations.
The revenue growth was healthy. 28% and 22% for the last two years, the latter being the latest. He assumed that the tension had no derogatory effects on the company.
Previously, Lance would diffuse the situations by taking sides of the parties that were lesser worse than the other.
Effects of tension:
Lack of collaboration between Head of Sales and CFO.
Distrust between team members.
Increased customer onboarding time (6 months)
Possible Solutions:
Re-consideration to employ a leadership development organization for his senior team. [Recommended by Jhumpa Bhandari the Head of Product, given the messy situation between CFO and Sales Head. Missed opportunity in the past.]
Consideration of a team-building retreat. [Ericās idea]
Increase percentage bonuses attached to company performance. The assumption is that it might increase collaboration. [Ericās idea]
To fire them. [Jhumpa joked]
Analysis/Questions to explore:
Relationship between trust and collaboration: Trust and collaboration might be independent qualities linked via a one-way bridge. Collaboration doesnāt have to entirely rely on trust to take place, individual motivational factors can also lead to collaboration. But then, we also donāt want trust-less collaboration to just get the work done. Trust-less collaboration would probably not lead to innovations. So, individuals should āwantā to collaborate first, the trust would be a result of sustained collaboration effort. To build an efficient workforce, our effort should be to develop this āwantā towards collaboration. Example: To develop a āwantā towards collaboration, Mars Inc. a family business, made the employees realize how collaboration would lead to more success and identified activities that require collaboration.
Identifying healthy and unhealthy debates: Could the situation had been much easily solved when the first differences were noticed? Did Lance make a mistake by taking the side of lesser worse in previous diffusion attempts? One should be able to identify the boundary between healthy debates and personal debates. Healthy debates would develop new solutions, while personal debates would build barriers in the current processes. The boundary would be where debates stop being fun and start being additional work.
Answers:
As quoted in the case. The goal of the sales department is to increase revenues, while the goal of the finance is to maximize profit. Revenues and Profit are both key metrics for the companyās performance, and hence the optimum performance of the sales and finance departments are also important. But what happens when one is stronger than another? Either profit would decrease or revenue wonāt grow enough to reach the intended goal. So the competition to keep these two metrics at equilibrium would be important. But a better way to solve this problem would be if Ahmad and Damon collaborate and calculate mathematically the range of profit that is to be maintained to grow to 500 million pounds in revenues by 2022. Now any conflicts if they go too far can be quantitatively resolved by going back to the projections.
The key effect of Barker being a family business is that Lance inherited the senior team that Eric had built. The team is like a family to Eric, and hence thereās an emotional aspect to decision marking. There are also instances in family businesses where father-son donāt go along, in our case Lance and Eric have mutually agreed goals (revenues to 500 million pounds by 2022) and Eric agrees that the decision to fire is Lanceās. Hence in the Barker scenario, thereās a stable father-son relationship. Normal businesses have the liberty to hire CEOs that are compatible with the team, but in a family business, the team has to cope with new methodologies and structures brought by the CEO. In Lanceās case, we note that even after 5 years of working with the team, thereās a key internal struggle to be solved. This might hint that Barker Sports needed a CEO with stronger human resource skills, while Lance might be stronger in bringing new opportunities (given the new Howell deal and revenue 20% + increase). We can note that team retreats and increased compensation were Ericās ideas that were never implemented previously, which means such conflicts did exist when Eric was the CEO. By being a family business Barker Sports has inherited the āconflictsā weak point, hence not being a family business could have made a difference.
Lance should go through this three-step process to solve the problem:
Check if motivations are aligned: Asking questions like are you loving what you get to do every day? What could the company do to make work more fun? What are the most interesting things that you look forward to at work every day? Bruteforce collaboration (team building activities) wonāt increase the work effectiveness if the āwantā doesn't exist. Check the āwantā (motivations) to collaborate and then design situations that test their collaboration (team building activities/retreats). Motivations could be aligned by increasing compensation, balancing power, or improving the decision-making structure.
Show them why collaboration is important: This step involves holding discussions on questions like, What tasks could be solved by collaboration? What would be the difference in outcome for these tasks if solved individually and with collaboration? (Try to lead these questions towards quantitative terms like, reduction of customer onboarding period by X months, an increase of net income by Y amount). Develop the outcome of this discussion into a framework. [In the context of this case, this point will solve the problem as Damon perceives that giving individual best is all that matters āAnd thatās what Iām doing: my job. Iām the keeper of the bottom line, and that means Iām going to butt heads with a few peopleā ā the team needs to collaborate over the bottom line].
Identify core issues: Core issues to a problem involving corporate tussle would be: lack of communication, lack of compassion, not being a good listener. These can be identified easily as good or bad for the company. So, if misaligned motivations arenāt the factor, the next step would be to break down the complex problem and identify core individual issues. If a leader is identified to be a bad listener, a personal coach could help him develop that skill. But if characters still remain the same, the last option could be to fire the individual.