I have had the pleasure of working for several great companies and within highly functioning executive teams throughout my career. Along the way, I have made some interesting observations, one of which is that, in my view, companies and their executive teams are like ecosystems in nature.
Natural ecosystems consist of animals, plants, microorganisms, and non-living materials, all of which depend on each other and their surroundings. A balanced ecosystem is signified by a habitat which is healthy and sustainable. In nature, abrupt environmental changes, both natural and man-made, such as pollution, fire, drought, and over-harvesting disrupt this delicate balance. This can threaten or weaken the entire ecosystem, negatively affecting all of its members, or resulting in some species becoming threatened, diminished, or even extinct. Imbalance can also occur when a species that is naturally successful begins to aggressively dominate.
The Corporate Environment
So why is a company and its executive team like a natural ecosystem? Because companies also require a balanced and healthy environment for their people and balance sheet to prosper. A healthy corporate environment consists of such things as a positive culture, effective communication, clear lines of responsibility, fair compensation, and a safe workplace.
A Balanced Ecosystem
Think of the executives and other employees in a company as the various species in a natural habitat, all living together, and all connected. Just like in nature, it is imperative that the members stay in relative balance, that no one department and its leader weaken; and that no one department or leader begins to dominate and take over.
Functional Competition of the Species
I am sure that we have all noticed that the interests of various corporate departments are sometimes quite opposed. What is good for one is not always good for the others. I have seen a power imbalance in executive teams many times in the corporate world, and it can come from any functional area.
For example, an out-of-control Human Resources leader can start to “run the company” and overload it with policies, procedures, administration, and witch hunts.
A dominating operations department whose leader is tasked and bonused on cost savings can cut customer service to the bone and severely damage the customer experience. Such situations create hardship for the sales and marketing departments, ultimately leading to revenue loss in excess of the savings achieved.
An overly dominant marketing department can lead to out-of-control spending and a lack of accountability for a positive return on marketing investments.
A dominating sales department can overpromise customers, excessively discount pricing, and place excessive demands on the company claiming, “it all starts with a sale”, or “nothing happens without a sale”.
Over-powered finance executives can go overboard on cutting expenses that are required to maintain and grow the business. In truth, most business expenses are budgeted and there for a reason, their return on investment.
Overall, an unhealthy and imbalanced corporate environment leads to many serious consequences, including toxic corporate culture, top performers leaving, strategies and plans failing, customers losing their loyalty due to bad service, expenses running out of control, brands losing equity, and product or service offerings losing their edge.
The Leader’s Role
So how do we create and maintain a healthy environment and avoid this imbalance of power? Foremost, it takes a good leader at the helm; one who sets the culture, moderates the tone, and keeps the power in balance. When each functional leader is equally empowered, they keep each other in check. When one functional department head inevitably tries to dominate debate, stops listening and does most of the talking, the leader must be vigilant and exert influence to keep things in check.
Team Member’s Role
Individual team members have a major responsibility as well. They must have the proper mind-set and demonstrate constructive behaviour. Team members are obliged to respect one another, listen actively, fully communicate and express their thoughts, be open to other points of view, and understand that functional departments sometimes have opposing interests. But at the end of the day, they must do what’s right for the common good.
Decision Making
Importantly, a healthy corporate environment also leads to the best decision making. A good leader must purposefully draw-out input from all team members. It is important that the leader considers the ideas, wants and needs of each functional leader and has the insight and courage to make the final call when all don’t agree. I have seen leaders do everything they can to avoid making hard decisions. They are more comfortable with doing a round-table to see what everyone thinks and what they “vote” for, and then going with the majority view, which is not always the best decision. Businesses are not a democracy.
Summary
If your company is having difficulty getting traction, it may be related to your internal business ecosystem. Ultimate causes of imbalance may be difficult to find, and are usually best assessed through an outside perspective. For example, exploratory research will reveal the diagnosis, and solid, customized strategies can remedy the situation and restore a proper growth-nurturing environment.
Should you need assistance, Tenato’s offices in Vancouver, Calgary and Toronto are highly experienced and readily available to help you out.
