In every walk of life, leaders are crucial to success. Arun Sarin outlines his three components of effective leadership. The Vodafone CEO explains how businesses can use these components to build competitive advantage.
Leadership matters, whether in business, sports or politics. Effective leadership has the potential to be a competitive differentiator. Great leaders can take mediocre institutions and make them great; conversely, poor leaders can weaken the quality of a great institution.
Over the last 20 years, I have observed great leaders, tried new leadership approaches and honed my own personal leadership style and philosophy.
I believe there are three interrelated components of leadership: strategic, operational and human leadership. The careful deployment of these three components can improve the performance of any organisation.
In essence, strategic leadership means getting the big picture right: the state of the world, the state of your industry and the state of your company.
Strategic leadership requires an intimate knowledge of your customers, of your markets, of the commercial and economic dynamics that are occurring in your marketplaces, and of the trends that will shape your company and your industry. It is very important to get the big picture right.
Twenty years ago, Vodafone was a challenger in new markets. In our middle years, we focused on acquiring a number of companies around the globe to create a world-class footprint. Today, we face a tougher operating environment for a number of reasons:
- Our markets are maturing; in many markets we have reached 100% penetration
- Competition is accelerating, there are new entrants and there are new business models, including low-cost, no-frills ideas borrowed from the airline and supermarket industries
- We face greater regulatory scrutiny
- We are heading towards a convergence of voice, data, entertainment and commerce
- Customers' needs and expectations are rising. This means we have to find new ways to meet these new requirements
To ensure we are going in the right direction, we have developed our vision, values and goals, which we use as a compass in our everyday work. All businesses, institutions and organisations should have a broad understanding of their vision, values and goals, to help them achieve strategic alignment.
VISION, VALUES AND GOALS
The first key element is vision. Vodafone is primarily a mobile wireless communications company; we do not have any landlines or fixed lines, nor do we intend to have any in the future.
We are very clear about who we are, what we are focused on and where we want to be. We do not want to be a fast follower or second in the market; we want to be a world leader.
Next comes values. Values define the culture of a firm and how it does business. We have our own statement of values, which we refer to as our four passions – for our customers, for our employees, for results and for the world around us.
We use these passions to identify the kind of people that we bring into the firm.
When we review candidates, we look for team players, people who are customer-focused, people who embody our brand and who will go the extra mile to enhance the reputation of the firm.
In a large organisation in particular, assembling teams of employees with these traits is essential in ensuring long-term success.
The third element is goals. At Vodafone we have six strategic goals, which reflect what it is we need to do:
1. Pleasing our customers: we want to be an even more customer-centric company, anticipating customer needs and providing the best products and services available in the mobile world.
2. Building the best global team: we are a service business, and we deliver our products and services through our employees. Our employees are a big part of the success of the firm. We need to make sure that they are trained and are completely up to speed on what is going on around them.
3. Leveraging scale and scope: around five years ago, we began collecting a number of businesses around the world, creating one of the world's largest companies. We now need to leverage this scale and scope. We need to source the best ideas from around the world, and to ensure that our customers benefit from these new ideas.
4. Expanding market boundaries: whether it involves moving into Eastern European markets or diversifying into the entertainment or IT sectors, we are expanding the boundaries of the company and the telecoms industry as a whole.
5. Providing a superior shareholder return: we know who our shareholders are and how high their expectations are. Through dividends, share buybacks and good resource allocation we intend to provide them with excellent rates of return.
6. Being a responsible business: this is not a luxury for us. Our products and services are part of the fabric of society, and we are obligated to be a responsible business. Our brand stands for responsibility and we take that responsibility very seriously.
Vodafone's business leaders take every opportunity they get to communicate these goals and initiatives to its 60,000 employees, and I believe vision, values and goals are the foundation of our strategic leadership, enabling strategic alignment, improving execution and ensuring that the organisation always sees the big picture.
The second component of leadership is operational leadership. Unless you are performing as well as you possibly can day in day out, you will give your customers reason to consider other options.
Operational leadership is therefore about delivering on your goals and measuring and monitoring the progress of your company. Irrespective of size, the benefits of this level of discipline and focus are considerable.
To achieve superior operational leadership, everybody in the organisation must share common goals. Strategic goals must be aligned so that individuals support the goals of their department, which in turn should support the strategic goals of the company.
This alignment of goals is the basis for regular measuring and monitoring. At Vodafone progress is measured in relation to our goals as well as our operational and financial targets. This process continues throughout the organisation right down to individual level.
Communicating goals and progress is another important part of operational leadership.
Because we communicate with our employees regularly, they understand what we are trying to achieve. This enables me to understand what our front-line employees are going through and ensures that the decisions we take help them to be more successful in their jobs.
Another important aspect of operational leadership involves designing an organisational structure that gets results. At Vodafone we are creating a 'flatter' organisation to help us serve our customers more effectively.
We strive to maintain local connections with customers while at the same time benefiting from our increased scale and scope.
We empower people with tools and information to ensure that all decisions benefit the customer and we seek out best practices that have been successful elsewhere and share them across the organisation.
I believe this kind of approach can be applied to any industry. In essence, operational leadership is the ability to get things done and achieve company goals.
The third component of effective leadership is people leadership. Leaders must be exceptional at connecting with people and getting the best from the teams around them.
People leadership means identifying and developing great employees, listening to them, and recognising and rewarding them. The question that ultimately determines the effectiveness of your people leadership is 'did you bring out the best in the people around you?'
At Vodafone we encourage our staff to move across different functions and geographies. In my own career, I have benefited immeasurably from working in different countries and performing different functions.
I have served as director of human resources, chief financial officer, general manager, international chief executive – the list goes on and on. This has prepared me for the role I have today. We try to use this model in developing aspiring leaders in the business.
People leadership is also about listening to employees. Every two years we ask our employees to share their views on work and the direction of the company and to offer any advice they might have for us.
In 2005, close to 90% of our workforce – 50,000 employees – completed the survey. We were fortunate to see an overall improvement in employee satisfaction, and found that Vodafone was regarded as an excellent place to work.
Employees said they understood the vision, values and goals of the company, but also highlighted areas where we could do better. These survey results become the basis for action plans throughout the organisation.
A CONTINUOUS COMMITMENT
The core concepts of strategic, operational and people leadership are very straightforward, but there are difficulties in achieving them.
One is simultaneous execution, which means you have to practice strategic leadership, operational leadership and people leadership simultaneously, week after week, month after month, quarter after quarter, year after year.
Equally, you must have the right people in the right jobs. Otherwise, the challenges of leadership are very difficult.
As you lead your organisations, ask yourselves how can you use strategic, operational and people leadership and how can you become better leaders. I believe that seeking answers to these questions will set you on course to win big in the marketplace.