Managers should focus on distributed leadership to unlock innovative skills of employees
Companies that empower and give meaning to employees create highly innovative and flexible organisations
Bank Tabungan Pensiunan Nasional (BTPN), a medium-sized Indonesian commercial bank happens to be the only Asian bank and only Indonesian company ranked in the top 50 of Fortune magazine’s “The Fortune 2016 Change the World” list. The bank’s emphasis on serving the lower-income segment, comprising of market traders, pensioners, micro and small and medium enterprises, and productive poor communities has gathered much attention for its meaningful and empowering outreach and its “do well by doing good” business philosophy.
The crafting of BTPN’s mission, vision and values began back in 2009 with participation from employees across all levels. The leaders work to create conditions that empower others in the organisation to take charge. Its vision to be the best mass market bank to make a difference in the lives of millions, and its core values, such as trustworthy and passion for excellence, are demonstrated by its leaders who further enable employees to figure out how best to bring this vision and values to life.
Jerry Ng, president director of BTPN and the management team also took pride to integrate its social programme within its business operations to create a company culture true to its tagline, hidup yang lebih berarti, translated as “to give our customers a more meaningful life”. The bank cascades this ethos down to its daily business activities, its branches and front-line staff by actively involving employees in problem solving and innovation, letting them make decisions on the ground to make sure that customers have a positive experience and operations run smoothly. There is a lot of communication and contact across levels of the firm and rewards and recognition for people who make a difference.
In 2015, the bank rolled out a simple yet innovative mobile banking programme BTPN Wow! to help the unbanked in remote lower-income communities by employing local agents who took on the roles of bank tellers within tiny local stalls and grocery shops. These agents have flexibility in how they serve these customers to help increase financial inclusion. This easy access to financial services through mobile phones and local agents instead of through bank branches is a bold yet socially meaningful move. In less than two years, BTPN Wow! has gained more than 2.5 million customers.
By enabling, empowering and giving more meaning to employees and agents and their work environment, they can in turn reach out to their customers meaningfully while treating them with respect, making the bank famous for its innovative solutions and customer service.
Not only has this made BTPN an attractive career destination, it has also brought the company strong profits and growth. In October 2016, the bank reported a year-on-year net profit after tax increase of 2 per cent to 1.4 trillion rupiah (HK$813.2 million). Put simply, the company’s success can be put down to what I and my colleague Deborah Ancona call distributed leadership.
Unfortunately, there aren’t many BTPNs out there. But if companies can create meaningful, dignified work environments, they can also create highly innovative and adaptable organisations. And they can do it by distributing leadership.
What we often refer to as leadership is the notion of a gallant leader performing miracles helming from the very top of an organisation. While this can be reassuring, especially at times of uncertainty, this type of leadership cannot be consistently successful in a changing environment – the kind of environment in which just about any organisation and any leader we know now operates in.
To be consistently successful, leadership tasks need to be distributed across levels, across functions, across geographies and across individuals to wherever the best information and capabilities reside. But this raises two questions: What capabilities are needed for effective leadership? And how can these capabilities be mobilised to put distributed leadership into action?
Our research has focused on four such core capabilities for distributed leadership first introduced in the Harvard Business Review article, In Praise of the Incomplete Leader, by Deborah Ancona and her co-authors.
● Sense making: This is to essentially ensure that the context in which the organisation is operating under is making sense. In order to do that, dialogue and frequent communication must take place up and down the organisation, as well as communication to external stakeholders to source expertise and new ideas. Connecting and mapping customer demands, cultural norms and competitive challenges is crucial to understanding the environment.
● Relating: It is becoming clearer, particularly in fast-moving environments, that leadership is not a solo sport. We lead through many people, so the ability to create trusting relationships with people different from ourselves is part of the relating capability. At the core of relating are two essential behaviours: inquiry and advocacy. To trust and empower the corporate entrepreneurs and mavericks at the front lines, let go of your own perspective and put yourself in their shoes. But inquiry alone is not leadership, so advocacy is inquiry in reverse, letting the other person know what your reasoning, data and understanding is to open the way for dialogue.
● Visioning: This is about creating a compelling picture of what the future looks like for the organisation. While sense-making is about “what is”, “visioning” is about “what is possible”. It is a process of articulating what members of an organisation may be able to create in the future. Steve Jobs was good at explaining that Apple was not just in the business of building computers, but in driving innovation that will change the way people think, act, learn and live.
● Inventing: This involves the development of creative ways to get around roadblocks and to keep the organisation moving as it shifts in new directions. This means creating the structures and processes to move toward the vision outlined in the previous point. It is important to give people permission to break the rules but at the same time provide them with guardrails.
But how many of us have all four capabilities and, more importantly, how many leaders do we know that have all four? Research suggests that most people are good at one and in exceptional cases, two. It is time to end the myth of the complete leader, the flawless person at the top who has got it all figured out. Leaders need others to be complete, which is why they need to rely on teams. These capabilities tend to be distributed across leaders in the organisation.
We have discussed this model team in our book, X-Teams.
X-teams are the vehicle by which distributed leadership takes place as they enable employees to make connections throughout the organisation and its power structure as well as outside the organisation, hence the “X”, which stands for external action. Throughout our research, we have found that high performance teams in today’s organisations “go out” before they “go in”.
Henrik Bresman is an associate professor of organisational behaviour at INSEAD and academic director of the INSEAD Global Leadership Centre