Tag Archives: Leadership

Leadership

Perception of CEOs’ Non Verbal Leadership Behaviors Affect IPO Valuations, Predict Financial Performance

Elizabeth Blankespoor

Elizabeth Blankespoor

Favorable first impressions of CEOs can affect new companies’ valuations and can predict near-term performance.

Perception of CEO non-verbal behavior during IPO road show presentations was associated with higher valuations at each IPO stage, found Stanford’s Elizabeth Blankespoor, Greg Miller of University of Michigan, and University of North Carolina’s Brad Hendricks.
These findings underscore the importance of road show presentations and presenters’ credibility to investors, underwriters, analyst, and financial media.

Greg Miller

Greg Miller

Blankespoor’s team noted that for most investors, the road show is the first time they see the CEO in the two-week interval between setting the initial proposed price and determining the final offer price.
As a result, Blankespoor and colleagues posit “a tight link between perceptions and valuation.”

Participants in their investigation were hired through Amazon’s Mechanical Turk, a crowdsourcing task website, to view videotapes of CEOs presenting IPO roadshow, then to rate the speakers for competence, attractiveness, and trustworthiness.

Brad Hendricks

Brad Hendricks

At least 40 people viewed each series of 30-second video clips from 224 actual road show presentations between 2011 and 2013, with modified audio to muffle words while retaining vocal pitch and rhythm.

After controlling for other factors that could affect stock price like CEO age, experience, and education, companies with higher-rated CEOs on a composite score of competence, attractiveness, and trustworthiness ratings received a larger price increase for the proposed offering price and the revised price for secondary markets.

Mechanical TurkFor each 5% increase in CEO composite perception score, the final market price was 11% higher, and CEO perceived competence and attractiveness had a significant impact on firm valuation.
However, trustworthiness alone had no effect.

These initial perceptions also correlated with companies’ early performance, based on stock prices up to 12 months after the IPO, suggesting that “…investors … glean real additional information about the CEO from … nonverbal behavior and … perceptions of management are signals for firm value.”

Gotham Research GroupBloggers as well as traditional media outlets are important arbiters of CEO reputation.
In a commissioned analysis of 10 well-known institutional bloggers by the Gotham Research Group, perceptions of CEO authenticity were significantly related to bloggers’ evaluations of CEO competence and performance.

Candor, bluntness, fearlessness, specificity, plain words, examples from stories, warmth, frequent contact with customers and employees, and acknowledging challenges and worthy competitors are all essential to setting a credible tone, according to this report.

Weber ShandwickIn fact, Public Relations firm Weber Shandwick noted that 49% of company reputation is attributed to CEO reputation, and 60% of market value is attributed to company reputation.
Perception of a CEO, the firm argues, has significant influence on market value, underscoring empirical findings by Blankespoor’s team.

-*What non-verbal behaviors and attributes signal “leadership” and “executive presence” to you?

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Four Leadership Behaviors Differentiate Top Performing Organizations

Ralph M. Stogdill

Ralph M. Stogdill

Effective leadership is a critical part of organizational health and growth and an important driver of shareholder returns, according to Ohio State’s Ralph M. Stogdill with McKinsey’s Aaron De Smet, Bill Schaninger, with Matthew Smith.

Bill Schaninger

Bill Schaninger

Consistent with this report, more than 90 percent of CEOs said they plan to increase investment in leadership development because they see it as their single most important human-capital issue, reported McKinsey’s Claudio Feser, Fernanda Mayol, and Ramesh Srinivasan.
However, only 43 percent of CEOs reported confidence that leadership training investments will render an acceptable ROI.

McKinsey Organizational Health Index Top Leadership Qualities

To more accurately target developable leadership behaviors associated with superior organizational performance, McKinsey identified 20 critical leadership traits then surveyed 189,000 people in 81 organizations of varying sizes across industries.

Claudio Feser

Claudio Feser

They segmented organizations by leadership effectiveness measured by McKinsey’s Organizational Health Index, and focused on companies in the top quartile and bottom quartile.

The team reported that four skills closely correlate with effective leadership and explained 89 percent of the variance in leadership effectiveness between top-performing organizations and lowest-performing organizations:

  • Effective problem solving by gathering, analyzing, and considering information before taking a decision,
  • Operating with a strong results orientation, developing and communicating a vision and setting objectives to efficiently achieve results,
  • Seeking different perspectives by monitoring trends affecting organizations and the external environment and by encouraging employees to suggest improvements,
  • Supporting others by demonstrating authenticity and sincere interest in colleagues to build trust and help others manage challenges.
Ramesh Srinivasan

Ramesh Srinivasan

A related post outlines other findings of top leadership competencies required for optimal organizational performance, including “Big Eight Competencies” described by Lominger’s Voices® 360˚ Assessment:

• Dealing with Ambiguity
• Creativity
• Innovation Management
• Strategic Agility
• Planning
• Motivating Others
• Building Effective Teams
• Managing Vision and Purpose.

-*Which leadership behaviors do you find most imperative?

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Power of “Powerless” Speech, but not Powerless Posture

Assertive speech is assumed to signal competence and power, pre-requisites to status, power, and leadership in the U.S. workplace.

Alison Fragale

Alison Fragale

However, University of North Carolina’s Alison Fragale demonstrated that warmth trumps competence in collaborative team work groups.

Fragale studied “powerless speech,” which has been believed to make a person seem tentative, uncertain, and less likely to be promoted to expanded workplace roles.
She defined “powerless speech” as including:

  • Hesitation: “Well” or “Um”, as known as “clutter words”
  • Tag questions: “Don’t you think?”
  • Hedges: “Sort of” or “Maybe”
  • Disclaimers: “This may be a bad idea, but … “
  • Formal addresses:“Yes, sir” or “Yes, ma’am”

In collaboration-based work teams, “powerless” speech characteristics are significantly associated with being promoted, gaining status and power.
Interpersonal warmth and effective team skills are valued more than dominance and ambition by team members and those selecting leaders for these teams.

Paul Hersey

Paul Hersey

In contrast, “powerful” speech does not feature these characteristics, is more effective when the task or group is independent and people are expected to work alone.

Ken Blanchard

Ken Blanchard

As in Paul Hersey and Ken Blanchard’s Situational Leadership, Fragale concludes that communication style should be tailored to group characteristics.

Li Huang

Li Huang

Likewise, INSEAD’s Li Huang  and Columbia’s Adam Galinsky with Stanford’s Deborah Gruenfeld and Lucia Guillory of Northwestern University demonstrated the impact of “powerful” body language – also called “playing big” –  on perceived power.

Adam Galinsky

Adam Galinsky

Although assuming “larger” postures is associated with credibility and authority, some situations benefit from assuming “smaller”, less powerful postures to establish warmth or to acknowledge another’s higher status.

Lucia Guillory

Lucia Guillory

As noted in an earlier post, Women Get More Promotions With “Behavioral Flexibility”, careful self-observation and behavioral flexibility based on situational requirements are effective foundations to establish group leadership.

-*How do you monitor and adapt “powerless” speech to work situations?

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Leadership Qualities that Lead to the Corner Office?

Adam Bryant

Adam Bryant

Adam Bryant, deputy national editor at the New York Times interviewed more than 200 CEOs of top companies for his column, and distilled the leadership qualities that moved them to The Corner Office: Indispensable and Unexpected Lessons from CEOs on How to Lead and Succeed :

  • Passionate curiosity, deep engagement with questioning mind and a balance of analytical and creative competencies
  • Confidence based on facing adversity, knowing capabilities
  • Collaboration, ability to “read” and shape team dynamics
  • Ability to translate complex to simple explanations
  • Fearlessness in acting on considered risks  The Corner Office

These five characteristics augment qualities that might be considered “table stakes” – or “must-haves” for any leadership candidate:

  • Preparation
  • Patience
  • Navigating organizational obstacles  
  • Building a team of diverse members by galvanizing with a clear mission and spending time with members

Bryant argues that these behavioral competencies may be developed through attentive effort, but he acknowledges that some people have greater natural predisposition and aptitude for these “ways of being.”

Lois Frankel

Lois Frankel

Lois Frankel’s earlier book, Nice Girls Don’t Get the Corner Office: 101 Unconscious Mistakes Women Make That Sabotage Their Careers provided different recommendations for women seeking leadership roles, later empirically validated in research studies:

  • Act like a mature woman rather than a “girl”
  • Frame statements as assertions rather than questions
  • State and initiate a course of action, rather than waiting to request permissionNice Girls Dont Get The Corner

In contrast, Bryant particularly advises women to “meet as many people as possible and build relationships because serendipity and chance encounters can lead to unplanned opportunities.”

Research organizations like Catalyst and Center for Talent Innovation conduct social science research to investigate these behavioral and attitudinal recommendations.

CatalystBoth groups have questioned the applicability of mainstream recommendations in leadership development curricula when implemented by women, minorities and “people of color.”

Their continuing research agendas include analyzing the behavioral components of general recommendations such as “demonstrate gravitas” which the majority of top executives affirmed as “… critical for leadership. I can’t define it but I know if when I see it.”Center for Talent Innovation

These research organizations seek to more clearly define what these key executives see in critical leadership attributes like “gravitas” and to define them in replicable behavior terms.

-*Which leadership behaviors do you consider most important for any executive?
-*Which behavioral competencies are most crucial for aspiring women leaders?

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How and Who of Innovation

Many innovation experts urge overcoming roadblocks by “doing something different”, and Alex Cornell joins the chorus in his Breakthrough!: Proven Strategies to Overcome Creative Block and Spark Your Imagination 

In contrast, Tom Kelley offered more specific guidance in the stages of “how” innovation is managed at IDEO in   
  The Art of Innovation: Lessons in Creativity from IDEO, America’s Leading Design Firm:

•              Analyze the market, potential client groups, technology, and constraints for each innovation problem
•              Observe people in typical life situations
•              Visualize novel concepts and their intended customers
•              Evaluate and refine prototypes during rapid iterations
•              Implement new concept for commercialization

Steven Johnson offers seven non-linear principles of innovation in Where Good Ideas Come From: The Natural History of Innovation:                                                          

•              Adjacent possible: Timing is essential for innovation to be accepted

•              Liquid networks: Connections between different disciplines to enable ideas development and implementation

•              Slow hunch: Insights incubate, germinate over time before becoming executable

•              Serendipity: Spontaneous, chance juxtaposition of ideas applied to other

•              Error: Outcomes considered “failures” from numerous trials  may lead to – and be required – to successfully implement ideas

•              Exaptation: Reusing existing ideas, technologies for a different purpose

•              Platforms: Adapting, recombining existing knowledge, components, implementation approaches to develop something new

Expert innovators seem to follow these guidelines and have developed skill through what Geoff Colvin calls “Deliberate Practice” in “What Really Separates World-Class Performers from Everybody Else”, the sub-title of his book, Talent is Overrated.

He notes that Deliberate Practice is not considered “fun”, but is a highly demanding and repeated mental challenge, systematically designed to improve performance with consistent expert monitoring and feedback.

Colvin’s premise is based on K. Anders Ericsson’s classic Harvard Business Review article, “The Making of an Expert“, which outlines three contributors to superior performance across disciplines:

•             Deliberate Practice to improve existing skills and to extend the reach and range of skills
•             Expert coaching with consistent monitoring and corrective feedback
•              Support from family and mentors

Kelley of IDEO focused more recently on the “who” of innovation in The Ten Faces of Innovation: IDEO’s Strategies for Defeating the Devil’s Advocate and Driving Creativity Throughout Your Organization, organized by Learning, Building, and Organizing capabilities:                     

•              Experience
•              Set Designer
•              Caregiver
•              Storyteller
•              Anthropologist
•              Cross-pollinator
•              Hurdler
•              Experimenter
•              Collaborator
•              Director
Meredith Belbin offered similar analysis of eight team roles in his Team Roles at Work  and Management Teams: Why they succeed or fail  to ignite collaborative strategy definition and execution.   

These findings suggest that processes and practices can help shape innovation, but consistent, focused and attentive practice increases capacity to innovate more than “natural talent” — validating the well-known homespun advice to “work hard” and demonstrate a “strong work ethic.”

-*What processes and roles do you use to increase innovation at work?

Related post:  
It’s Mostly Random, So Just Do Something: Suggestions to Guide Innovation, Creativity

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It’s Mostly Random, So Just Do Something

Several recent books showcase Big Ideas in innovation:

  • Success often has random elements
  • Active experiments and reflective “incubation” are required for effective innovation.
Frans Johansson

Frans Johansson

Frans Johansson argues that most success “comes from things we cannot predict and plan: serendipitous moments, unexpected and spontaneous approaches, unusual combinations, and lucky breaks,” in the form of “click moments”, which can move people and ideas to a new, unexpected direction” in in Click: Seizing Opportunity in an Unpredictable World.

Leonard Mlodinow

Leonard Mlodinow

Johansson, Leonard Mlodinow and Nate Silver (“American statistician, sabermetrician, psephologist”) all demonstrate that events are more random than people typically acknowledge, and Johansson recommends specific actions that individuals and organizations can take to favorably focus this randomness

Nate Silver

Nate Silver

Follow your curiosity:  Capitalize on interests and “passions” to drive creative explorations

  • Use cross-disciplinary, “inter-sectional” thinking to break “associative barriers”
  • Examine surprises and unintended consequences for possible inspiration and re-usable ideas
  • Be aware of opportunities everywhere, requiring a mindful engagement rather than living “automatically”, and explore “all” opportunities
  • Scan for momentum and align to it
  • Choose a less predictable, or more “contrarian” solution
  • Act: Place many “purposeful bets” to try many options, with no expectation or guarantee of “success”
  • Minimize bet size to reduce the impact of loss
  • Take the smallest executable step (measured by time, money, partners)
  • Calculate acceptable loss rather than focusing on return on investment
  • Create “large hooks” to scaffold and leverage creative “borrowing” from existing sources
  • Shift focus from the problem to enable cognitive “incubation” of ideas
  • “Double down” when opportunities are not obvious

Many of these recommendations are more similar to behaviors intended to increase creativity and innovation than to quantitative finesse maneuvers.

For example Johansson’s recommendation to engage in “purposeful bets” draws from Peter Sims’ recommendations to place Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, which are low-risk experiments to discover, develop, and test an idea.

  • Experiment to “fail quickly to learn fast”  – see post on Eddie Obeng
  • “Play”  by establishing a fun environment to cultivate innovation
  • Immerse  by interacting with customers
  • Reorient by make celebrating small wins and undertaking improvement “pivots”
  • Iterate by frequently testing, refining and improving-*How do you detect and optimize opportunities?
    -*How do you manage uncertainty in your career?

See more recommendations to boost innovation and creativity at: How and Who of Innovation  LinkedIn Open Group The Executive Coach

Related posts
Cognitive Biases in Unconscious Automatic Mental Processing, and “Work-Arounds”

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Doonesbury Celebrates Women’s Contributions to Work Groups via Thought Diversity and Emotional Intelligence

Doonesbury Celebrates Women’s Contributions to Work Groups via Thought Diversity and Emotional Intelligence

-* How have you seen women’s Emotional Intelligence applied in the workplace?