Creating a Culture of Leadership Development

In: BlogDate: Oct 04, 2021By: Billy Burgess

Kevin McCoy and Chris Hannay, of US e-commerce company Next Jump, understand the importance of investing in leadership development for getting to Beyond Budgeting. The culture at Next Jump is built around helping people with situational judgments, and the organisation’s investment in its people has led to revenue growth and business transformation.

In this talk at the 2017 Beyond Budgeting Conference, Kevin and Chris explain how to navigate the "lying, hiding, faking" problem and how investing in your people gets you to Beyond Budgeting.

Read the transcript and watch Kevin and Chris' full talk below.

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Creating a Culture of Leadership Development

KEVIN: I’m Kevin, I’m one of the co-founders of Next Jump; I’ve been with the company a little under twenty years now. This is Chris, he’s one of the directors in our UK office; he’s been with the company about five years.

Today what I’m going to talk to you about is this notion that in order to get to Beyond Budgeting, our thesis is that you need to invest in leadership development. I think it came up this morning, it came up at the last talk and one of the really interesting questions at the end was this whole “what would you do with your own money?” and I think part of that is around situational awareness and building your own judgment. We’re going to go through some practical guides on how we’ve built our culture around how to help people make those situational judgments and then that leads to leadership at every level of the organisation.

So just a little bit about Next Jump - I know Henry mentioned it - we’re at $2.5 billion in ecommerce sales, our day job is really around building ecommerce platforms for employees and we’ve got 3.5 million customers here in the UK. I think if you’ve Googled us or if you’ve heard of us probably since about 2012, the thing that really comes up often is around our investments in culture. I think about 24 months ago some professors from Harvard came and did this study on Next Jump and really dug deep into what we were doing. They named us as one of these three deliberately developmental organisations and it’s really shown from our profitability and our revenue growth where investment in our people has led to a transformational change in our business. So that’s really what Next Jump is about.

Understanding the problem that we’re going to cover today: this slide is about this transformation in where we’ve come from and where we’re going to, in terms of how decisions are made in organisations. If you look at it from the perspective of the old school top down management, you can have a decision made at the top and then middle management and workers would execute. But today if you’re either a disrupter or you’re being disrupted, the idea is that you need to push as much decision-making capability down to the lowest level of your organisation as possible. The real question is how do you go about doing that, what’s the method that you can use to actually have your employees making decisions: there are two problems that come about. The first one - I don’t know if anyone has seen behaviour like this at their own organisation - every time I see this slide, I want to crawl into the slide and move that tree out of the road, and it seems like the obvious choice but the driver made a conscious decision to do this. It was about doing his job versus doing the right thing and I think that came up before as well, so really looking at the root cause of what happened when he came to that point and made that decision is what today’s talk is going to be about.

The second thing that we’ve seen and I’m just going to take a minute to read this - this is directly from the book - it’s about the lying-hiding-faking problem that happens at probably every organisation. “Most people are doing a second job, no one is paying for them and they are spending time and energy covering their weaknesses, managing other people’s favourable impression of them showing themselves to their best advantage playing politics”. And in many organisations, you start out your career with a lie, because the interview process when you come into an organisation, you’re taught, even at university, and we see this all the time, you have to put your best self forward, you have to hide your weaknesses and then that happens throughout your career. There are books that are telling you it’s all about politics and how to navigate an organisational structure. So just imagine for a minute if you could take that extra job that you’re doing and maybe reduce it by half, maybe you still do some lying-hiding-faking, but if you were to reduce that job by half, how much more energy do you have to be able to invest into the things that are important about your job?

It’s about creating an environment where there’s safety to fail; those are the two key things that really lead to this whole issue around this leadership decision making. Companies traditionally spend a lot of resources and they’re really good at training hard skills: how do you use Excel; how do you code in Java; how do you go through a sales process? Where companies are historically weak is in training judgment calls which are really the key to leadership decision and those are emotional skills, not hard skills like Excel. That’s what the programmes that we have are going to introduce. If you take just about three minutes - this is the first table topic - so what I’d like you to talk about: do you see similar issues at your organisation, the whole idea of millennials entering the workplace and wanting the additional levels of responsibility; that renter versus owner; the lying and hiding; and then the emotional decision making. If you can as a table, come to a consensus - is this actually one of the problems that you’re facing as an organisation?

CHRIS: I’m going to be talking about the Road to Self Awareness. It sounds like quite a broad and interesting topic or scary topic for some people, but it’s all around how do you build a culture within your organisation that can allow you to teach decision-making? How can you teach situational judgement, so when it comes to responsibilities such as budgeting, such as people based decisions, you can trust that you’ve put the frameworks in place that mean that you can trust your employees to do the right thing.

So I want you to think of two situations. Situation A: it’s Sunday afternoon, you’ve achieved all your goals for the week, there’s literally nothing you need to do for the rest of the week, you've got sense of calm, you’re just sat on the sofa just ready for the world. Compare that [to] Situation B: where you’re in the car, you’re on the way to your mother in law’s 60th birthday, you’ve got two kids in the back of your car, one of them has a fever, they’re screaming, your wife is annoyed at you because you didn’t fix that leak that you have on the sink, and so you’re just not in a great place at that particular moment. Now imagine if a judgment call or a decision comes in that you have to make -  how you make that decision is going to be quite different depending on whether you’re in situation a where you’re very level-headed, you can think about previous times that you’ve made similar decisions, you can reflect on mistakes you might have made. Compare that to situation B where you’re sat in the car wishing you didn’t exist, but realistically the decision still has to be made.

Now they might sound like fairly extreme examples but every day in your workplace there will be different things that come in, different emails you get, different meetings you have, and you’re going to have to go make decisions based on a number of different things. How you make those decisions could often be quite different. How you operate outside of stress can be quite different to how you operate during stress. What we teach at Next Jump is very much how do you get self awareness for the sort of person that you are when you are under stress and the sort of decisions you make, because 9 times out of 10, probably 10 times out of 10, the decisions you make under stress are probably going to be the wrong ones.

So how do we do this? Has anyone heard of Jim Loehr? He’s a world class coach, he runs a human performance institute in Florida but he’s essentially coached pretty much everyone in the sporting world from Andre Agassi to top athletes to Olympians. And instead of focusing on the more technical sports-based skills, he very much focuses on the emotional training. Next Jump has been working with him for a number of years and what we’ve learnt from him is that character is a muscle and like all muscles, it can be exercised and strengthened. For example, people might typically say “I’m just not a patient person, that’s just not in my character” but that’s not true. If you want to become a more patient person, you can deliberately put yourself into situations where you can practice more patience: you can stand in more queues or you can do things like that, that make you slightly more comfortable when it comes to growing your patience. Now, we worked with Jim a couple of years ago around this idea of character muscles, and originally when we started working with him there were 23 spectrums, 23 different pairs of character muscles: one might be patience, one might be impatience; one might be optimism, one might be pessimism. And you’d go through the list and you’d say, during stress typically I would fall here on the spectrum of this one, and here on that one, and suddenly it left people being like I don’t really know who I am anymore because there are 23 pairs of character muscles and they all seem quite different. But actually what we found was that you can reduce these character muscles to two what we call the “mother” of all character muscles which are: are you more arrogant or are you more insecure during periods of stress. My name is Chris and I am arrogant, and this is Kevin and he is more on the insecure side.

Now what does that mean? During stress, I will typically be the first person to jump in, I’ll typically speak first in a meeting, I’ll typically jump to a solution and try and get things sorted when I need to make a decision under stress whereas this is quite different to what my colleague, Kevin, would do. He won’t mind me saying he is typically one of the last few people to speak, he will typically allow others to take the lead in stressful situations, and also he’s more likely to become paralysed when it comes to actually making the decision. What we’ve found is that across our entire organisation, we really can class people into, are they more arrogant during stress or are they more insecure during stress? What that allows people to do is to begin to understand, ‘okay what do I need to practice now that I’m getting this element of self awareness, what do I need to do so that the next time a stressful situation comes up and I might have to make a decision?’ I know that I’m more likely to typically jump to the solution when in actual fact I should do what Kevin does and consider all options before making that decision.

Self-awareness is a hard exercise and it’s often something that you won’t be able to do on your own. Typically, you will have many different blind spots when it comes to how you behave, things that you don’t even realise that you’re doing so one of the frameworks that we’ve created to allow people to make better decisions when it comes to anything, from people-based decisions, to strategy-based decisions, to finance-based decisions, is we’ve paired every single person in the organisation up into something that we call ‘Talking Partners’.

I don’t know about any of you, but what I’ve found is that as you get more responsibility, as more people rely on you to make decisions and to make calls, unless you have someone you’re talking through your decision-making process with, you can feel quite isolated when it comes to making those decisions, particularly when you know people are relying on you. The Talking Partner framework really is one that allows us to be able to talk through the different fear narratives that we might have when it comes to making decisions. Kevin and I are Talking Partners, we within the organisation are very much treated as decision-making machines together. Because I am more on the arrogant side and Kevin is more on the insecure side, he is able to see the blind spots that I currently have, he is able to show me different points of view that I might not typically see when I’m making a decision on my own.

The whole Talking Partner concept is one where on a very regular basis, literally every day, Kevin and I meet. The way that it works is that first of all, we will vent. So for example, imagine that you have this really big pitch or you have this really big meeting where you put forward a proposal and you wake up and you realise that you’ve got absolutely no hot water in your shower and you get to the train station, and you’ve just missed a train, but when you finally get on the train, there are so many different delays by the time you get in, you’re just frustrated. And now you’re expected to go straight into that meeting and make that proposal and you have all these other things going on in your head and you’re what we call “emotionally tilting”. What we do every day at an organisation level is I will go in and I will first of all meet with Kevin and I will just vent. I will rant about my morning, I will rant about all the things I have on my plate, I will talk about the things I’m scared of, I will talk about the things I’m pissed off at, and he will do exactly the same to me as well, and only through that do we get to the truth and the understanding what it is that is going on. So for example, he might say to me “Chris, you see how the way that you are approaching this situation is exactly the same as you’ve been approaching this situation for the last four months. Unless you change something there, you’re probably going to end up in the same outcome.” The most important part of the Talking Partner framework that we have is this concept of work, so after we’ve vented out everything that we have, after we’ve talked it all through, we can then say, ‘okay how are we now going to go into this proposal and how are we going to smash it’. You enter into that meeting, you enter into that conversation so much more relaxed and clear in terms of your point of view so that you’re able to make much clearer decisions and have much more clarity.

The other thing that we’ve set up that we are consulting many different companies to do the same is called a situational workshop. Within Next Jump’s business, we’ve basically got rid of management meetings. We found that that it’s much better to teach your employees situational judgement and to help them with their own self-awareness journey. For example, you’ve all heard this example, ‘don’t just give a man a fish, teach a man to fish’, but how do you take that framework and bring it into your organisation? When it comes to people, you may have people who are making consistent decisions when it comes to budgeting or things like that. You want to make sure that they’ve learnt from mistakes in their past and approaches that they’ve done where it hasn’t worked particularly well, so they have a greater understanding of what went wrong or what they could have tried so that when the next opportunity comes up, they have this understanding and they know that they can try something different.

We find that situational workshops are basically a means to teach judgment. How does it work? So as I mentioned, myself and Kevin, we are Talking Partners at Next Jump, we are two of the more senior Talking Partners in the UK office which means that every two weeks we run a meeting, it’s one-hour long, and we have two pairs of Talking Partners, so four other people, who are more junior than us coming along and they will prepare a situation where something hasn’t necessarily gone the way that they expected. They might have tried something and not got the outcome they thought they would or they might have just found that they’ve been consistently worrying about this one topic and it’s showing up all over the place for them. And so, what we will do is we will help them notice patterns in their behaviour.

For example, we might find that Graham, who is one of our software engineers, he is currently working on being a lot more transparent with what he’s doing and the decisions that he’s making, and he might talk about something he’s doing on a coding project or he might talk about something that he’s been doing on recruitment as he’s been supporting the recruitment effort in the UK. He might not immediately see that actually his approach and the decisions he’s making are identical in both situations. It’s up to us as his situational workshop leads to be able to help him to see those patterns so that he can understand what he could potentially do and consider other approaches when it comes to making similar decisions in other areas of his job.

What this basically means is because we have Kevin and I giving a situational workshop to two groups of Talking Partners, and they will also go on to give situational workshops to people more junior than them, we have an organisation which is basically coaching at scale. This starts right at the top with our co CEOs in New York who actually run Kevin’s and my situational workshops. So they’re coaching us on situational judgment and decision-making, and then we’re coaching the next level and then the next level are coaching the level below. It’s a really effective way of helping the entire organisation to understand what are the good judgment calls that they’re making, but also what are the bad judgment calls that they’re making, uncovering the patterns in that decision-making process and then work out ways to move forward as a pair, because ultimately as a Talking Partner, you are accountable to the other Talking Partner’s success.

KEVIN: If you’re using the revenue producing element of your business as a training group, then there could be some danger in that. What we’ve done is we’ve developed a model where we’ve picked initiatives that we classify as ‘above the waterline’ and ‘below the waterline’.

Blow a hole in the ship below the waterline, the ship sinks. If you blow a hole above the waterline, the ship might take some damage but it’s not going to sink. That in essence is how we’ve divided the initiatives and predominantly, where the training goes on in terms of where you’re practicing as an individual and where you’re bringing the situations, is in the cultural initiatives.

So as an example, I’m currently running Next Jump’s Adopt a School Programme here in the UK. Now, while we do feel that Adopt a School is a very important initiative for Next Jump, it isn’t one of our revenue producing initiatives so it gives me more latitude to fail and to look into why I made the decisions that I did. So for myself, I’m working on setting context and growing a vision and with Adopt a School, I can do that in much bigger way without impacting Next Jump’s revenue. That’s where if you’re working through a situational workshop like Chris was talking about, the situations that people are bringing in are almost always very similar and related to one another. The decisions that you’re making in your home life, the decisions you’re making when you’re working out in the gym, the decisions you’re making when you’re working on a volunteer initiative, the decisions that you’re making when you’re working on a business initiative have a pattern to them and the pattern is that you’re taking yourself with you to every one of those decisions. The job of your co-mentor, the Talking Partner, and the situational workshop is to really identify what that pattern is and help you get to the root cause and then you can work on ways to change it.

Like Chris said, that could be something as simple as if you’re working on patience, you walk in the slowest queue or you walk behind people on the street. If you’re working on more transparency, maybe you’re sending a daily update instead of a weekly update. Those are the kinds of practices that we’re talking about because really, I think 95% of what you do every day you’re on auto-pilot and then there’s that 5% that you can manoeuvre and change. It’s the little things, those micro adjustments that pay dividends over the longer period of time.

This is the model that we use for the cultural initiative, the things that we have that are above the waterline. This can be something as simple as running the weekly drinks at our company, or running the company holiday party or making sure that the fridges are stocked with healthy foods. Each initiative like that has a captain, and then potentially has some people that are helping with it called the left hand and the right hand and then there’s a coach. The job of the captain is to run the initiative and the captain is the one who’s practising something about themselves, and the coach is there because they have run the initiative before and they are helping the captain with those decisions. The left hand and the right hand then feed in and become the captain at a later date. The idea here is that this is not the most efficient way to run the company holiday party. The most efficient way is to give it to the same person year after year after year. However, from our perspective, it’s a missed opportunity to train leadership skills into a junior member of staff who can then take those same skills and help someone else grow their own skills. This flow model is not meant to be an uber efficient way to run a company; it’s meant to train people in a way where they can fail and then they can take that failure and learn from it in a safe environment.

The last table topic is around if you look at these programmes that we talked about today, these are programmes that we feel and we know have scaled to other organisations: what obstacles would you see adopting some of these at your own organisation? These include something like Talking Partners where you can literally start with two or four people, situational workshops or using other cultural initiatives as a practice ground.

Kevin says the "lying, hiding, faking" problem is the single biggest loss of resources that organisations face today.

“Most people are doing a second job no one is paying them for," he says. "They are spending time and energy covering their weaknesses, managing other people’s favourable impression of them, showing themselves to their best advantage, playing politics, hiding their inadequacies, uncertainties and limitations.”

Kevin suggests that even halving this second unpaid job – the lying, hiding, faking – would preserve an enormous amount of energy that could be redirected into things that hold genuine importance for the job. But to reduce the lying, hiding, faking problem, people need to be in an environment where it’s OK to fail. 

Companies tend to be good at training hard skills, but fall short when it comes to training judgment calls and emotional skills; essential tools for decision-making. At Next Jump, the focus has been on building a culture through which decision-making can be taught.

Chris poses the question, “How can you teach situational judgement so when it comes to responsibilities such as budgeting, such as people-based decisions, you can trust that you’ve put the frameworks in place that mean that you can trust your employees to do the right thing?”

Chris says the way you make a decision is going to be influenced by how you’re feeling. Your solution will differ depending on whether you’re feeling level-headed and can compare it to similar decisions you’ve made in the past, or if you’re stressed and irritable.

At Next Jump they put a lot of emphasis on getting their people to understand how they behave under stress and the sorts of decisions they're likely to make in such situations.

“9 times out of 10 – probably 10 times out of 10 – the decisions you make under stress are probably going to be the wrong ones,” says Chris.

What you will learn in this video

  • Why investing in leadership development is essential for getting to Beyond Budgeting

  • What the “lying, hiding, faking” problem is and why it’s the single biggest loss of resources that organisations face

  • Why an environment where it’s OK to fail is necessary for reducing the lying, hiding, faking problem 

  • Character is a muscle and like all muscles, it can be exercised and strengthened

  • How classing people as either more arrogant during stress or more insecure during stress allows them to improve decision-making the next time a stressful situation comes up 

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About Next Jump

Next Jump is a unique eCommerce company, handling loyalty programmes for Dell, AARP, Intel and Hilton Hotel, among others. It has 70% of the Fortune 1000 among their clients and has sales of over $3bn a year – and has a ‘no fire’ policy. They also have Talking Partners, which means every staff member has a buddy that supports and encourages them throughout their career

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