Kai Hammerich: An interview by Bob Morris

Posted on: April 11th, 2014 by bobmorris

HammerichBased in London, Kai Hammerich heads the European Leadership & Succession Practice for Russell Reynolds Associates. He has conducted numerous chairman, board, CEO and c-suite assignments for major Nordic, European and global technology clients as well as for some the largest Nordic corporations. He has been nominated: One of the World’s most influential headhunters, by BusinessWeek. He is an expert in aligning talent strategies with corporate strategy and culture.

Kai has considerable experience in advising clients on how to align a company’s talent portfolio with the overall business strategy and company culture. He has worked with Private Equity clients, Fortune 100 type clients as well as VC-based growth companies. He is specialized in the B2B and B2C communications, digital/convergence and IT enterprise solutions space.

Prior his search career, Kai worked in the computer industry for 10 years, most for Apple Computer as the U.K. Regional Marketing Director, based in London, and as EMEA Marketing Manager for the Education Business Unit based in Paris. Earlier, he was CEO in a venture capital financed software start-up company, Maconomy, which subsequently went public and held sales and marketing roles at HP.

Kai received his M.B.A. with distinction, from Northwestern University, Kellogg Graduate School of Management and his M.Sc. in economics from the University of Aarhus, Denmark. He is fluent in Danish, English, and conversational in Swedish and Norwegian.

He is the co-author with Richard D. Lewis of Fish Can’t See Water: How National Culture Can Make or Break Your Corporate Strategy, published by John Wiley & Sons (2012).

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Morris: Before discussing Fish Can’t See Water, a few general questions. First, who has had the greatest influence on your personal growth? How so?

Hammerich: My mother. She taught me to listen to other people and to empathize with them.

Morris: The greatest impact on your professional development? How so?

Hammerich: When at Kellogg Business School, history professor Lavengood taught a course on Business Ethics. This hugely impacted my sense of responsibility as a business leader, not only in driving results for shareholders, but also as importantly in appreciating how a leader acts as the ethical beacon for the organization. Don’t ask someone to do something you would not do yourself!

Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.

Hammerich: I joined the search industry without really having any clue of what it was all about. (So much for the diligent analysis taught at Business Schools at great expense). I loved the people, the freedom you have as a search professional, the impact you can have if successful in your recommendations – and the responsibility your advice carries.

Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?

Whilst studying at Kellogg I had planned to return to Denmark to become a business school professor. I clearly failed in that ambition. However, Kellogg, which is a fantastic business school, opened so many opportunities for me. I am grateful and today I am a Kellogg Alumni Council member.

Morris: What do you know now about the business world that you wish you knew when you when to work full-time for the first time? Why?

Hammerich: That it can be cut-throat, but that anyone has a fair chance to succeed, if they have talent and work hard. A MBA gives you an edge, but only for a period. You have to create your own success, by being successful – and helping others develop and so that they can be successful, also.

Morris: From which book have you learned the most valuable lessons about business? Please explain.

Hammerich: One of John Kotler’s books, Marketing Management. It teaches you to always look at the world from the perspective of the customer. This is an eternal truism from Wall Street to the bazaar in Persia.

Morris: Here are several of my favorite quotations to which I ask you to respond. First, from Lao-Tzu’s Tao Te Ching:

“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”

Many of the business principles that management gurus hail, are truisms that have been known for a very long time. Decentralization and empowerment are two of them. Understanding your customer is another.

Morris: Next, from Voltaire: “Cherish those who seek the truth but beware of those who find it.”

Hammerich: Curiosity and an open mind prevail over dogmatism in the long term.

Morris: And then, from Oscar Wilde: “Be yourself. Everyone else is taken.”

Hammerich: People who seek authenticity may never find it. Authentic leaders are often simply themselves.

Morris: From Albert Einstein: “We cannot solve our problems with the same thinking we used when we created them.”

Hammerich: Fish can’t see water.

Morris: Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”

Hammerich: Focus on what is essential, simplify the problem, and act on it. Complex problems do not always require a complex answer.

Morris: In one of Tom Davenport’s recent books, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment. That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” What do you think?

Hammerich: Their logic has some – perhaps a lot of — merit. Complex business problems can sometimes best be solved by the common-sensical approach of an insightful and inspired leader. However, in today’s complex world, managers often need to rely on the diverse experience of a diverse leadership group supported by complex information systems to make decisions. Though this can also blind them to the obvious. One must never allow the systems to prevail over common sense. This is where culture plays in – to help guide decisions when there is no obvious answer, or an automatically systems-generated answer feels wrong.

Morris: Here’s a brief excerpt from Paul Schoemaker’s latest book, Brilliant Mistakes: “The key question companies need to address is not ‘Should we make mistakes?’ but rather ‘Which mistakes should we make in order to test our deeply held assumptions?'” Your response?

Hammerich: Without painful mistakes you don’t learn and grow as fast. Every corporation needs to test its deeply-held assumptions on a regular basis – though this requires that they know what these assumptions are – which they often don’t. Hence the recommendation in our book to conduct a regular cultural audit.

Morris: In your opinion, why do so many C-level executives seem to have such a difficult time delegating work to others?

Hammerich: They succeeded by being in control. It is difficult to let go of embedded habits – especially for successful people.

Morris: The greatest leaders throughout history (with rare exception) were great storytellers. What do you make of that?

Hammerich: Complex problems often require simple solutions that can be easily communicated. The human mind is simply not prepared for handling the complexity of global corporations with hundreds of thousands of employees all over the planet.

Morris: Most change initiatives either fail or fall far short of original (perhaps unrealistic) expectations. More often than not, resistance is cultural in nature, the result of what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.”

Here’s my question: How best to avoid or overcome such resistance?

Hammerich: Change only happens if the individuals in the organization change their behavior. Change is not abstract, and unless it can be translated into a few behaviours everyone, including the leaders, can do differently, it may not be effective.

Morris: In recent years, there has been criticism, sometimes severe criticism of M.B.A. programs, even those offered by the most prestigious business schools. In your opinion, in which area is there the greatest need for immediate improvement? Any suggestions?

Hammerich: MBA schools have long embraced the scientific leadership tradition. You need a PhD. and scientific validated research to become a professor at most prestigious business schools. These schools prepare future leaders well, with an analytical tool-box, but may also mislead them to think that management is all about the tool-box. It is not. I know of no business, which is not a ‘people’ business.

I once asked the chairman of a large global business whether the complexity of the company was the cause of its getting into trouble. His response was that the mistakes made had nothing to do with complexity but everything to do with a lack of common sense, understanding of the customers and openness to new information.

Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any Advice?

Hammerich: Managing complexity and leading change.

Morris: Now please shift your attention to Fish Can’t See Water. For those who have not as yet read it, please explain the title.

Hammerich: This title refers to the observation that it is difficult for most humans (and groups of people) to view themselves from the outside and separate themselves from their embedded values and behaviors.

Morris: When and why did you and Richard decide to write it in collaboration?

Hammerich:
We had both noted at some of our clients that the same national trait would help accelerate success in one business cycle, only to flip-flop and derail performance in the next. We wanted to look into this to understand if this was a general phenomena or not. It turned out that this is a general phenomenon – where national traits play a key role when a trait alters nature from being benign to derailing.

Morris: Were there any head-snapping revelations while writing it? Please explain.

Hammerich: We went through three or four distinct phases writing the book. After writing for while and debating the implications, we then reached a new level of insight and abstraction. The first versions were pretty poor but laid the foundation for gaining this insight.

The final insight is the close link between the embedded national traits and the national strength in business. This insight helps explain the different industrial structure observed in various countries and variation in business success that small, medium and large corporations have in each country.

Morris: To what extent (if any) does the book in final form differ significantly from what you originally envisioned?

Hammerich: Completely. We were fortunate to have a wonderful editor who helped us turn the book on its head in the final version. We did everything wrong. We started with an idea and started to write. The book grew almost like a wild plant. Lots of ideas and insights, but we lacked the story. Only in the last phase did we realize that the business cycle metaphor was the dynamic that made traits change their nature, whether based on national or business influencers.

Morris: As I indicate in my review of the book for various Amazon websites, there are dozens of passages throughout your narrative that caught my eye. For those who have not as yet read the book, please suggest what you view as the most important point or key take-away in each of several passages.

First, how values, beliefs, and assumptions are embedded in an organization by its founder(s) and leaders

Hammerich:: Culture is behavior and behavior is culture. One cannot separate the two. Founders often act instinctively – being completely authentic – in today’s ManagementSpeak. Their behavior is likely based on their own deeply-held values of what is right and wrong. These values and behaviours based on personal idiosyncrasies are then repeated by the organization, because the founder(s) approve of it. It is through this repetition (rather than through the PR department’s tombstone with ‘our values’) that values are slowly inculcated into the culture. “Walk the Talk” as they say in America is a very effective and endearing leadership principle. And very difficult to do well.

There is aother observation to consider that, I hasten to say, is not scientifically proven: successful entrepreneurs often have personal values that neutralize the potentially derailing effects of their national culture.

It is difficult to answer all these questions in detail. For those who prefer a quick overview of the book, I suggest reading the introductory chapter, three chapters (5-7) with cases related to different life-cycle phases, and the final chapter. At the end of chapter 7, there is a list of the key learnings from these mini- case studies: P&G, Wallmart, Sony, Samsung, Kone, Nokia, FLSmidth, and Toyota. Also, the Austin Motors analysis in chapter 4, one that may also be interesting to read for a brief summary.

Morris: The “Lewis Model” that triangulates national cultures (i.e. linear-active, multi-active, and reactive national)

Hammerich: This is obviously a simplified model. However, it helps people understand some common patterns of behavior and communication styles observed in different nations. It has been validated independently. When we present, we often can get the audience to agree on how we describe other cultures – but rarely their own. As Richard observes in the preface:

“Where national traits are concerned, we are all experts and victims. Culture hides much more than it reveals and, strangely enough, what it hides, it hides most effectively from its own participants”

Morris: The defining traits of key nations (e.g. France, Italy, Great Britain, and USA) and their significance

Hammerich: We always get into trouble on this. When you review the poorest scores/rating we get on Amazon.com or amazon.co.uk it is often because we have upset someone – by challenging their deeply held beliefs. For instance, the reviewer at the prestigious Financial Times was reluctant to agree that the British Wing-it tendencies had anything to do with the demise of the British industrial sector in the 80s and 90s.

Americans are often super urgent and have a strong bias-for-action, this is a great trait for getting stuff done and moving forward. However, during a crisis it can also lead to knee jerk reactions, where more considerations would have been prudent.

In the UK a similar national instinct is to ‘wing-it’ rather than engage in strategic planning. Again dependent on the situation it may be a highly successful response or can be an inappropriate reaction. The real point in the book is that management needs to understand the double-edged nature of their strong national instincts. But it may be difficult to be seen and agreed upon, by the country’s own participants.

Morris: The “Cultural Dynamics Model” ® and the concept of a cultural dynamic

Hammerich: It is the most complex model in the book. What it describes is how Culture will impact and interact with the strategy execution. An important insight is that culture may change on its own, as an unintended consequence of a strategy change and in a direction that the leadership did not foresee. If this change derails performance, it is called a Derailing Cultural Dynamic. The model and Chapter 4, provides a framework for understanding when this happens and how to identify the signals before it is too late. When a derailing Cultural Dynamic emerges, it often costs shareholders dearly and the board needs to be alert.

The other insight is that business influencers and national influencers have very different origins, and will impact the organizational culture differently. If a company needs to change, the business influencers may prove to be more benevolent, while national influencers may prove to be real hurdles. (See examples of this in most of the cases in the book: Nokia, Sony, Samsung, etc.)

Morris: Lifecycle periods (e.g. organizational, such as those discussed by Ichak Adizes in Corporate Morris: Lifecycles: How and Why Corporations Grow and Die and What to Do About It).

Hammerich: The simple point of the life-cycle model, is that an organization requires different skills and needs to learn to manage the increased organizational complexity as it grows.

This will impact the types of people hired and through this the company culture. Interestingly different nations have different preferences for organizational models, which then creates nation specific challenges for the country’s companies. Denmark prefers a decentralised organizational model (Better for start-up and growth companies), Japan a centralistic model (Better for large corporations)

Only the fittest should survive. If an organization is no longer effective in adding value to society, we should not bemoan the loss of it. So the message is: “Stay fit for longer”. The book helps navigate some of the national cultural reefs organizations from different nations face.

Morris: The maturity period with its phases of efficiency, scale, and in some instances consolidation

Hammerich: Corporations mature because they are successful. They are complex and efficient at one level, but also inefficient at a deeper strategic level. They become set in their ways, and thus become difficult to change. Often they will suffer from hubris taking their success for granted and are blind to external threats. If then faced with a disruptive competitor the board needs to be aware and alert.

Morris: “Whither the West” in terms of the impact of what Tom Friedman characterizes as a “flat world” has on western nations as they compete globally

Hammerich: Our core perspective in the book is that we are facing a world where at one level there is a level playing field (The world is flatter) and common supply chain systems to plug into.

However, in the future, competitors may not play to the same rules. Chinese, Brazilian, Indian or any other successful company from emerging market economies are likely to adopt a management philosophy based on their own national values rather than Western corporate values (The world is getting rounder and more diverse).

We are already seeing this today, Toyota, Samsung, Huawei and many other Asian corporations have cultures that are deeply influenced by their national cultures. This impacts the organizational structure, the use of power, the hierarchy, the compensation system, the performance management systems, the work process design (Group v individual), etc.

Morris: The nature and extent of the “existential crisis” discussed in Chapter

Hammerich: When faced with a crisis, most companies and organizations revert to their national instincts. For instance an American corporation will become more American (short-term oriented, hierarchical, will use command-control power more overtly and may become narrow KPI focused). A Danish company will react differently to a crisis, but most likely will take a short-term view. A Japanese company may look upon a crisis as an opportunity to improve long-term and only react slowly.

The 8 types of an existential crisis are listed in the book, and include poor strategy, poor execution, disruption etc. If an organization is faced with more that one crisis – it will be challenged. Most leadership teams can handle a single crisis, but two or more at the same time will challenge them significantly to the point that they may not be able to resolve the conflicting objectives. The case of Samsung v Sony exemplifies this phenomena. Sony failed to respond to three coinciding crises: The leadership transition from the founders, the analogue to digital transformation and a new, more execution-oriented competitor in Samsung,

Morris: I was especially interested, also, in your discussion of how business leaders can “see the water that surrounds them,” water that may be red with ferocious competition, white with uncertainty, or blue (as W. Chan Kim and Renee Mauborgne suggest) with opportunity. You and Richard Lewis recommend a five-step framework. Please explain each. First, Determine the main dimensions of the [given] company’s strategy and cultural alignment using the Cultural Dynamics Model ®.

Hammerich: The five steps will help a cultural practitioner and the leadership team to identify deeply rooted values and assumptions that drive the actual behavior. With this insight they will be able to better navigate and lead a business transformation by identifying both behavioral enablers and derailers that are either based on national or business influencers. However, this methodology needs to be used with caution and respect. It is a bit like psychotherapy for an organization and needs to be used with caution and the results not broadcasted outside a small group, as it may challenge the self-perception of the organization and thus lead to rejection.

Morris: Next, classify the national type that reflects the embedded national values using the Lewis model,

Hammerich: This is a bit complex – perhaps better to refer to the book.

Morris: Identify where the company is in its lifecycle.

Hammerich: The lifecycle model has five phases:

1. The innovation phase

2. The (market) expansion phase

3. Product-line expansion

4. Scale and efficiency

5. Maturity and consolidation

As a company moves from one phase to the next it passes a transformation point, which can become a point crisis.

Each phase requires specific skills, and it is interesting that different countries (through their national traits) will support each cycle differently. Danish companies often excel in the first two phases, although then often fail in the later phases. The Danish national traits of informality, pragmatism, reluctance to the use of power, creativity and openness, small team orientation, in essence serves small companies better than large ones. Large Japanese organizations are well supported, and more so than small start-ups.

Morris: Establish how national culture may have enabled and/or derailed success at the most recent transformation point and could impact the organization at the next.

Hammerich: The growth company essentially needs to balance the agility of the small organization with the process orientation of the more efficient large corporation. This is a tricky phase for most companies.

Morris: Finally, diagnose signs of a potential crisis that could accentuate a cultural dynamic and create a life-threatening situation for the company.

Hammerich: When Nokia was first challenged by the iPhone and Google Android in 2007/2008, it largely ignored the threat. The company was at its peak commanding 66% of the profit pool in the mobile handset industry in 2007. The organization had become arrogant and internally focused, yet was still seen as being very successful. The challenge boards face is to understand when such a derailing dynamic is at play and act on it. As Clayton Christensen observes, companies that are about to be disrupted often have their most profitable years just before the life threatening disruption. This was indeed the case at Nokia,

Morris: Which are the most effective initiatives to prevent a national culture from “breaking” one’s organization’s strategy? Please explain.

Hammerich: The board and the leadership team need to have an open mind and conduct regular independent cultural audits. Having diversity (of thinking) at board level and in the management team will help increase openness to new ways of thinking.

Morris: Pogo the possum once observed, “We have met the enemy and he is us.” When concluding the book, you and Richard seem to be suggesting an alternative: “whichever the direction the world takes, we can only point the finger in one direction – toward ourselves. And herein lies our biggest opportunity!” Is that a fair assessment?

Hammerich: Yes! We are the masters of our own destiny.

Morris: Let’s say that a CEO has read and then (hopefully) re-read Fish Can’t See Water and is now determined to establish or strengthen a workplace culture within which personal growth and professional development are most likely to thrive. Where to begin?

Hammerich: I believe this is beyond the scope of this book. But it is a very good question.

My simple response is: lead from the front, reward behaviors that are aligned with this strategy and chose new employees carefully to ensure they embrace those values . Look for agility, ambition , personal development, curiosity, and motivation to grow.

Morris: For more than 25 years, it has been my great pleasure as well as privilege to work closely with the owner/CEOs of hundreds of small companies, those with $20-million or less in annual sales. In your opinion, of all the material you provide in Fish Can’t See Water, which do you think will be of greatest value to leaders in small companies? Please explain.

Hammerich: In the US, in our view (and that of many economists) the biggest economic opportunity is to help the domestically-oriented SME company grow internationally. Our book provides a mirror to help understand how an American company can globalize most effectively and how to avoid and recognize some of the most common pitfalls.

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Kai cordially invites you to check out the resources at these websites:

The Fish Can’t See Water homepage link

Kai’s Amazon page link

Russell Reynolds Associates link

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