Shock Therapy

Nothing brings fresh ideas to the table better than a news report telling employees a rival company is going after their core business. Even when it's not true.

Wednesday, June 2, 2010
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As the business-news anchor solemnly read the announcement into the television camera's gaze on an otherwise typical workday last June, the room full of high-powered Western Union executives suddenly became quiet, save for the occasional gasp.

More than 30 of the money-transfer company's top business and functional leaders gathered there that day sat and watched in helpless dismay as Money Matters Today anchor Mary Caraccioli told them well-known rivals of the company were announcing a new partnership and making a push into the remittance space, long considered Western Union's bread-and-butter domain. (While Caraccioli used the rival companies' names in her report, they have been omitted from this story.)

"It was very real," says Jorge Consuegra, the company's senior vice president of domestic money transfers for the Americas and one of the executives in the room when the report aired. "It immediately generated some competitive juices and a sense of attentiveness that was extraordinary."

Yet along with that urgency, a deep sense of consternation also filled the room. This was a game-changing scenario for Western Union -- in the most negative sense -- and only some quick thinking would prevent the company's future from collapsing under the weight of the rivals' new attack strategy.

For sure, the only person in the room who could manage a smile after watching the news was Gint Baukus, senior vice president of talent management at the Englewood, Colo.-based company.

After all, this was his idea, from the news broadcast to the photocopies of a Wall Street Journal-style story that were simultaneously passed out in order to reinforce the hoax's premise. (The idea was also honored as one of the 2009 Best HR Ideas competitions by HRE earlier this year.) 

He had conceived the idea just a few months earlier, after reading a business magazine story that hypothesized just such a scenario.

"We're by far the 800-pound gorilla in the remittance space," says Baukus. "And [after reading the article], I started thinking to myself: 'This represents the potential for at least one doomsday scenario for us, so how do I take this and actually do something with it, instead of just putting a presentation together?' "

Baukus soon knew he had a winner. The group of stunned executives, told of the hoax after the "news" report finished playing, embarked on a brutally honest conversation about the company's strengths and weaknesses. Before they left the room that day, the conversation yielded six concrete business initiatives that the company then put into place before the year's end, including point-of-sale improvements, a mobile initiative and a push to explore alternate channels for its business.

Baukus adds that the group also created a revamped vision statement for the company in an effort to furnish a galvanizing framework for the new initiatives.

Based on some recent research by the Seattle-based Institute for Corporate Productivity (i4cp), it appears companies may need to rely on similar shock treatments going forward if they hope to succeed in today's quickly changing business landscape.

The Organizational and Leadership Agility Survey by i4cp found that, while more than 75 percent of the 454 respondents reported their business is either changing or rapidly changing, only 44 percent reported their company is adept or very adept at "identifying and making needed incremental changes."

In that survey, only 40 percent of the respondents also said their organizations are adept at recognizing and responding to strategic challenges in a timely manner, and only 32 percent said their organizations were proactive in anticipating and initiating the changes needed for sustained high performance beyond their immediate strategic challenges.

"In today's constant whitewater environment, the ability to quickly move the raft is imperative," says Kevin Oakes, the institute's CEO. "Most organizations understand the need for agility, but what they don't understand is how to create a more agile culture."

Oakes cites research showing companies that use simulations -- as well as business case studies -- to a great extent are very likely to be better market performers.

"It stretches the thinking of participants and causes them to evaluate multiple scenarios, as well as the consequences -- both good and bad -- of their actions. Better to do it in a safe environment first than in the real world," he says.

"I'd highly recommend companies explore increasing their use of business simulations, particularly with their high-potential employees and next-generation leaders," he says. "However, it's a minority of companies that use simulations regularly today. We have keyed in on this and think it's a 'next practice' for organizations."

Evolution of an Idea

One day back in March 2009, Baukus recalls, he was visiting a colleague's office, when he spied a copy of American Banker magazine, a publication he had become familiar with during his time as a bank executive.

While paging through the magazine, he stumbled across an article that explored the possibilities that the aforementioned business simulation eventually covered.

After reading the article, Baukus says, a sense of foreboding came over him.

"We're sitting there saying, 'That's our equity, in our brand and our network,' and all of a sudden, a name such as [Competitor A] or [Competitor B] could potentially enter our space, and then all sorts of rules start to change."

He then began researching what he calls "our differentiation, some of the unique strengths of our business," but soon realized that the company's dominance within its domain of remittance was already being threatened.

"Some of the big banks are already in the remittance space," he says. "If you start connecting the dots, you go, 'Oh my gosh, some of our uniqueness may already be at risk.' "

Baukus shares the credit for the eventual success of the simulation, saying his superiors had already set the simulation up to succeed.

His boss, Grover Wray, the company's executive vice president of human resources, had long pushed the company towards what Baukus calls "taking a philosophical approach to developing leaders." And around that same time, company CEO and President Christina Gold also gave the HR department free rein to devote an entire day to executive development during an information-gathering session in New York.

"The group of executives was getting ready for a conventional day of development," he says. But Baukus soon had something different in mind.

"We thought, 'Let's get people off their heels and onto their toes and start really thinking about the business,' " he says, because "we have to be able to reinvent ourselves in order to be in front of what's going to happen or what could happen. By thinking through these 'landscape threats,' we hoped we'd be able to know how to respond to our customers if we saw the threats ahead of time."

Building a Hoax

In order to accurately convey the depth and breadth of the business simulation he had in mind, Baukus knew he'd need help from both within and outside the organization.

"There had to be some real plausibility to all of this," he says. "We couldn't have just done something like 'Delta Airlines buys Western Union,' because that just doesn't make sense."

So he enlisted the help of Marcus Cudina, the senior vice president of strategy for the company's talent management group, who Baukus calls an expert in all things Western Union.

With the skeleton of an idea in place, "Marcus began to surgically insert things [into the simulation] so that a person who understood the business would say, 'This is completely realistic.' "

From there, they had to insert an academic element into the story, so they contacted INSEAD, the Fontainbleau, France-based international business school, where Baukus enlisted the help of Stewart Black, the associate dean of executive education for the Americas.

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Black says the simulation needed to come through in a few key areas if it was to be successful, especially in the true-to-life department.

"People's environments are very busy, very sensory-loaded," Black says. "If this learning environment doesn't approximate that to some degree, then rightly or wrongly, people start to sense that it doesn't match their work and therefore the lesson doesn't match either."

He also noted that, in Western Union's field, things move at a different pace than in other industries, which only makes quick, agile thinking even more of an asset.

"Their industry doesn't move that fast," he says, "but it can. If you wake up one morning and one of these big moves has been made, you're already too late."

To play up that aspect, a scenario involving the "live news" broadcast was chosen, and Black and his team at INSEAD set about crafting all the necessary parts, from creating the script to getting the video shots down and creating the faux-WSJ article. (For more specifics on the creation of the video, see sidebar.)

But Black's role didn't end when the videotape did, Baukus says. After the video ended, Black divided the assembled executives into two teams for a discussion of what they had just seen, essentially Attackers versus Defenders of the company. It was during this discussion that the company's many strengths -- and many shortcomings -- came to light.

"It's the ultimate exposure to your own weaknesses," Baukus says. "The keepers of the inside knowledge were now exposing it for the good of the company."

Getting Results

From that tough conversation, which Baukus says sometimes resembled "a Braveheart battle," referring to the movie starring Mel Gibson as 13th-century Scotsman William Wallace, six new business initiatives eventually emerged, as well as a vision statement to tie them all together.

Upon hearing about the simulation, Gold, the company's CEO, was shown the videotaped report. She was thoroughly impressed with the results, Baukus says, so much so that she changed the agenda for the following day's meetings in order to spend time addressing what came out of the simulation. Her first reaction after seeing the simulation was one of fear, she says.

"I looked around the room and saw all these deer-in-the-headlights looks," Gold recalls with a laugh. "But it was the beginning of really thinking about how we [can] change and become much more proactive and more strategic and really not look to one person to solve all the problems.

"It really synthesized ... the need for us to move forward much more urgently on our strategy, to bring more people into the mix in terms of getting involved, and to better educate our leaders to understand the overall mission and vision of the company and strategy."

With Western Union as an example, says 14cp's Oakes, an organization's HR function can play a significant role in cultivating agile leadership by "fostering a culture of knowledge sharing and open feedback, focusing on agility as a competency on the hiring front as well as in their learning-and-development efforts, and ensuring that the communication and understanding of the company's strategy, mission and vision are clear.

"The key is to walk the walk," he adds. "Many companies like to think they are agile, but leaders often resist change and move cautiously."

Looking back on the grand experiment, Grover Wray, the company's executive vice president of HR, is proud of what the simulation ultimately accomplished.

"When something you do then fundamentally, overnight changes the way you think and behave, you know you have done the right thing," Wray says.

"Something like this [also affects] the way you think as well as the speed of your operations, and you know it's a huge success," he says.

"We're thrilled to death" with the results, Baukus adds. "We didn't give people the answers, or create passion or interest. We were just the catalyst, to allow the leadership of the organization to be a part of what brought that energy together, all at one moment, and we created a burning platform, which is a very important thing for change initiatives."

See also:

Making the 'News'

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