Why Successful Businesses get Disrupted by the Innovations of “Cheeky” Upstarts

Innovation, Entrepreneurship

This report is intended to stimulate the kind of strategic thinking busy business owners and managers often find hard to make the time for, in the midst of the jungle of demands that most established businesses battle with on a daily basis. Steven Covey put it in the Important, Not Urgent quadrant. However, with the rate of change we’re experiencing, if we don’t all spend some time in that quadrant, we’re likely to find someone else in the jungle will push it into the Urgent quadrant, in the not too distant future, whether we like it or not.

Upstarts, by the way, are what Startups get called when you’re on the receiving end of their disruptions. So why, if you are a well-established business, generating good cash flow, might you be unable to see that some far less established business, with quite possibly less technically advanced products or services, is about to eat your lunch?

According to Cyril Bouquet and Chloe Renault from the prestigious IMD business school in Lausanne, there are 3 things going on:

  1. You’ve become ‘prisoner’ to the system you’re operating in.
  2. You’re in denial.
  3. You’re not innovating. Well, not enough, anyway.

Let’s look at some examples. The taxi industry had a system that was so ingrained it was unconscious to them, so they were unable to imagine a whole new way of operating. Enter Uber. Customer satisfaction with taxis, with few exceptions, was low, but for decades they had the hire car market locked up and so became imprisoned by their own assumption nothing was going to change their world. And even when Uber arrived, both drivers and taxi companies were in denial and couldn’t understand why customers were flocking to an alternative. Uber used the same technology that taxis could have used to locate cars and inform passengers of arrival and route, to automate payment and rate drivers etc., but there was no innovation going on of note within the taxi industry.

Blockbuster videos knew about Netflix but considered them unable to compete with their stranglehold on the video hire market. Blockbuster even turned down the chance to buy Netflix for just $20m. Video stores were hooked on a business model that earned them the total cost of their videos after just a few night’s late fees. In fact, the creator of Netflix, Reed Hastings, got going after being stung $40 for his late return of Apollo 13. Kodak, whose own scientists invented digital photography, was so in love with their business model, based on a virtual monopoly of film sales, that they couldn’t contemplate doing business another way.

All these businesses and many more were prisoners of their own device, couldn’t see the need for change and weren’t looking for new ways to charm their customers.

Of course, it’s human nature when you’ve found a winning formula, to stick to it and not to want to throw it over for a new model that might not work yet. And any sound management or board of directors is going to look sideways at a business case that puts their cash cow at risk to explore something foreign to their customers and employees that can’t reliably forecast what the ROI might be.

Established businesses are set up to execute a well-understood business plan, with well-understood products, or services, to well-understood customers.

Startups, on the other hand, are exploring who their customers are, what their problems and desires are, how to satisfy them, with new products or services that are still in development, what business model to use and how to make money from the enterprise.

This is a process that doesn’t readily blend with an existing operation that is focussed on the next quarter’s results, trying desperately to increase sales by 5% and decrease costs by 5%.

And yet if you want really game-changing innovations of the kind that can transform your business, or prevent you from being the next statistic in the global disruption trend, then you need to consider how to take some of the methods Startups use to develop those innovations.

We’re not talking here about incremental innovations. The kind that can be gleaned from suggestion boxes, surveys of employees or customers, or simply an intelligent engineering based consideration of how to improve your product or service for next year’s model. Those improvements are important and necessary – once you are onto a winning formula. What we’re discussing is how and when to find the next quite different winning formula.

Take Apple as an example. Their invention of the first smartphone was a game-changing new formula that disrupted the phone market and led to business breaking problems for the previous dominant players, Nokia and even Blackberry, who themselves had disrupted the market. However, once they had introduced the smartphone, Apple’s annual updates, though important, can be considered to be incremental. Apple was also willing to disrupt their own winning formula for the iPod, which put ‘a 1000 songs in their customer’s pocket,’ with the creation of the iPhone. In this way, while iPod sales plummeted, they continued to capture music hungry customers, as well as a whole new market who were delighted to find the iPhone put ‘a computer in their pocket.’

Innovations that grow your business by 800%, as the iPhone did for Apple, take fresh thinking.

We call it Unicorn Thinking.

We’re not talking about the magical kind of unicorns, although the kind of innovations that result might seem like magic to competitors and delighted customers alike. We’re talking about the thinking that leads to private Startups growing to valuations in excess of $1 billion. At the end of 2017, there were 197 such companies, known as Unicorns, according to a survey from CB Insights. You’ll be familiar with some of the better-known ones, such as Airbnb, Canva, Dropbox, Pinterest, Slack, SpaceX, Spotify, Stripe, WeWork, and Xiaomi.

Australian software enabling company Atlassian was a Unicorn before it floated on Nasdaq for $10 billion. So were the tech giants of today, colloquially known as FAANG – Facebook, Amazon, Alphabet (Google), Netflix and Apple. Of course, these stocks have moved a long way from being Startups, but in most cases, they are still drawing on what they learned about developing game-changing innovations to continue to grow their businesses.

We believe virtually all businesses can benefit from putting some resources into understanding how these kinds of Startups developed their innovations.

In our view, there are 6 main steps.

But first, here’s where not to start. With an idea.

Most people will jump to an idea and then look for supporting justification. Again, that’s just human nature. So, if you have ‘a good idea’ already, try to park it for a while and start back with your target customer’s desires and no preconceived ideas on how to satisfy them.

Here are the steps:

  1. Find an important unsolved problem
  2. Ignore the competition and start over with a blank slate
  3. Imagine the ideal solution regardless of accepted wisdom, or obstacles
  4. Search emerging technologies for ways to do what wasn’t possible before
  5. Make the simplest possible prototype and test with customers
  6. Use feedback to improve it multiple times before production
  7. Make a business case with reverse income assumptions

The world’s capitalist system basically operates by generating products and services that persuade customers they will solve their problems or fulfill their desires.   The trick though is how to discover an unsolved problem and a fresh and better way to do solve it.

Unicorns use Design Thinking processes to explore it.

Design thinking stems from the way designers investigate solutions to problems in a human-centric manner. It’s found a strong following outside of pure design circles in recent years, because the method can be broadly applied to solving complex problems, including business problems of most kinds. The UK Design Council coined the term the double diamond to describe how you initially diverge from an assumed problem to explore, then converge to define the key issue, then diverge again to explore possible solutions, before testing and feedback helps to converge and deliver a specific solution.

Don’t rush to conclusions on what your customer problems are. Empathise and explore what’s really going on for customers in the setting of their lives and work, before defining their most critical issue and developing a solution that emphasizes the customer experience.

Sometimes the problem you begin with turns out not to be the critical problem you need to solve.

I had my own experience of innately using this process many years ago when working as a marketing consultant. I was commissioned by the advertising agency for Qantas domestic, or TAA as they then were known, to come up with a new ad campaign to differentiate them from Ansett, their fierce rival at the time. In those days planes were divided into First Class and Economy. I started my assignment by spending a week flying around the country in both TAA and Ansett and seeing what the travel experience was like for various customers.

It soon became apparent there were two main groups of travelers in Economy. People flying for business reasons, who wanted to get there on time in a rested state of mind ready for a busy working day. And people who were traveling for social reasons, often going on holidays, who wanted to start their holiday fun the moment they got on the plane. It quickly dawned on me they needed to be treated differently. So, the problem I went in with, to write an ad campaign, became redefined as a challenge to reconfigure the cabin and the in-flight experience.

I recommended that Economy should be split into Business Class, up the front, with passenger entering via the front stairs to an oasis of peace and calm and Holiday Class, at the back with passengers entering from the rear stairs to a livelier reception.   After a while, they implemented Business Class but missed what I thought was another good opportunity to create a Holiday Class experience.

Starting over from first principles.

Elon Musk, the co-founder of PayPal, and founder of Tesla and SpaceX, recommends starting by going back to a clean sheet of paper and first principles. Here’s how he describes it.

“Historically, all rockets have been expensive, so therefore, in the future, all rockets will be expensive. But, actually, that’s not true.

If you say, what is a rocket made of? It’s made of aluminum, titanium, copper, carbon fibre. And you can break it down and say, what is the raw material cost of all these components? If you have them stacked on the floor and could wave a magic wand so that the cost of rearranging the atoms was zero, then what would the cost of the rocket be? And I was like, wow, okay, it’s really small – it’s like 2% of what a rocket costs.

So clearly it would be in how the atoms are arranged – so you’ve got to figure out how can we get the atoms in the right shape much more efficiently. And so, I had a series of meetings on Saturdays with people, some of whom were still working at the big aerospace companies, just to try to figure out if there’s some catch here that I’m not appreciating. And I couldn’t figure it out. There doesn’t seem to be any catch.

So, I started SpaceX.”

Elon also reasoned he could cut the cost of space travel by 90% if he could make rockets reusable, enabling them to land safely, rather than tossing them into the sea, so to speak. That took several very expensive failures to get right, but he and his team finally succeeded.

Instead of assuming things have to be done the way they always have been, start from scratch and imagine new possibilities that will empower you to achieve your mission.

Test your value proposition, then your prototype and only then your market.

It seems extraordinary, but true that the most common reason new products fail is that nobody wants to buy them. Unicorn companies have learned they need to test their assumptions at every step of the way.

First of all, they need to be tested in what Steve Blank termed a Customer Discovery Process in his book, The Startup Owner’s Manual. Steve and Eric Reis who recently updated his thoughts in his book, The Startup Way, realised the startup journey often failed because enthusiastic entrepreneurs rushed their ideas into production and launched them without thoroughly testing their reception with the target market first.

Even global companies can fall into this trap as I found out when I was working for the British pharmaceutical company GSK, or Glaxo as they then were. At the time Valium, made to treat anxiety by Hoffman La Roche, was the biggest selling drug in the world, selling over 2 billion tablets a year, however within Glaxo it was considered to have a problem, in that it had the side effect of making people sleepy. So, Glaxo chemists set out to see if they could make a benzodiazepine analog, in effect a chemical cousin of Valium, with less of a soporific effect. They succeeded and spent some years and many millions getting it through clinical trials to show it was as effective as Valium at reducing anxiety, with less of the soporific side effect. However, when we launched it in Australia, sales were very disappointing. Initially they thought the marketing was at fault so that was rejigged, but still, the sales were slow. So finally, they sent a market research firm out to interview GPs to ask why they weren’t prescribing this great new drug.   The answer came back, “Well if someone comes in with anxiety serious enough to warrant treatment it’s not such a bad thing if they end up napping during the day and getting an undisturbed sleep at night.”

So, it’s clearly a better idea to test these things before spending years and millions launching the product. The Lean Launch Method and the Business Canvas provide tools to test first your ideas and then your prototypes, for your new products and services, and also your new business models. This is usually a challenging process. Steve Blank said no business idea survives its first encounter with a customer. Or as Mike Tyson put it, “Everybody has a plan until they get punched in the mouth.” It’s better to take your punches early. Fortunately, there are now quite well-established protocols for testing your hypotheses before you lock in your blueprint.

Sprinting to the finish line.

Getting your new product developed used to be guided by spreadsheets and Gantt charts with finely constructed critical paths. That is still appropriate for a well-understood process, but for an innovation that breaks new ground for your company, you’re better off using what has become known as Agile Project Management.   Innovations necessarily involve experimenting and that necessarily involves surprises, both of failure and success. But they cannot be rigorously plotted on a Gantt chart. Instead, they are best tackled as a series of Sprints with a small co-operative team accepting it’s a fast learning exercise, with frequent check-ins on feedback and what remains outstanding in the work plan.

The Innovator’s Business Case.

As fabulous as your innovation may be, it probably still has to pass the screening of a diligent, if not skeptical board of directors, or in a smaller company the CFO and key investors. Discovery-driven planning uses a reverse income statement to address this problem.

Wharton’s Ian MacMillan and Columbia’s Rita Gunther McGrath developed a system they called “discovery-driven planning” in their book, The Entrepreneurial Mindset. “Discovery-driven planning acknowledges that at the start of a new venture, little is known and much is assumed.” They contrast this with conventional, “platform-based” planning, in which “assumptions underlying a plan are treated as facts – givens to be baked into the plan – rather than as best-guess estimates to be tested and questioned.”

 

Startups used to write long Business Plans of 50 to 100 pages with reams of financial projections forecasting what the income and expenses would be 5 years into the future, or even went further to generate a Net Present Value for the company from a discounted cash flow analysis of the effective life of a company’s core assets. Investors and Directors would then beat up the CEO if these fanciful projections weren’t met with some exactitude. I know, because I went through it with a biotech company I took to an IPO on the ASX as CEO. The reality is of course that a Startup is in an exploratory stage and doesn’t know exactly what profit or losses it will make. The same is true for a truly new endeavour inside a large established business.

 

However, you still need some sensible method of assessing commercial viability.

The key to using discovery-driven planning is to list and honestly test the key assumptions you are making that underlie the belief the new venture will be profitable. Rather than pretending all will go to plan the reality is accepted that some assumptions will be proved wrong and that you expect some surprises as the business develops. But by laying out the assumptions you are checking and adapting as you proceed.

 

The reverse income statement, rather than starting with income and cost forecasts to see what profit or loss that generates, begins instead with the required profit after a period of time and then sees what costs are tolerable in order to achieve it.   The focus then shifts to the creative challenge of how to produce the product or service within those costs. The same challenge is set for creatively achieving the necessary revenue.   Required profits equals necessary revenue minus allowable costs. With this approach, the emphasis shifts from being right, or being blamed for not meeting forecasts, to being creative as a team, in order to meet the cost and revenue challenges, while openly and transparently checking whether or not key assumptions are holding up as the adventure unfolds.

Mapping your own areas of disruption risk

Unicorn Thinking is a very useful set of tools for developing major innovations, however, how do you know in the shorter term in what areas of your business you might be at risk and what you can do to defend yourself? Customers tend not to desert companies who are hitting their mark in 8 key areas of business.

One of these key areas is Intrinsic Brand Value. Are you competing on price, as a commodity, or are your customers willing to pay more to get your brand? The goal of branding is to allow your product to be sold for more than competitors with similar products.

Rolls Royce is owned by BMW. The Rolls Royce Ghost is built on a modified version of the BMW 7 series platform and shares a modified version of the 7 series V12 engine. No doubt there are refinements with the Rolls, but it’s substantially the intrinsic perceived value that allows it to be sold for 3 times as much as the BMW. Apple iPhones sell at a premium to their competition. Blind taste tests of different whiskeys, conducted by Dr. Stephen Chadwick and Dr. Hugh Dudley, both surgeons at St. Mary’s Hospital and Medical School in London, showed that most people can’t tell the difference between single malts and cheaper blends without the knowledge of which one they’re drinking. As advertising guru, David Ogilvy said, “They’re tasting images.”

 

Whether you’re at risk of having your market disrupted may depend on how firmly your customers have bought into a belief in your intrinsic value. Customers can’t always be fooled, of course. The perceived intrinsic value must be backed up by exceptional user experience to maintain leadership. As Clay Christensen explained in the Innovators Dilemma, with innovations such as smaller disc drives, their initial inferiority led them to be dismissed by the dominant players. But, it was also the lack of intrinsic brand value with older formats that meant customers had no compunction in buying the cheaper product as soon as the improving performance got within range of the existing devices.

 

Building intrinsic brand value provides not only higher profit margins, but also higher safety margins against disruptive newcomers.

 

Author:  Tom Williams, Principal of InnovationConsult : www.innovationconsult.com.au/

Networking your way to executive success

Business does not operate in a vacuum, and for a leader to succeed, interpersonal skills such as relationship building are just as crucial as the technical skills they possess.

We are often taught the importance of networking in the earliest stages of our career – the famous mantra of “it’s not what you know, but who you know”. This critical competency rises even further in importance for those leading an organisation.

With that in mind, it’s essential to find the right balance between quantity and quality when building your executive network. A large network will not necessarily contribute favourably to your career if it is not filled with the appropriate individuals who can drive your executive development.

Therefore, just like any major business activity, a strategic approach to networking is vital. Here are some points to consider when expanding your web of corporate relationships.

Why leaders need to network

So why exactly is networking so important to the modern business leader, and what benefits does it bring?

In a Psychology Today article, author Ray Williams even goes as far to call networking “the essential professional skill”. In the article, he cites numerous experts in the field to build an argument for why networking needs to be a priority for any professional.

For example, he cites Brian Uzzi and Shannon Dunlap who, in their Harvard Business Review article entitled “How To Build Your Network”, claim that networking comes with “three unique advantages: private information, access to diverse skill sets, and power”.

According to Uzzi and Dunlap, business leaders can often recognise these three advantages being enacted in their day-to-day work – however, many do not realise just how big a role networking plays in all this.

Further, in an article for the INSEAD Knowledge blog, Professor of Organisational Behaviour Herminia Ibarra takes a unique spin on the classic networking slogan and argues that “what you know is who you know”. In other words, what and who you know are just as important, and leaders need to learn how to marry these two for the benefit of the business.

“Other things being equal, what is going to give you an edge?” she asks.

“It’s the relationships that you have that allow you to augment what you know and allow you to take the ‘what you know’ and actually to translate it into practice, into something the organisation can use. It makes all the difference.”

The three types of networking

The importance of business networking can certainly not be doubted – however, it’s important to recognise that there is more than one type of networking, and successful leaders need to know how to leverage each one. As outlined in a Harvard Business Review article by Herminia Ibarra and Mark Lee Hunter, there are in fact three types of networks:

Operational

Operational networking is when you develop relationships with the right people within your organisation, with the purpose of doing your job better and more efficiently. The relationships tend to be focused internally, although they can be spread across different departments, with the goal of meeting the current operational demands of the organisation.

Personal

On the other side of the coin, personal networking is important as it grows your list of contacts outside of the immediate organisational sphere. As such, relationships tend to be focused on those external to the business, and can centre around interests and pursuits beyond the corporate world.

According to Ibarra and Hunter, such relationships are crucial as they play a role in fostering both personal and professional development.

Strategic

Lastly, strategic networking is one of the most complex – and also one of the most important – forms of relationship building. This focuses on creating connections with high-value individuals both internal and external to the organisation, such as those who are future-oriented and likely to contribute to the positive growth and development of your company.

Ibarra and Hunter outline that when a leader believes he or she is a good networker, they are often only thinking in terms of their operational or personal ability. However, leaders need to learn to “employ networks for strategic purposes” in order to gain maximum value out of their relationships.

It can be a worthwhile exercise to rate yourself on these three types of networking and see if there are any areas for improvement. Assess your current network – are the relationships too focused on the operational and personal level, or is there an overarching strategic goal that governs them?

What makes a good network?

For all three types of network, it is obviously important to create meaningful, lasting relationships that contribute in a positive way to your development. So what characteristics make up a strong network?

The Center for Creative Leadership’s ‘A Leader’s Network How to Help Your Talent Invest in the Right Relationships at the Right Time‘ paper posits one view on the issue, listing three key qualities of a good network. According to the paper, the best networks are:

Open – networks should be open enough that not everyone in your circle knows each other.
Diverse – connections should “cross critical boundaries”, reaching across vertical, horizontal, geographic, demographic and other limits.
Deep – quality, meaningful relationships that can lead you to new information, ideas and resources are crucial.

By strengthening your network-building skills across the three types listed above, and ensuring each connection you make is open, deep and diverse, you can make sure your network is primed to contribute the best possible value for the development of yourself and your business.

6 reasons why introverts make excellent leaders

When imagining a successful leader, many people automatically envisage someone with a bold personality, charisma, and a knack for public speaking and commanding social situations. This bias has also existed in businesses for many years, with organisations typically looking to promote extroverts to leadership positions rather than staff who are prone to introversion.

A 2006 USA Today study revealed that 65 per cent of senior executives believed introversion to be a barrier to effective leadership. In fact, only 6 per cent said introverts make the best leaders.

However, the list of frequently cited introverts who have made successful leaders is long, including modern names such as Bill Gates and Warren Buffett, as well as historic faces like Gandhi and Abraham Lincoln.

Therefore, what traits make introverts powerful and motivational leaders? Particularly when they face the stereotype of being quiet, shy and reserved. To answer that question, here are six reasons why introverts could be the right choice for leadership positions at your organisation.

1. New perspective

If your business only promotes extroverts to leadership roles, it can be difficult to gain a different perspective on problems or issues. Introverts can bring new ideas and suggestions to the table that offer fresh direction.

A mixture of introverts and extroverts can optimise brainstorming sessions and other meetings by combining two sets of talents in a way that is mutually beneficial for the creative process.

2. Careful preparation

Introverts like to be prepared, especially for social situations where they may otherwise feel uncomfortable, such as presentations, business meetings, networking events or speeches.

Any additional time spent researching, practising and understanding goals and strategies often pays dividends. Extroverts, while often naturally charming, can be guilty of ‘winging it’. This could cost them opportunities if colleagues or potential customers feel they have more style than substance.

3. Calming influence

Bringing together a room full of extroverts can mean emotions occasionally spill over, which could result in heated arguments and process delays.

Introverts, on the other hand, are usually more reflective and less likely to be directly confrontational. This can help to calm passions and temper egos when meetings spiral out of control.

4. Better at leading proactive teams

Research published in the Harvard Business Review shows that introverts are often better leaders for naturally proactive employees.

This is because they tend to be more receptive to a team’s ideas, which motivates and galvanises staff who are already passionate about their job. However, in the same study, extroverts were found to be more effective at leading passive teams that needed more direction.

5. Keen sense of self

Introverts tend to be better at self-evaluation, meaning they are adept at identifying the positives and negatives in their performances and making adjustments to improve.

An extrovert’s extreme self-confidence could lead them to ignore or not notice flaws in their skills and abilities, or worse, lay the blame elsewhere.

6. One-on-one skills

Whereas extroverts are comfortable flitting between social contacts and talking to a number of different people, individually or in groups, introverts often prefer building strong one-on-one connections.

The advantage is that interpersonal relationships are deeper and often longer lasting. Suppliers, customers and colleagues also feel more appreciated and respected when you take the time to build these ties.

Different leadership styles from around the world

Businesses are operating in an increasingly global environment, which requires careful consideration of cultural differences when marketing goods and services worldwide.

This is particularly true for Australian organisations hoping to take advantage of growing opportunities in Asian markets, with the country ideally placed to strengthen trade relationships on the continent.

Whether you are dealing with international partners or setting up an office in an overseas location, understanding typical leadership styles in that country can be extremely beneficial to bolstering smooth-running relationships.

So what are the main leadership styles exhibited worldwide? British linguist Richard D Lewis explored the nuances between a number of countries in his 1996 book ‘When Cultures Collide‘, which is now in its third edition.

Here is a summary of some of the common characteristics outlined in the book.

Australia

Australian leaders are thought to be fairly democratic, with Mr Lewis pointing to Swedish egalitarianism models as a close comparison.

However, Australian organisations are also guided by the more aggressive American way of doing business, which favours quick thinking and fast decision-making.

According to Mr Lewis, Australian executives must be considered ‘one of the mates’, but once they have achieved this status they often exert important influence.

Research by the Australian Institute of Management has previously found that the country’s leaders are supportive, preferring coaching and mentoring rather than focusing on individual mistakes.

UK

Diplomatic, tactful and casual, British managers are often fair and willing to compromise.

Under the surface though, UK leaders have a pragmatic streak that ensures they can be resilient and ruthless, but in a subtler manner than is stereotypically seen in US counterparts.

Where British employees can falter is in international communications, with an adherence to tradition and inward-looking perspective that can prevent cross-cultural learning.

Japan

Japanese businesses are more likely to have a bottom-up approach to innovation and change, Mr Lewis claims.

Top executives may harness substantial power, but new ideas typically come from workers on the ground. These are then filtered up through middle management to senior executives and are put in place when they gain enough support.

This process involves the circulation of a document called a ringi-sho, which is annotated and amended by various departments as it makes its way up the leadership chain.

China

Like in Japan, Chinese leadership is often geared towards consensus decision-making, which Mr Lewis describes as the Confucian model. This means a leadership group is usually in charge of policy implementation.

However, unlike in truly democratic leadership styles, there is a respect for unequal relationships. Organisational structures are similar to families, with age and seniority being greatly revered.

A benevolent autocrat is considered the ideal boss, and subordinates expect to be given instructions.

The US

US leaders are often assertive, aggressive and goal orientated, which Mr Lewis says is a result of the country’s frontier beginnings shown since the 18th century.

“They are capable of teamwork and corporate spirit, but they value individual freedom above the welfare of the company, and their first interest is furthering their own career,” he stated.

Leadership positions are usually allocated based on merit and Americans are not shy about pursuing wealth as their main motivation.

India

Nepotism is a key feature of Indian leadership structures. Decision-making is often made between family members holding senior positions within the organisation.

Trade groups exert a significant influence in the country and strong inter-personal relationships can develop between these organisations.

Germany

German efficiency is commonly referred to when discussing businesses in the country – and while it may be a stereotype, there is truth to the notion.

Clear chains of command exist in each department, with information passing through the hierarchy in a top-down fashion. However, despite this autocratic approach, there is room for consensus in German leadership models.

Germans often gain the respect of subordinates by showing a willingness to work hard, obey the rules and play fair. Horizontal communication between department leaders is less common than in US and British firms.

France

France’s leadership models are among the most autocratic, although Mr Lewis says this may not be particularly evident at first glance.

CEOs often have skills across a wide range of areas, including marketing, production, accounting and personnel – shifting gears as and when required.

Due to this comprehensive coverage, management blunders are more accepted in French businesses, as leaders are responsible for a large number of decisions across many departments.

Netherlands

The Netherlands values merit-based appointments, so Dutch leaders can often point to many achievements and competencies.

While managers in the country are decisive, consensus is important and there are commonly a number of key individuals involved during new policy implementations.

Mr Lewis adds that ideas have free flow throughout Dutch organisations, suggesting bottom-up creativity is encouraged.