There’s a hard-nosed reason why all CEOs should learn to sing:
I'd like to build the world a home
And furnish it with love
Grow apple trees and honey bees
And snow white turtle doves
These lyrics are from the 1972 New Seekers song “I’d like to teach the world to sing” It was a hit when I was a boy.
And you know what? I think all CEOs and their executive teams should sing it out loud at the start of all their strategy development meetings.
Well it might just help you dramatically boost your firm’s market value by inspiring you to create a strategy that energises your workforce.
Let me explain briefly:
Quy Nguyen Huy, INSEAD Professor of Strategy states:
“How a leader manages collective emotions can create or destroy enormous market value. It can also have a huge bearing on what large groups of stakeholders think of you.”
Contrary to boardroom wisdom, the majority of strategy failures are not the result of weakness in the face of strong competition, but because of the negative emotions they generate in the workforce.
Years of research by Professor Quy Huy reveals that 60% of failed strategies implemented by CEOs and their executive teams occurred for a reason which is so unexpected it had rarely been considered. It turns out the ‘collective emotions’ of the workforce, especially the middle managers, are mostly to blame.
Further, executives tend to know very little about the collective emotions of the groups they are leading. They rarely sense the failure brewing right under their noses.
When the failure occurs CEOs and executives look for explanations (and more often excuses) in statistics, market analysis and economic algorithms. These can give perspective and make leaders feel wise in retrospect. However, they seldom reveal what specifically went wrong within the company. They can even shift the responsibility outside of the company.
Meanwhile the collective emotions of the middle managers, which caused the failure, continue to fester.
Huy cites Nokia’s fall from grace as a perfect warning. The almost unbelievable failure of the Finnish multinational has been a source of horrid fascination for years – the stuff of nightmares for any CEO. From having 50% of the global market in 2007, Nokia lost 90% of its market value over three fast years.
The subsequent articles about fast-moving markets, the on-going electronic revolution and technological trends are dismissed by Huy. After all, the big boys were all competing in the same markets.
Nokia decreased in market value by more than the value of Apple because the company’s middle managers were experiencing collective emotions, particularly fear.
More specifically, Nokia was knocked off its brilliant perch because the company executives knew nothing about these collective emotions. They did not understand the nature of the fear. They did not even know there was any fear.
The employees did not mention their fears to their bosses. In fact they claimed to be feeling very confident; everything was hunky dory and the competition was toast.
Huy’s point is this: It falls to the generals to pick up on the collective emotions of the lieutenants. They cannot rely on anyone telling them.
Middle managers simply do not want to talk to CEOs about “the company’s emotional capital”. And traditionally, monitoring the emotional response from middle management to the latest pressures is on the ‘to do’ list of absolutely no CEOs. They just expect the team to buckle down and get on with it. However, the reality is these collective emotions act on a subconscious level within groups and become contagious, spreading throughout the organisation (Hatfield et al, 1994).
Of course it goes against the grain of the macho business world to think about emotions. Emotions are for home life. You leave them at the door. In the work place they can only distract and get in the way. Yet we are human, and executives ignore collective emotions at their peril. Nokia is just one particularly obvious example.
To quote Huy:
“Strategy is 5% thinking and 95% execution. Strategic leaders can fail in strategy execution if they focus on the business or task-related goals alone and not pay enough attention to the human motivational factors, including the emotions of various groups whom they seek to get support for their intended strategy.”
The notorious failure of Nokia makes more sense emotionally than it does in market or technological terms. Much has been made of the fact that the company’s Symbian software platform was never going to cut it in the new world of pocket computers. Yet why didn’t anyone mention this blindingly obvious fact to the executives?
Nokia teemed with people who knew their platform was feeble at the time. None of them wanted to be the bearer of bad news. After all, ‘Cleopatra killed the messenger’ and the managers were fearful already.
As a result of selective upward reporting, Nokia’s leadership actually believed the company was progressing well against its competitors. There was no panic. Nokia’s tumble surprised the executives as much as any observer.
We know that a build-up of collective emotions will occur in any group, from football fans to family gatherings to middle managers. It is not necessarily negative.
Your job as CEO is to create a company strategy that harnesses the power of collective emotions. Huy describes how this is done: communicate for both intellectual understanding and emotional commitment. By doing this you can tap into employees’ positive energy and this can be a force to help drive your strategy (rather than act as a blocker).
Emotions within teams and organisations are too frequently overlooked but, as Huy demonstrates, they can create or destroy market value.
There are emotional drivers that can be ignited in a workforce that help ensure strategies are successfully implemented and performances powered up. (Although there is no room to share these in this article I’ll be happy to talk them through with you, click to arrange a conversation.)
So, although singing the New Singers song at the start of your next strategy development meeting might be a step too far, keeping in mind the emotional impact your plans will have on your workforce may well may boost your market value!
References and further reading:
New Seekers song “I’d like to teach the world to sing”. Watch it on YouTube (click – opens new window)
Roger’s Harvard Business Review article “What CEOs Are Afraid Of” (click – opens new window)
Hatfield, E., Cacioppo, J., Rapson R., (1994) Emotional Contagion, Publ: Cambridge University Press
What Could Have Saved Nokia, and What Can Other Companies Learn? Quy Huy INSEAD Associate Professor of Strategy and Timo Vuori , Assistant Professor of Strategic Management, Aalto University, 2014, click this link to read and view video.
How Collective Emotions and Social Identities Influence Strategy Execution By Quy Huy Q, Strategic Management Journal (2011) and Psychological Foundations of Strategy, 24 March 2011, available at this link (opens PDF download).
Emotional Aperture and Strategic Change: The Accurate Recognition of Collective Emotions By Jeffrey Sanchez-Burks, Management and Organizations, Ross School of Business, University of Michigan, Ann Arbor, Michigan and Quy Nguyen Huy, Strategic Management, INSEAD, published in Organization Science, Vol 20 (No 1) 2009 (Article can be downloaded from this INSEAD link)
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