Your company will soar if your executive group sticks to this list. Just ask one of the most successful banks in the world.
By Doug Ready
In 2015, I asked Dave McKay, the newly appointed CEO of the Royal Bank of Canada, a simple question: “What one thing do you hope to accomplish over the next decade through your stewardship of RBC?”
His answer: “I want RBC to matter in the world we’ll be living in tomorrow. To be truly successful, we need to be about more than just making money. I want my team to energize our 85,000 people so that we’re pursuing an ambitious goal together. If we can do that, we will matter in the world—and we will be successful financially.”
McKay’s response was telling on several levels. First, RBC was already successful financially, with a history of delivering excellent results and consistent above-average returns to its shareholders. Second, the bank already enjoyed the enviable reputation of being the most respected company in Canada, and it had just been voted by its peers globally as the world’s most trusted investment bank.
Sign up for the monthly TalentQ Newsletter, an essential roundup of news and insights that will help you make critical talent decisions.
But I was particularly struck by the emphasis McKay placed on the importance of aligning his top team so they could get big things done together.
Hold on—get big things done? McKay had just taken over a highly admired and prosperous company. It had a coherent strategy and well-articulated set of core values, and it welcomed the best graduates coming out of the best universities and business schools. RBC’s board turned the reins over to McKay after the service of two highly successful CEOs had been completed in full accordance with its succession planning process.
What, then, would McKay’s impact be? How could he write his story so that it would make a positive difference to the company’s customers, the communities where RBC operated, its shareholders, its employees, and its board?
It became clear early on that this wasn’t going to be a story of a celebrity CEO driving a turnaround transformation against all odds. Rather, this would be the tale of a leader with the perspective to understand the power a leadership team has when it’s focused, energizing, trusted, capable, and forward-looking. It’s also the story of a team that understands how to lead through unrelenting complexity.
Every organization has a leadership team. But what does it do either better or differently from others? What does it feel like in the organization when that team is operating at peak performance? How do top teams become great? Is it simply the luck of the draw, or do they need nurturing, pruning, and cultivation?
To answer all these questions, we must take a look at the skillsets of members of great leadership teams, and how RBC’s top team worked together to drive change.
5 Crucial Skills of Every Top Team
I’ve studied and worked with leadership teams all over the world for the past 25 years. Through my experience, I’ve found that there is a common set of skills that help explain what great top teams do. It’s a simple but powerful list of capabilities that, if tended to, will help a company fulfill its bold ambitions.
- Create clarity. Great leadership teams focus organizational attention, identify what truly matters to their customers and key stakeholders, and build powerful stories around their organization’s challenges to fulfill those needs. In a complex world, they understand that perfect clarity is more ambitious than realistic, but they still strive to create as much clarity as possible with regard to their organization’s purpose, vision, strategy, and values.
- Unleash energy. Great leadership teams don’t stop at telling stories about their company’s bold ambitions. They make sure the entire organization is engaged in and accountable for mission accomplishment. They seek out many different voices as a means of soliciting an all-hands-on-deck approach to addressing their biggest challenges.
- Build trust. There is no greater accomplishment a top leadership team can achieve than building a climate of trust in their organization. With trust, people take risks, tell the truth, and help others, even when they might not help their own unit. The best way a leadership team can continue to earn their organization’s trust is to role-model the behaviors they’re asking others to demonstrate. They establish metrics and rewards that reinforce their messaging, and when the inevitable tensions surface between stated principles and observed violations, they set out to reconcile those tensions to maintain trust.
- Win today. At this point, we begin to see the interrelationships among the various skill sets of the top team’s job. Think of how much easier it is to build new capabilities when people know where your organization is headed. Think of how much easier it is to shed old ways of working and create new ones when we actually listen to those with new approaches. And think of how much easier it is to build those capabilities when we trust each other that we won’t be ridiculed for needing to refresh or be viewed negatively when we say our teams need help. Great leadership teams provide the structure, resources, and discipline that help equip their people to grow so that they can execute against strategic and operational objectives.
- Shape tomorrow. Teams that place a premium on experimentation and searching for new ideas build agile organizations that are filled with resilient people. They embrace new technologies that make it easier and better for their customers to do business with them. They seek out talent with a continuous development mindset and provide the resources for them to stay at the cutting edge of their disciplines. They think big and try to fail small. They understand that being able to shape tomorrow isn’t just an organizational capability challenge, but a cultural challenge that they embrace and are ready to address by constantly asking why things are done this way and listening to voices that offer fresh approaches.
Crafting & Implementing RBC’s Collective Ambition
Years ago, in the aftermath of the 2008 global financial crisis—a time when it appeared both our financial institutions and our faith and trust in the leaders who ran them were crumbling—I examined a series of companies that emerged from the wreckage stronger than before.
The organizations that tended to come out on top were those whose leadership teams led the change to find a compelling ambition, articulate a common purpose, rebuild their capabilities, and live by a set of guiding principles.
I referred to this process of building organizations that were purpose-driven, performance-focused, and principles-led as those who had crafted and implemented their companies’ collective ambition. Let’s look at the Royal Bank of Canada’s collective ambition journey and the role the top team played in it.
McKay was struck by this simple idea: clarify your purpose, build your organization to win today and tomorrow, and stay true to your values. RBC came through the Great Recession better than most companies, but it still suffered a 20 percent reduction to its stock price due to the negative impact the crisis had on the financial services industry. This was a wakeup call to even the most successful and values-driven companies, like RBC.
McKay set out to lead a collective ambition journey with RBC as a means of preparing the company to embrace the challenges they would face in the coming years, especially the wholesale digitization of the financial services industry.
First, they created clarity. Setting a clear agenda isn’t easy for a company’s leadership; in the early stages of McKay’s quest to make RBC an enterprise that was purpose-driven, performance-focused, and principles-led, several top team members openly wondered if the CEO’s priorities were well thought out.
Some felt that performance was all that should matter. Others felt the company’s core values were already a great asset to the company, and discussing them further might serve to confuse people as to whether the leadership team supported those values. But McKay argued that the process of identifying a common purpose would bring the organization together and also serve as a leadership opportunity for the top team to work with the new CEO.
Next, they unleashed energy. McKay and his top leadership team—the group executive, or GE—knew right from the start that RBC’s collective ambition journey would be doomed to fail if it became labeled as an HR (or CEO) initiative. It had to be a company-wide effort led by the c-suite team and supported by HR, but it needed to be viewed as an all-hands-on-deck engagement.
The GE formed what they called a champions team, a group comprised of influencers at RBC, no matter their title or level in the hierarchy. All businesses, functions, and geographies were invited to share their views on what brought RBC employees together. What was their core purpose? How could it drive even greater performance and shape their next generation of core values?
In addition to talking with hundreds of people, the company launched a two-day global online values jam. The leadership team hoped to capture several hundred inputs, but instead, it received thousands of inputs from more than 20,000 employees. Because RBC’s leadership team sought input about how to make the company great over the next few decades, they unleashed energy that was just waiting to be engaged.
Now it was time to build trust. In one of the most popular sessions held during the jam, McKay and the GE encouraged RBC employees to ask them anything. You might think the employees would be reluctant to speak so openly, but the CEO and his team settled that concern in real time by committing to acting on certain suggestions while the jam was still happening. The employees began to realize the process of crafting a collective ambition wasn’t just real, but one to which they could contribute, too.
When it came to winning today, one of the GE members made the point that RBC’s collective ambition couldn’t end with just a beautifully crafted statement of the company’s purpose—it had to be woven into the strategic and operational priorities of the bank. People had to see it was real, and not just a wordsmithing exercise. So as the purpose statement (“Helping Clients Thrive and Communities Prosper”) unfolded, the immediate agenda for the top team was to assess where RBC was today with that aspiration.
The GE-led sessions that focused on what new capabilities would need to be developed to make this promise a reality. In other words, if RBC’s purpose statement was to be viewed as core to the company’s future, how would it be used at board meetings, in community information sessions, and in client pitches for new business? This was a significant exercise; it forced the leadership team to invest in developing new capabilities and training thousands of people in them.
Finally, when I asked McKay about the impact he wanted to make, he instantly framed his views on the world we’ll be living in tomorrow. He wasn’t interested in simply delivering value for RBC’s clients today—his passion was to catalyze his leadership team to shape a powerful future for the company’s clients, employees, and communities.
That perspective is taking tangible shape today in the form of a comprehensive evaluation of how the company does business; an assessment of how the GE can bring RBC into the digital age as quickly and comprehensively as possible; a cultural transformation initiative; and a talent assessment that’s taking a new look at who will lead RBC into the future.
Great top leadership teams like RBC’s GE marry creating a sense of urgency with the patience needed to drive deep change. They call for collective action while emphasizing the importance of individual accountability. And they understand that their role as stewards of their company requires that they serve as bold catalysts for change.
This blend of skillsets and mindsets is the secret sauce that makes a leadership team not just good, but great.
Doug Ready is senior lecturer for organizational effectiveness at MIT’s Sloan School of Management. He is also the founder and CEO of the International Consortium for Executive Development Research.