Sports convergence with Business

-    What we learned from the Rugby World Cup 

White Papers | October, 2015

By Alex Bennett

Rugby World Cup Winners Michael Lynagh and Kyran Bracken, with DHR International’s Managing Partner Alex Bennett, explore what elite sport can teach the business leaders of today.

The elements of sporting success – such as team culture, leadership, and decision-making, among others – are present in every champion team, regardless of sport. Excelling in these areas is what unites the teams that win and keep winning: Manchester United under Sir Alex Ferguson, the all-conquering All-Blacks in rugby, the 1990s Chicago Bulls of the NBA, these are all examples of teams with sustained periods of success from across the sporting world.

But these elements are not unique to sport. They are also among the critical elements of success in business. In this research report, we will examine what the world of business can learn from the most successful teams in the sporting arena, with the help of a group of individuals who have experienced victory in both.

 Michael Lynagh was fly-half and vice-captain in Australia’s 1991 Rugby World Cup winning team, and later captained the team from 1993 to 1995. He was a key player for the Wallabies through one of the most successful periods in their history. He retired from test rugby in 1995 as Australia’s leading international point’s scorer, a record he still holds 20 years later.

Since retiring from the game, Michael has transitioned into a very successful second career in commercial property. Having suffered an unexpected stroke in April 2012, Michael detailed his inspirational recovery in his memoir Blindsided, published in September 2015.

Kyran Bracken played scrum-half for England on 51 occasions, including four appearances in the team’s Rugby World Cup-winning campaign of 2003. Kyran was a key member of the Saracens team known as the "Galácticos" a team built by Nigel Wray at the dawn of professionalism that was regarded as the Real Madrid of rugby. He went on to play more than 120 club games at the highest level for Saracens.

Kyran has also built a successful second career after his retirement in 2006. He now spends his time running Hybrid Houses, a timber-frame home construction business. He also became a celebrity beyond the world of sport by winning ITV’s Dancing On Ice in 2007.

 Alex Bennett is Managing Partner with DHR International where he leads the Global Medtech, Devices & Diagnostics Practice and is co MD of the London office. Formerly a back-row for Saracens, Orrell and Brive, achieving International honours with England A and representing the Barbarians, Alex was a teammate of Michael and Kyran in the late 1990s.

Having built and sold a successful Medtech business after retiring from professional rugby, he transitioned to executive search where his career has continued to flourish.  Alex suffered a broken neck in February 2012 whilst preparing for a charity legends match, leaving him completely paralysed. He walked back into the office just 6 months later, having been supported through his rehabilitation by the entire rugby community.

In October 2015, DHR International invited Michael, Kyran and Alex to give their insights into what the business community can learn from elite sport, and what lessons they have taken from the rugby field and applied successfully in their business careers.

This paper will focus on three key areas: culture, succession planning and decision-making. All three of these are central focuses of DHR International’s strategy in executive search – a strategy that has led to DHR International becoming the sixth-largest executive search firm in the world.

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Culture

For a senior executive joining a global organisation, there are two substantial challenges to be faced. First, a senior executive must have the strength of character, leadership skills and vision to be able to ‘put their mark’ on the organisation, and drive transformation. Secondly, and almost in contradiction to this, they must be able to understand the existing culture of the country and the organisation itself, and be flexible enough in leadership style to avoid offending immutable cultural expectations.

Eddie Jones and the underdog miracle

The situation for sporting leaders is virtually identical. Both Michael Lynagh and Kyran Bracken raised the example of Eddie Jones, coach of the Japan rugby team. The Tasmanian son of a Japanese-American mother and an Australian father, Jones rose to prominence as a coach of the Brumbies in the Australian Super 12, leading them into the most successful period in their history. He then coached Australia from 2001 to 2005, including the narrow loss to England in the 2003 Rugby World Cup final in Sydney.

Jones gained a reputation for being a forceful, almost autocratic leader – one who could bring the very best out of his players, but who also clashed with colleagues and management on several occasions.

Since 2012, Jones has coached the Japanese rugby team, one of the true underdogs of world rugby. Despite some positive results against other Asian opposition, prior to Jones’ appointment, Japan had failed to win a game at a Rugby World Cup since 1991.

On taking over as head coach, Jones said that Japan had to develop a style of play that would allow them to win games against upper-tier international teams like Wales and Scotland.

Three years later, on September 19 2015, Japan stunned the rugby world by beating titans South Africa, winners of the Rugby World Cup in 1995 and 2007. The 34-32 win in Brighton has been described as the biggest upset in rugby union history.

Michael, Kyran and Alex say that Jones’ biggest achievement as Japanese coach was blending his own leadership style with the expectations of the Japanese players, giving them the opportunity to reach their potential as a team.

Says Alex Bennett: “Eddie Jones is known to be extremely detail focused and manages both the macro and micro elements of his team’s execution with obsessive levels of precision – he gets involved with almost every aspect of the team. As it turns out, he recognised that was exactly what Japanese rugby needed – his style and the culture of the Japanese people and their team was very much aligned.”

“The Japanese players really took to Eddie’s leadership style, and he led them to achievements that I doubt even they thought were possible.”

Adds Michael Lynagh: “With a Japanese mother and a Japanese wife, Eddie knows Japanese culture inside out, and he knew exactly what he needed to do to get the players to respond to his style.”

“Speaking the language was also an enormous advantage for Eddie. You take communication problems out of the equation, and it allows you to focus on driving improvement.”

Carlos Ghosn – unlikely cultural icon

When placing senior executives in global businesses, it is critical to take the same factors into account. In particular, when the difference in culture is significant, an executive must be able to take the same approach as Eddie Jones, and take into account the prevailing local culture when making leadership decisions.

In May 1999, French car maker Renault took a 36.8% stake in Japanese rival Nissan. The first senior executive from Renault to join Nissan was Carlos Ghosn, an Executive Vice President who had, until that point, headed up Renault’s South American division, as well as taking responsibility for purchasing, advanced research, engineering and development, powertrain operations, and manufacturing. He was immediately appointed COO of Nissan, becoming President in 2000 and CEO in 2001.

Born in Porto Velho, Brazil in 1954, Ghosn’s family was Lebanese-Brazilian. He moved to Beirut at the age of six, and gained engineering degrees from the École Polytechnique and ENSMP in Paris.

Nissan was close to bankruptcy on Ghosn’s appointment, but having already radically restructured Renault in the 1990s, Ghosn had gained the nickname ‘Mr Fix-It’. 

His ‘Nissan Revival Plan’ took the carmaker from $20bn of net debt in 1999 to zero by 2005. In 1999 Nissan booked a net loss of $6.46bn; in 2000 it turned a net profit of $2.7bn. Its 1999 operating profit margin was 1.4%; by 2003 that was 11.1%.

Ghosn is famed for understanding Japanese culture, but also for not being constrained by tradition. He is noted for listening to the concerns of Nissan workers, and putting in place cross-cultural team groupings within Renault-Nissan to ensure that cultural sensitivities and expectations are respected. He was also a very public face of the recovery and reconstruction efforts following the Japanese earthquake and tsunami of March 2011.

Equally, however, Ghosn dismantled Nissan’s keiretsu system of interlocking business relationships to create a simpler and more efficient supply chain. He also changed the company’s official language from Japanese to English, and broadened the company’s strategic planning group from purely Japanese leadership to include European and North American senior executives.

Carlos Ghosn is currently Chairman and CEO of both Renault and Nissan individually, and of the Renault-Nissan Alliance, as well as Chairman of Russian auto manufacturer AvtoVAZ.

Says Alex Bennett: “Carlos Ghosn is probably the highest-profile example of a business leader who has blended the best of his natural leadership style with the best of another culture.”

“Ghosn has become something of a cultural icon in Japan, which considering the cuts he was forced to make to the Nissan workforce, is an astounding achievement. He’s also probably the only non-Japanese business leader to be immortalised in his own manga comic book!”

“When placing senior executives in global businesses, we always strive to ensure that both sides are willing to accept change in their approaches. Carlos Ghosn and Nissan are the model that every global business can learn from.”

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Succession Planning

Succession planning is an enormous part of DHR International’s work, and has been for decades. The executive search firm is internationally renowned for achieving consistent results in placing senior executives who are ready to step into global leadership roles.

Just as culture is vital in creating a successful sports team, succession planning is vital in ensuring that this success is sustained; that a victorious team becomes a dynasty.

England – from revolution to revolution

At our Q&A event, Michael, Kyran and Alex all spoke at length on the topic of England’s early elimination from the Rugby World Cup, but it was Kyran’s insight into the team’s failure to plan succession that was most thought-provoking.

Says Kyran: “It’s astonishing to see that almost nobody in the England set-up today was involved in the 2003 Rugby World Cup win. There have been so many ‘revolutions’ in English rugby in just 12 years that almost all the organisational learnings of that win have been lost.”

“Every new coach since the World Cup win – Andy Robinson, Brian Ashton, Martin Johnson, Stuart Lancaster – have all brought in their own staff, and in almost every case, every one of them has left with that coach.”

Says Alex: “Retaining some continuity though a period of turmoil is absolutely critical both in sport and in business and the England rugby team hasn’t managed to do that.”

“A once-in-a-lifetime event like the 2003 World Cup win brings a wealth of learning for those involved, about the nature of winning teams, about the preparation and mental strength needed, and about the organisational structures that facilitate victory.”

“For all that to be lost in just 12 years is disappointing for English rugby.”

“England must now decide whether it is time for yet another revolution, or whether that will simply be returning to square one again.”

BP – succession planning to avoid disruption

In business, having the right senior leaders in place can be a critical factor in determining success, especially when navigating a difficult event or a challenging economic climate.

One example of how effective succession planning can work in practice can be found in Bob Dudley, the Group Chief Executive of oil giant BP. He has been with the group since the BP-Amoco merger in 1998 and by 2009 had risen to Managing Director, with responsibility for the group’s operations in the Americas and Asia.

On April 20 2010, BP’s Deepwater Horizon oil rig sank in the Gulf of Mexico. Dudley was appointed head of BP's Gulf Coast Restoration Organization, dealing with the clean-up operation, cooperation with authorities, informing the public and analysing the damage caused by the oil spill.

In the weeks following the accident, Dudley was appointed to replace outgoing CEO Tony Hayward, with the company’s share price down 37% on its pre-spill level, and the group facing tens of billions of dollars in clean-up costs, regulatory fines and civil settlements.

This was arguably one of the most critical executive appointments in the history of BP, with the group facing a period of difficulties that could potentially threaten its long-term future. At this point, being able to promote a planned successor from within and avoid a destabilising transition to a new leadership group was a major advantage to the organisation.

With his knowledge of challenging conditions in the oil industry, including long stints in BP’s Russian operations, as well as a transparent approach with regulatory agencies, Dudley was able to help BP begin to turn the corner.

Just seven months after the Deepwater Horizon accident, BP’s share price had risen 63% from its post-spill low, and the company had begun to make progress from a legal, regulatory and public relations perspective. Although the road back from the difficulties of 2010 remains challenging, Bob Dudley’s leadership of BP played a role in piloting the organisation through the toughest period in its history. 

Says Alex Bennett: “Having a ready-made successor to the lead executive in place is what every business should strive for, as ‘black swan’ events like the Deepwater Horizon accident can turn an organisation upside down virtually overnight. By having prepared for a handover when it wasn’t an immediate need, BP minimised the disruption it faced when the handover was unexpectedly forced upon it.”

“Across all sports teams and businesses, minimising damaging ‘revolutions’ in senior leadership should be a key organisational goal. The setbacks in terms of strategic disruption and loss of knowledge can be very damaging.”

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Decision-making

England’s critical moment

The defining moment of England’s Rugby World Cup campaign came at the end of their second group stage game against Wales. Having trailed 25-18 with just 11 minutes to go, Wales scored a try and kicked a penalty in the space of four minutes to lead 28-25.

England won a penalty 30 metres from the Welsh line with three minutes left, and captain Chris Robshaw faced a critical decision: to present fly-half Owen Farrell with a difficult kick at the posts to tie the scores at 28 and draw the game, or to kick for the corner, go for the try and the win, and risk everything on one roll of the dice.

Robshaw decided to kick for the corner, the Wales defence held up against England’s driving maul, and the game’s last opportunity was gone.

Says Kyran: “The decision to kick for the corner would have been hailed as genius if England had scored the try, but it was never likely to happen. The chances of scoring against a very solid forward line like Wales’ is very low indeed with that approach and England played the percentages all wrong.”

The Economist has pointed out that Tier 1 rugby nations, including Wales, only concede a try on 9.8% of lineouts inside their own 22-metre line, making Robshaw’s choice to kick for the corner an excellent example of a team ignoring data and making a decision based on “a feeling of what's going on on the pitch,” as Farrell later said. 

The same can occur in business, with a capricious CEO making decisions based on ‘gut instinct’ rather than trusting the data.

Alex Bennett says that there are positive and negative aspects to the decision to kick for the corner.

Says Alex: “In a way, it’s important that England’s on-field leader was empowered to make that decision, and to be confident in taking what was a very substantial risk. Conversely, it’s disappointing that the decision made was very clearly the wrong one.”

“While it’s easy to question decisions with the benefit of hindsight, people like myself, Michael and Kyran were very surprised at the level of risk Chris Robshaw decided to take, with absolutely no safety net should it not work out.”

Michael Lynagh questions whether Robshaw’s attitude to risk reflected the general approach of the England camp.

Says Michael: “In rugby, a team often comes to reflect its coach, and that might well be the case with this England team. It seems that Stuart Lancaster takes a very low-risk approach in general, and his players have become uncomfortable with taking risks.”

“Perhaps that meant that when Chris Robshaw was put in the position to make a critical decision, his assessment of the risks involved in kicking for the corner was wrong.”

Smith & Nephew – trusting decisions to ‘best in class’ leadership

In business, it is just as critical to trust your senior management to make tactical decisions, and be able to assess the risks involved in their decisions effectively. Having the right leadership team in place is crucial in this regard.

Alex Bennett points to the example of Smith & Nephew as a business that has built a leadership team that the CEO trusts to make decisions.

 

Olivier Bohuon was appointed CEO of Smith & Nephew in 2011, having been Executive Vice President at Abbott Laboratories. Coming from a background in pharmaceuticals, some were sceptical of his suitability to lead a medical technology business, but the ‘best in class’ executive team he has assembled has meant that his deep-rooted restructuring of the business has been successful.

Says Alex: “Some of the transformations Olivier Bohuon has led at Smith & Nephew have been fundamental in nature, and that’s very difficult to achieve without a leadership team in place that the CEO trusts to lead those changes.”

“Almost the entire executive team has changed since the CEO’s arrival, and the business has focused on getting the very best individuals, on both the technical and commercial sides of the group.”

“With Smith & Nephew shares up 60% since he took over, it looks like the market agrees that the restructuring has been successful, despite the risks involved.”

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Conclusion

The worlds of business and team sport share a clear similarity– success in both depends on harnessing the talents of a group of individuals to work as one.

The degree to which the group is able to do that is a crucial determiner of success or failure. A team divided is unlikely to reach its full potential, either in business or in sport.

The most successful businesses and sporting teams are those that, like Olivier Bohuon at Smith & Nephew, or Sir Clive Woodward assembling England’s 2003 Rugby World Cup winning team, bring together a ‘best in class’ group, and unify them within one culture.

England’s 2015 team fell some way short of those standards, and all the aspects discussed in this research paper – culture, succession planning and decision-making – may have played a part in that.

It remains to be seen whether England follow the example of BP in promoting from within to retain organisational knowledge, of Smith & Nephew in installing a completely new leadership team to drive transformation, or of Nissan in turning to a leader from another culture.

Just like a business undergoing restructuring, how the senior leadership reacts to failure, both within the England team and the game’s governing body, the RFU, will decide whether England return to contention for the 2019 Rugby World Cup.

As sport continues its commercial development and becomes ever more a global industry, the approaches followed by elite businesses become ever more applicable to elite sport.

Some would argue that England could learn from some of the lessons contained within this paper, and follow the examples set by some of the world’s highest-performing businesses. These organisations constantly to strive to ensure that their senior leadership is able to drive change, adapt, and succeed.

Having the correct blend of skills, background and experience, along with the right level of diversity, is what sets world-class leadership teams apart from the pack. Building that team is what DHR International has achieved for its clients for decades.

If you’d like to find out how DHR International can help your business follow best practice in culture, succession planning, decision-making and the many other aspects of putting together a senior leadership team, visit us online at www.dhrinternational.com, or call us on +44 (0)20 7901 0400

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Ten things business leaders can learn from elite sports


1. Training can apply to business set pieces

Training in sport is more all-encompassing than in business – professional athletes spend far more time practicing than competing. However businesses can still benefit from practice.

Set piece moments, such as pitches, speeches or meetings can be rehearsed. Professor Kenneth Shropshire, former Stanford football player and Director of the Wharton Sports Business Initiative, teaches students on the Wharton Executive MBA program to practice negotiations.

“It’s not about teaching people tricks, but giving them a way to focus and develop a road map to what they want that they can achieve” Shropshire told Wharton Magazine.

2. Start with the right foundation

Careful consideration of who is being brought into a business, at what level and why is crucial to the ongoing success of an organisation. The characteristics of hires must meet the requirements of the business.

In a Harvard Business School case study Sir Alex Ferguson states that his first thought on arriving at Manchester United was to build a football club, not just a team. Developing youth players and teams helped create a continuity of supply for the first team.

Despite this focus Ferguson was consistently willing to bring in established professionals from other clubs to fulfil specific roles. Ferguson states that he deliberately recruited “bad losers” who would each demand more from their colleagues.

3. Removing negatives can be as important as bringing in positives

The importance of hiring the right people in businesses is not the only staffing issue central to Sir Alex Ferguson approach. Removing inadequate or disruptive elements was just as important, Ferguson famously forced his Club Captain Roy Keane out of Manchester United after Keane publically criticised his teammates.

Cutting underperforming business lines or individuals can be difficult, particularly after significant time investment trying to turn things around. However a leaner more focussed business is often stronger.

4. Trust subordinates…

If a team has been built correctly it should not need constant interference. Matthew Brodsky, Editor of Wharton Magazine reports on the management style of Peter Ueberroth a noted Water Polo player and leading American sports administrator and business figure:

“He would call his staff on the L.A. Olympic Organizing Committee into his office, name a task and say “make it happen.” No micromanagement. Just trust in his subordinates’ talent and initiative.”

5. …without giving up control

Keep observing after delegating tasks and responsibilities without intervening at every step. Allowing staff space to operate autonomously makes it easier to see patterns in how certain individuals or business functions interact.

Sir Alex Ferguson relates how delegating and allowing his coaches to coach gave him more perspective on what was working about the training sessions and where his expertise could be best deployed.

6. Instil values set the tone

Setting the tone and style of a team comes from its leaders. Leaders of the Rugby World Cup winning England side of 2003 such as Captain by Martin Johnson are hailed as a core reason for that team’s success.

Having a very clear view of the integral elements of the style of working an organisation wants to promote makes consistency easier to achieve, and development easier to measure. Replicating that style across locations and departments will help ensure that staff from across the business can easily collaborate.

7. Build the work environment

Constructing the best environment for an organisation can be as important in business as in sport and physical structures affect working patterns as much as attitude. 

Manchester City Football Club has invested £200 million in a training complex in East Manchester which allows 400 footballers, professionals and juniors, men and women to train simultaneously.

Thorough satellite City Football Academy campuses in New York and Melbourne for their affiliate clubs Manchester City are building global consistency in training facilities.

Parallels can be seen in the development of Google’s global office environment. The distinctive ‘Googleplex’ in Mountain View, California is designed to foster a collaborative way of working Google are keen to export to their other offices.

Unhappy with the architectural plans for a new London office Google CEO Larry Page demanded new designs that were ‘more googley,’ insisting that the fabric of the building inspire workers.

8. Communicate internally - active listening and tailoring messages

Information flow is vital is sports and business organisations. In a Deloitte report on sports and business Peter King of the highly successful British Cycling setup explained that much of his teams’ success resulted from a collaborative approach:

“Anyone with input to an athlete’s success would regularly meet and talk through their needs and ideas.”

King goes on to say that even outlandish ideas can generate gains when people with different approaches and perspectives were brought into dialogue.

Openness to suggestions and engagement internally can provide benefits and educating staff on how to share ideas with each other can be as important as how management messaging is tailored to staff.

9. Adapt rewards for achievement

Employees respond better to encouragement in most situations, and communicating what constitutes an individual success is important. This is not the same for all employees, and certain staff prefer certain types of reward.

In the NFL some linebackers get paid cash bonuses for tackling the quarterback of an opposing team, whereas coaches get paid for winning competitions. While these targets are related they are not necessarily fully aligned. Trying to make a tackle can help a team win but is not always the best play.

Employees will not necessarily understand or operate in an incentive structure the way it is designed. Some sales employees often expect to have to game the system to maximise their remuneration.

Absolute clarity on pay can be a difficult area for businesses to offer as it can be contingent on a huge range of factors. However explaining why an incentive structure is in designed the ways it is can be as important as explaining how it works.

10. Make the best use of the correct data

Business leaders can be distracted by the ‘noise’ of data they are presented with. Deciding what the most important metrics are for a business will make taking action more straightforward in crunch situations.

Sports teams have long used data on players to make decisions, the more goals a player scored the more valuable he was perceived to be. This has become ever more sophisticated in recent years.

Until recently data analytics in football relied on detailed observation by third parties such as Opta, which tracks statistics such as the number of touches of the a football player has in a game.

Increasing numbers of sports teams collect their own real time data on their players, in training and match situations. The England Rugby team can monitor their players’ heart rate and average speed during games and use the data to decide when to make substitutions.

 

Alex Bennett serves as managing partner and the global leader of the Medtech, Devices & Diagnostics Practice for DHR International and is based in the firm’s London office.  Contact him at abennett@dhrinternational.com or by telephone on +44 (20) 7901 0453.