Igniting Intrinsic Motivation

Roy van Griensven: It starts, for me, with clarifying a word that I think is overused in many cases. A lot of companies say we want transformation, we want commercial transformation, we want commercial excellence. My experience: nine out of ten cases a company does not want transformation. They just want an improvement of what we are doing today.

This comes back to when I started at LANXESS. We started with a very open, transparent dialogue with our CEO — as a Dutch guy it is easier to be straightforward than in some other cases. One of my initial questions was: what do you really want, and why do you want it? Do you want an improvement of your commercial performance, or do you actually want the transformation, and what does that mean? Because in the literal sense of the word, transformation means doing something completely different from what you are doing today. And are you up for that?

That is where the first question needs to come, and this is my personal plea to myself and my recommendation to anyone, because it makes your life a lot easier. If the question is that we are going to install a transformation, but what we actually want is just a better outcome of the same thing, I would walk away. There is no way on earth you can ever become successful, and we are just fooling ourselves in the end.

Then, if transformation really is what the company is looking for, the second question is: what does excellence mean? Do we want to be best in class? Do we want to copy what has worked for other companies, or do we want to be as excellent as we can within the constraints we have? Do we just want to grow one maturity level and get a bit better? Let us align on what we expect, because uplifting an organization to best in class is a very different ambition from wanting to get slightly better.

Roy van Griensven: In my own environment, when I stepped into LANXESS, transformation had already started and commercial excellence had already been defined. There was a great deal of tearing down misinterpretations first.

I spent my first thirty days listening and in conversation. The only thing I heard was: fourth time this is coming by in the past fifteen years. We will sit it out. What is going to be different? Do you know you are the fourth guy trying to do the same thing? So there is a very clear fatigue in any company, on transformation and on change. People look back at the past fifteen years and say, we have tried this before. Put a different sticker on it, hire a different consulting company — what is going to be fundamentally different?

In our company we also started very traditionally. We need a performance improvement, let us call it a transformation, let us install commercial excellence at headquarters level, bring a group of people together to run a set of projects, work with our businesses, hire a firm, they create some great slides, they show us the value potential, and then magic will happen.

We needed to tear that whole approach down. Magic is not going to happen by looking at a couple of slides from people who have never done the work — who have told others what they might need to do, but have never been on the other side of it, accepting the consequences and dealing with that. From an inspiration perspective it is all nice. But if you have an hour to talk to someone, spend no more than five minutes on inspiration. Quickly agree it would be fantastic if we lived in that environment. Then very quickly it boils down to: why are we not there today? What is hampering us?

Roy van Griensven: The biggest challenge in many big companies is that we fall back to central, top-down direction, where people say these are the five or ten or twenty programs that need to get done across all our businesses, and they just have to adopt them. Humans do not work that way — at least the companies I have seen do not work that way. If you want transformation, meaning fundamentally doing something different from before, it does not happen because someone comes in with a slide telling you that as of tomorrow this is what you will do differently. Most people are not wired that way.

So this is one of the questions I discussed with our CEO before I got started. Do you want to do it the easy way or the hard way? If you want the easy way, follow the consulting approach — you will get some impact, do a couple of projects, see results in your bottom line next year that may outweigh the fees. But I can guarantee that in two years you will be at the same point.

Doing it the hard way means addressing every element of structurally building capabilities in your organization. Adjusting your processes. Adjusting the data, correcting the data, dealing with the state of the data in most companies. Correcting the systems in place. And adding the people competencies.

In a lot of cases, and at LANXESS the same thing, companies jump very quickly into how fast we can implement the pricing tool or the CRM system. You need to bring people back to the sobering reality: the system is not going to make any material difference if you do not address the other three elements of structurally building a capability. That is the hard way. You need to do the difficult stuff.

Roy van Griensven: In a lot of cases, and in our company today, there is a change in strategy and then people expect a very clear, detailed account of how we move to that strategy and what it means to everyone. I think that is fundamentally a misconception.

The role of the board or the CEO is to give a certain direction for the company — guardrails and guidance of the strategy. It is the people's responsibility to fill that strategy with how we achieve it and how we execute on it.

That is misperception number one. I see in our company today that people simply wait for instruction. And we allow them to wait for instruction, because we centralize everything, it is top down, we have global initiatives, we bring consultants in to tell you how to do it. So you trigger a behavior where people wait for instruction.

So what we have done differently: we have done enough inspiring about where we can go as a company. Now let us pause. Let us stop. Let us first have a dialogue about where the individuals think we get stuck. One thing is complaining — a lot of people can complain easily, saying this is all that is wrong and what the company does not do well. But the next step is to call on the obligation and the responsibility people have. What is the one thing we should change tomorrow? And not the one thing the other person needs to do — what is the thing you can do? And where does the limit of your ability to change something stop, and where do you need help? What is that help about?

That is a much more difficult approach, because you are calling on the intrinsic motivation of people who are really motivated to do something different. Are they clear about the sense of urgency, or are they perfectly fine with what it is today? But you will see the people who raise their hand start to become vocal and say: I believe we fundamentally have an opportunity to do better. This is what I can do, and this is where I need help.

If you then build the transformation on the support those people need, all of a sudden people start doing the real change themselves. Of course you need to guide it, you need to inspire with what other companies do, the art of the possible. But it is an extremely uncomfortable approach for people in the headquarters, for the board, for business unit leaders — because you do not control. You do not have full control of what people are going to do tomorrow. You need to believe that with the right coaching and the right guidance on direction, people will be motivated to make these changes one at a time. And if you have a hundred of these changes together, then something really starts to happen.

If you do not touch upon that intrinsic motivation of people wanting, out of their own motivation, to do something different — okay, tell me, help me how to do it — change will not happen. We have seen more than enough transformations fail. One thing I object to is that a lot of the research says communication broke down, communication was not good enough. That is nonsense. It is not about communication, because communication is one-sided and typically top down. It does not address the core of human behavior in that transformation, and that is intrinsic motivation.

I am not here to tell a fantastic story that everything is perfect. What I do see, in a very traditional German chemical industry company which is tough to change, is that the moment you start touching on intrinsic motivation, things start to happen. All of a sudden people want to do it, they start asking for help. But it is a far less upfront predictable method of getting things to change.

Roy van Griensven: On the Academy specifically — if we build structural capabilities across people, process, data and systems, the people element is the sustainable, structural way of upskilling knowledge in the organization.

The moment I entered the company they had an idea of an academy where all marketing and sales people would be trained in modern commercial capabilities. Very traditional: a hundred slides, sit in a room for two days, do some exercises, let people go away and hope something stuck. I think all of us have seen enough to understand that learning does not happen that way.

So we changed the whole approach into three steps: inspire, reflect and apply. You need a bit of inspiration — in the chemical industry, in a company in Germany grounded in decades of heritage doing the same thing, you need to give some idea that other companies have tried different methods. That is a small piece of inspiration.

Then we get people together to reflect, and we say: talk about it. How does that matter in your daily job? This is not academic, theoretical stuff. How do you see this applying day to day? Do you recognize it? Would it help you, yes or no?

At the end of that we pick one component. You could easily pick twenty-eight commercial capabilities — all fine, but you can never address twenty-eight different things at the same time. So we limit it to what we feel are the critical ones for the success of the company in the next three to five years. And within those, we let people choose the one thing that matters most to them, for their personal learning and their day job, in the coming three to six months. What is the one thing you want to get slightly better at that would help you improve day to day?

Then we apply a ninety-day period of coaching, with help from people outside the company. Let us take this and help you make an improvement in how you deal with it over the next ninety days. We identify those as growth projects, and the combination does several things. Great ideas start coming from within the organization, which by default carries much more motivation to change, because it comes from within. It makes very tangible improvements while you go, so you do not wait two years for a big launch. And things come up that are suitable to scale across many different businesses.

The interesting part is that we started in the commercial organization, and now the rest of the company wants to do the same thing — there is a pull effect from within, because people want to learn. It is not the fact that people are resistant to change. They are just resistant to the way it has always been done.

Jesse Hopps: What is fundamentally different about this approach — the way I explain it to people getting started — is that we are going to teach you the same skills consultants use. The frameworks for purpose, definition, identifying needs. We are trying to democratize the consulting process and say: if you looked at things through this lens, you pick a problem, you identify the needs, you start designing a solution, you figure out where the roadblocks are, you figure out what resources you need to solve it or at least make progress. And you have some support on that.

Not everyone responds. But those who are going to be your next generation of leaders, the ones you want to promote, they do step up and they find things that need to be improved. So I would say it is as much about removing obstacles as it is about adding new things to the business. It takes us thirty days to do something and it is not a great customer experience — can we fix that, please? Let us get the fundamentals straight before the fancy stuff. Who cares about marketing automation when we cannot get a simple thing done for our customer?

When you meet the people on the ground dealing with those issues — I wish corporate knew about this and we could solve it — and you actually jump on that thing, that is when the light bulb goes off. It is not just about adding new methods and systems. It is removing the things that make it hard to be excellent day to day. So it is even more problem-solving oriented than it is training on new practice.

You also have to temper expectations. In a big organization the projects come back on a bell curve. You are going to have some amazing ones, a bunch in the middle, and some that never really got going. That is just humans. That is the cross-section of humanity.

A participant: Do you have any metrics you anchor to that help guide you on how effectively your programs are working?

Roy van Griensven: Very good question, and this is where I had quite a strong dialogue with our CEO and CFO, because naturally they look at one thing — they want EBITDA impact. This is where you need a very honest conversation. All of our salaries get paid in the end from bottom-line results, but EBITDA is not the way to steer a transformation, because a lot of effects can influence the bottom line that may have nothing to do with the progression and success of what you are doing.

So the dialogue I had with them is: we will develop a method that shows the leading indicators of progress. Ninety percent of our time is spent identifying whether we believe these are the right leading indicators — the ones representing that we are doing something better and different than we did before, that we are moving in the right direction. The ten percent is making a connection between how those indicators changing will likely contribute to the EBITDA result. And that word is extremely important: contribute.

If you want a one-to-one connection between the ROI of an excellence activity and EBITDA, forget it. It might just as well be influenced by your customer's own situation changing, by a competitor, by something happening on the other side of the world. You can never get a one-to-one relation. So you need to believe in the right leading indicators, and you need to make a credible connection to contribution.

The leading indicator discussion is the most important. I take an example from my past, when we separated from a parent company and went through an IPO. Investors are not looking only at quarterly EBITDA or quarterly performance. They are also looking at the mid- and long-term effect — are we progressing toward the potential of the strategy? So you connect the leading indicators to the direction of the strategy and ask whether we are doing the right things.

Very simple, tangible things. We want to grow in certain markets and segments, so a clear indicator is whether we are growing our pipeline of opportunities with customers we do not have today in those specific segments. There are many of these, and in several cases they lead to a hard dialogue based on transparency — guys, we are over-serving customers that will never grow. If we want to grow, you need to lower your cost to serve those customers, and increase what we spend where we need to grow. That requires an honest dialogue. Once people buy into it, you show progression on the growth accounts and progression on lowering the cost to serve.

Roy van Griensven: One element that comes with that is not so much an indicator as a behavioral call on board members, and certainly the CEO and CFO, and I repeat it at least once a month.

As the leader of the company, you need to reward transparency — and even if you do not feel that way, act it. Fake it until you become it. You need to reward transparency and not hit people over the head for showing that there is a gap. Because the moment you start creating transparency, people show where the problem is and where they need help. Then you can do two things as a leader. You can say: fantastic, what support do you need? I really appreciate knowing what our customers are experiencing — so what do we need to do?

Or you can jump on the problem and hit the person responsible for past performance over the head, and completely block any level of transparency that anyone feels comfortable showing again. It sounds a little arrogant and I do not mean it that way, but there is a huge element of C-level education in how their behavior can either accelerate or block any form of transformation.

Kurt Friedmann: I have had a fairly unique position to see this initiative from the outside. One of the key things is that we talk a lot about the executive team naming the lagging indicators they want to see — EBITDA, more revenue. That is not a transformation.

The transformation is when you say, here are some of the leading indicators we want to look at, like more deals in the pipeline, and then you challenge the teams responsible for that to say: how would you go about affecting this leading indicator? How would you transform this to make it fully transformational? That is where strategy from a leadership position does not get lost when it meets the teams who are in the problem every day, saying here is how I would do that. And then the question is: do you want to do it? Do you want to do a high-visibility project to make a difference here? And then they get to choose. That is where strategy meets the person-specific motivations that get to intrinsic motivation.

Roy van Griensven: It is massively important. Financial targets get set and they are typically steep and ambitious, and in a lot of cases you hear wishful thinking — we can never get there, impossible. What is much easier to rally people around is exactly that. Let us forget the lagging indicator for a moment. Let us believe that if we do the right things we will get as close as possible. But what are the leading indicators that would bring us there? Then the dialogue becomes: what can you do? What needs to be true for us to improve that leading indicator?

So do not go immediately to raise the win rate from X to Y. Start with the dialogue about what needs to be true and how we can influence it. That is where the biggest effect is, because people feel this is something tangible I can start dealing with, something I can see happening. What needs to be done tomorrow to change it by one percent? And how do we get from one percent to five, and to ten? Sometimes the ideas that come up are to do it fundamentally differently — that takes a bit of guiding, because this is not just continuous improvement, sometimes you need much bigger moves. But the moment we have a dialogue about how to influence the leading indicator, it is far easier than asking how we improve our business by a hundred million more EBITDA.

Jesse Hopps: I have been guilty of this for twenty years, and I am sure everyone on this call has done it. When you are a smart person and you feel like you know the answer to the puzzle, you build a chain of logic. If this were the case, we need to do this. A whole chain of reasoning and assumptions. And when it gets down to the field level, there are so many assumptions inside your great plan for fixing the company.

The exercise I have done to flip this completely on its head: rather than build the plan for how we win out there, I go into a group and say — if instead of hitting our target we were going to completely drop the ball this year, get nowhere near it, what would we be doing? And it is fun. People will give you everything. We would not do a lot of customer visits. We would not fix this, we would not fix that. They give you all the issues that are probably true about the current status quo. They do not necessarily connect it to the reality they are in, but they state how to not get there.

Then you flip it on its head and ask what the inverse of that is. If we said we would not visit our customers very often, then we visit our customers more often — and what does that practically look like now? The whole idea is bringing the team through the chain of logic and the assumptions of building the plan, but letting them provide the answers by you asking the questions. Guided discovery.

Roy van Griensven: I had a somewhat controversial conversation with our board members early on, because we were looking at the dashboard for the transformation and there was a lot of green — business unit leaders showing that everyone was participating. And I said: to what extent do we now think this is really happening? Or are we just installing an expectation that people need to show their hand and say yes, I will participate? Is something really happening?

I said, we are showing here that in this business unit we are doing these projects in commercial excellence. Do we think something materially is different, or are they just satisfying the CEO by saying yes, we will participate? And that was happening. So by changing the approach you also get much better sight of who the people are. Here I go back to something which for me is still incredibly valid, from good-to-great thinking: if you first get the right people — people with intrinsic motivation who are willing to improve and to change — then great things can happen. With the wrong people they can easily say yes, we will participate, we will do all the things, and nothing materially happens until two or three years down the line you realize nothing has moved.

By turning it around and giving people the opportunity to say what needs to happen, starting from intrinsic motivation, you will see some people take it as an opportunity to back off. What it does in an organization is also identify where we have the people who will help move this company forward — because they come with ideas, they come with passion, and you can have a real dialogue about content. You can agree, you can disagree, that is all fine. But you get that real motivation, and you avoid people acting as if they are playing along when they are not.

Jesse Hopps: To give some context — what Roy is doing is going around the world talking to hundreds of frontline salespeople, mid-level managers and country leaders, then giving them the time and the space and paying for coaching to kick off ninety-day projects. Little problem-solving projects, shine-a-light-on-things projects, adopt-a-system projects, whatever they want to do.

Anyone here worked in sales before? I worked in sales most of my life before I got into this. Never did a CEO ask the sales guys: what do we need to do around here to get more sales, make your life easier, help customers? Very rare.

That is what inspired me to work with Roy on this. They are going out and asking the field what we can do to make your life easier and help your customers. And a lot of the time the first thing back is: stop throwing random things at us. Stop throwing too many initiatives at once and filling my calendar with meetings so I can actually do my job.

It is also risky. Imagine kicking off that many projects with no clear immediate line to EBITDA, and having faith that we work on the right things, that the right people step up, and that we drive meaningful change. It is fairly early days, and I commend Roy on the courage to try something this different from the old playbooks.