The New Leadership Paradigm Roger Flynn Athens 3 rd December 2009

The New Leadership Paradigm Breed urgency and speed Alive to risk and deal with it Work systemically Engage EVERYONE in your business

Times of Transformation

The New Leadership Paradigm Breed urgency and speed

Prudential Retail £2 bn hit from Pensions mis-selling 6 million customers; 7,000 staff Loss-making Compliance lock – down Only one distribution channel

Potential to halve the cost per sale Cost of Distribution/Policy £ Current Home Visit Improved Home Visit Block-booked at Worksite Telephony Unregulated <100 Internet

Getting Urgent Senior Management  Buy in to Plan  Values creation Wider management and staff  Road shows  Branch visits  Home visits

Speeding up the Change Delivering on the promises  Sales Process  Laptops  Products Moving Fast  Leadership Programme  HQ Reorganisation

The New Leadership Paradigm Alive to risk and deal with it

Virgin Atlantic

Sales and Distribution Costs Source: Management figures 1996 Sales (£ m)6,000 Standard Commission 540 9% Incentive Commission 180 3% Marketing 150 3% Sales 100 2% Credit card 90 1% CRS 85 1% Other 55 1% Total Costs1,200 20%

Strategy to transform distribution Eliminate standard commission  Domestic commission in non-core markets  Domestic commission in core markets  International commission Incentivise more sales through agents  Increased commission available  Increased support tools Double direct business through call centres Launch web channel Re-align other elements of value chain

Fear the biggest barrier Internal nervousness  “Could wipe out this years’ profit”  “It won’t work, the customers won’t buy direct”  “My bonus is linked to revenue delivery”  “But the Travel Agents are my friends” Travel Agents  “We will move business away from you”  “Our profits will be wiped out”  “You want all the business to come direct”

Reducing Risk through Teams Building Teams, Building Engagement  Central High Energy Unit  Collaboration and solution building  Power to the “Baronies”  Lower risk implementation plans Moving Fast  Commission reduction plan  Global Internet selling system  E-Ticketing Project

Results: Distribution costs at 6% Internet Sales 80k per week E-Ticketing up to 84% Source: BA Fact Book 2006

The New Leadership Paradigm Work systemically

Alignment Model Copyright: Vector Consultants

Enterprise wide feedback systems? Source: Customer Champions in European Countries, 2001

The Virgin Way

Virgin Mobile Launched Nov 1999 Virtual Network deal with T-Mobile* Avoided capital of £2bn to build out a network Injected £45m 50:50 JV with One-to-One Initial aim: 1m customers in 15 months * One-to-One purchased by T-Mobile

Total Alignment Goal: 1m customers in 15 months Proposition: Simple Transparent Pricing Customer Target: Appeal to the young Distribution: Direct Virgin Values throughout the delivery Risk reduced by Using T-Mobile Network

Results Customer Growth  ,000  20011,000,000  20064,000,000 Most satisfied customers 2004 & 2005 July 2006 sale to NTL for £962 m Creation of Virgin Media

The New Leadership Paradigm Engage EVERYONE in your business

Energy Investment Model PLAYERS LowEnergyHigh Positive Attitude Negative

Energy Investment Model SPECTATORSPLAYERS LowEnergyHigh Positive Attitude Negative

Energy Investment Model SPECTATORSPLAYERS WALKING DEAD LowEnergyHigh Positive Attitude Negative

Energy Investment Model SPECTATORSPLAYERS WALKING DEAD WELL POISONERS LowEnergyHigh Positive Attitude Negative

What Inspired this?

BBC Plan Rejuvenate BBC 1 Create BBC 3, BBC 4 and News 24 Central overheads from 24% to 15% income Self-help of £1.2bn over 4 years More cross BBC innovation – “One BBC” Source: Greg Dyke speech Edinburgh Festival 26/8/2000

Pie Problem

Vision: Most creative organisation in the World Executive commitment Our best people! Conferences/Communication Leadership Development Programme Values bottom up Just Imagine … Mission: One BBC; Making it Happen

Results 10,000 staff engaged 2,000 change ideas, 700 implemented Values created by everyone Excitement about the Vision Huge energy release That’s why they protested!

YOU …. as a Leader Passion, Energy, Commitment → Player? What you do …… Exciting Vision and a sense of urgency? Alignment and working systemically? Risks worked hard? Enough people fully engaged? …. Are you being the Leader they need you to be?