Hello , I need your support for below case study:

What is meant by Global Values local Roots ? How the Leader moto Comply or justify shaped the Vodafone Organizational design ? How do you assess the description of Colao as benevolent dictator ? How Should Colao do about the accounting misstatements ?

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TSEDA NEELEY The Global-Local Tension: Vodafone CEO Vittorio Colao Leading with "International Values and Local Roots" (A) It was early in the evening on a Friday when Vittorio Colao received reports of disturbing accounting practices at two separate Vodafone operating companies. The charismatic and towering Group CEO of the telecommunications company had two cases to grapple with simultaneously. In one case 60 million had been misreported over several years. The problem had been escalated to Vodafone's audit committee, and all employees involved had been identified. The employees had track records of honesty and professionalism, but the investigation revealed that the misreporting stemmed from a series of failure to check manual accounting processes. Vodafone's Audit committee expected management to act drastically on the matter. In another operating company, roughly 7 million below the audit committee's threshold - was also misreported. Investigations had also identified the responsible individuals but found little explanation for why they decided to defer recognition of investments and push costs into the future. Even though deferred recognition was not uncommon at other Telecom companies, the investigation indicated that the individuals had bent accounting rules for self-serving purposes. Colao, his CFO Nick Read and Group HR Director Ronald Schellekens, had to decide how best to handle the two situations. Vodafone, headquartered in London, had achieved a leading position in its industry since its inception in 1991. The company sold voice, data, and phone services in Asia, Africa, Europe and Oceania. It owned and operated networks in 25 countries, and had partner networks in 47 additional nations. Under Colao's leadership, Vodafone had reached 46.6 billion in revenue (See Exhibit 1), and doubled in size to exceed 120,000 employees worldwide. Colao considered two possible responses to the cases brought to him: Vodafone could readjust the employees' bonuses, or take more drastic measures that affected their positions in the company. Colao and his team wouldn't be leaving the office until he had a plan to address the two pressing accounting discrepancies Two Judgment Calls Colao was acutely aware that confidence in his leadership, and the values of fairness and trust that he worked hard to establish, would erode if he didn't make the right decisions. Given the spread of operations and complexity of accounting practices, the consequences of his decisions could reverberate throughout the whole organization. For Colao, "extreme examples of doing right and doing wrong have a particularly powerful impact." The issues were not clear-cut, however. Colao thought about the national cultural differences inherent in Vodafone's complex and far-flung operations. He knew that people in different countries varied in their attitudes about business ethics. In some national cultures, people tend to prefer black- and-white rules ("If you bend the rules, you get fired') over shades of gray. "Nobody is Global" When Colao first took the reins at Vodafone in 2008, the company was a sprawling federation of operating units, with some cohesion in Europe but many scattered operations across other continents. That same year, the very concept of a global company was challenged by the financial crisis, and many wondered how Vodafone could build a distinctive yet cohesive culture in such a climate. In response, the freshly minted CEO took a counter-intuitive step. He challenged the very notion of "global." In the wake of the global economic downturn Colao observed a tension arising between being a citizen of the world and being what he calls a "populist or nationalist." He worried that the word "global' would take on negative connotations, and felt uncomfortable using the term. He sat down with his chief of staff Raja Al-Khatib and Ronald Schellekens, and asked them to reconsider whether "global" should be part of Vodafone's vocabulary. In those years, Vodafone's operating model and culture had put heavy emphasis on global leadership. Major functions like HR. Technology, Marketing all started with "Global" as their formal name. But Colao, recalling his previous experiences as the head of various regions and countries at Vodafone, was convinced that the real action takes place where the customers are (See Exhibit 2 for Colao's Biography). As he puts it I remembered from these earlier experiences how people called themselves "global" but had no customers. I had customers. The heads of our operations in Germany, the U.K., and South Africa had customers. Global-level leaders thought they knew what our customers wanted. But, in reality I felt they didn't. At a time when the concept of hypersegmentation of customers was gathering steam, Colao found Vodafone's emphasis on "global puzzling "Nobody is global. Each customer is unique, and you have to treat them that way. We were not in the product business. We were in the customer management business." The Vodafone Way: "International Values, Local Roots" Colao's Italian heritage influenced his views on the tension between global and local leadership Having grown up in Southern Europe, he was keenly aware of anti-globalization sentiment simmering throughout the region, from his home country of Italy to Greece. Portugal, and Spain. Drawing on this awareness and insights gained from his previous experience, Colao and his team defined a leadership 2 strategy that addressed local and global considerations simultaneously. They called this model the Vodafone Way (See Exhibit 3), which emphasized international values and local roots. To reinforce local autonomy, each country leader's title is CEO, not Managing Director. However, the CEO label does not imply a lack of oversight from the top. Each month, Vodafone's executive committee meets to discuss appointments of the top 200 or so leaders, including potential promotions, hiring and lateral moves. On all of these fronts, decisions hinge on each leader's effectiveness in managing the role of a local leader as well as a corporate citizen and contributor. Depending on the characteristics of a local market, Vodafone might decide that the CEO of that operating company should have deep roots in that particular culture, language and environment or not. Non-Negotiables from the Top Colao was adamant that for international values and local roots to work, there would be no compromise on the company's values." These non-negotiable values include integrity and conduct a culture of diversity and inclusion, as well as the overall brand architecture. As Anne O'Leary, CEO of Vodafone Ireland, points out "Brand guidelines including company logo and other signposts that affect how the Vodafone brand looks and feels are quite strict and universal across the company's global operations." Localizing Ad Campaigns When conducting business in the different countries where Vodafone operates, local rules are prioritized. For example, when producing ad campaigns, Colao explains: "The global center would not tell you that you should use the same campaign in your locality that worked well for another locality, unless that campaign really would work well for your customers." Country leaders were the custodians of local rules. As experts steeped in the country's local culture, they almost always produced advertising campaigns that use local cultural norms and languages. Murielle Lorilloux, CEO of Vodafone Romania and formerly of Vodafone's operations in the Democratic Republic of the Congo (DRC), often finds herself educating Group executives about the needs of her local customers. She explains the distinct role that Ad campaigns play in certain areas: Normally, you would keep ads to no more than 30 seconds for efficiency and optimizing your media buying. But in some countries, you need ads to serve as full entertainment, so they have to be longer - one minute, one and a half minutes and TV channels are not charging you per second at prime time. Customers are just waiting for these; they enjoy them. There will be a full song, for example. They are fond of new music...And if the Group challenges us based on international benchmarks or best practices, we can push back based on local needs. We show them through brand consideration and niet promoter scores KPIs that we are delivering and know what we are doing Local Regulations, Customers, competitors & Technology Alex Froment-Curtil, CEO of Vodafone Egypt, notes that a company built through a series of acquisitions must actively work to establish a common culture on a global scale, yet still be able to adapt to local needs. As Froment-Curtii sees it We are in a business where regulation remains national. Our competitors are also local, so having local responses to them is crucial. Customers, though they have more or less 3 the same needs everywhere in the world, are at different stages along the maturity curve. Local CEOs must be empowered to determine how best to serve them. For example, in Europe, there's a contract culture, in which customers buy telecommunication services for specified lengths of time. But in Egypt many customers don't have any money day-by- day. They buy just a little cache of data every day. That's a very different customer usage package O'Leary explains how local technology and regulatory realities require adaptation in her region: We take a high-level, guiding strategic principle from the Group level, such as technology convergence or network superiority, and adjust it to suit our local market in ways that make sense for us. Each country has a different regulatory environment. competitive position, customers, value proposition, and pricing. Vodafone Ireland is a premium mobile player with a huge market share. We're innovative and market-leading because we have mobile, fixed, and TV, and a strong consumer and enterprise business. So our convergence strategy will be different from other markets', where customers can't access wholesale fiber or wholesale fixed services. We have a lot of flexibility around how we adapt Group strategy to our local markets. Guided Product Launches It's no small feat for Vodafone's top leaders to manage the tension between global and local control. especially during new product launches. Executive committee members could mitigate this tension by giving standardized directives to the local CEOs based on their familiarity with the company's core competencies, but they risk imposing a strategy that would backfire in a local market. "At least some of the local CEOs will say, 'You're forcing me to make crazy investments," says Colao. The other option is to let the local CEOs make these decisions without any oversight. However, this approach would risk generating hundreds of different initiatives that aren't aligned behind a cohesive strategy. To manage the tension, Vodafone's top leaders stipulate that the product development system platform standards, and technical standards be used at all operating companies, but let the local CEOs determine how to tailor these standards to fit their markets' unique characteristics. To illustrate this management strategy. Colao cites the example of an Internet of Things solution that would help consumers track their pets' movements: the solution, along with marketing strategies, would need to work differently in markets where most people have dogs rather than cats as pets. The Value of High Trust and Few Rules For Colao, trust was a key factor to operate according to the Vodafone Way, a system characterized by few rules and high expectations. He opined: Trust enables people to work beyond rules. If you don't have trust then you need the rules. And if you need the rules, you will always end up with too many of them, and some will turn out to be silly. With trust people can find it much easier to just figure things out. without needing detailed rules. Yet top management will step in to give direction if local CEOs are having trouble reaching their goals. O'Leary notes: Group is quite hands-off if you're doing well. If you're struggling, they come in to help. As CEO of Ireland, I'm completely accountable for the delivery of all financial results 4 for my business, along with net promoter scores, brand strength results, and employee engagement. When the Group asks us to do something, if you look "under the covers." you see it's the right thing for the business and for our customers. The combination of guidelines paired with flexibility to adapt is great and I love the empowerment and the trust This flexibility can sometimes lead to conflicting expectations - and inflamed tempers - between Group-level executives and country CEOs. On one occasion, O'Leary recalls: It was time to do our purpose statement, and Group hadn't done theirs yet. So my team and I came up with our own, which was about "connecting people to what matters most" Vittorio got upset and told me we shouldn't have done that. And I said. "Well you didn't have anything for me." Then I got the purpose statement from Group, which I could see was great because it was more future-focused. I incorporated it into my operating company's statement which became about "connecting for a better future." Vittorio said. "But you can't go back to your company and your people and tell them you were wrong and you're changing things." I told him, "Yes, I can." I stood up in front of my team, thanked them for their effort and said, "Our statement was good, theirs was better and here's why." Being transparent and changing when things don't work is important To build trust as a core value, Colao maintains that honest mistakes should not be treated as "a capital sin." For Colao intentions behind mistakes matter. He was also adamant that it is not written words that make people want to embody a company's values, but a leader's actions. How they make decisions, treat others and perform must reflect the values of the Vodafone Way - and there is no compromising on those." Facing the Global Strategy: "Comply or Justify" Colao instituted a "comply or justify" model that governed how country CEOs executed the global Vodafone strategy. The default position is that country leaders will comply with mandates coming from the top, unless they believe that following the mandate would be unwise for their business. Integration and Efficiency Concerns Some executives and Board members worried that the relative flexibility of the "comply or justify" model could lead to a fractured company. Local CEOs could end up acting as barons, and the strict brand architecture would only hold the company together "in name." Opponents of "comply or justify" strongly recommended a fully integrated model, which was more efficient and much cheaper. citing Google and Facebook as examples. Colao disagreed: "At Vodafone customers are owned by the markets, not by HQ. If you don't agree, you can always try and join Google or Facebook." The "comply or justify" model requires a high burden of proof for country CEOs to justify their line of thinking. Froment-Curtil explains: It's not easy to make the "justify decision. You have to be very clear on what you're justifying. And that's the point you will only start this discussion around actions that you know won't work for your local market since you understand the culture and market dynamics there, and you know the financial impact of a wrong decision. "Comply or 5 justify" gives us the discipline to make sure that we're driving the global agenda as well as the local one. Without it things would swing too far toward the local O'Leary recalls a time when Group wanted every country business to adopt a new European- roaming initiative, by which Telecom service customers would get different tariffs abroad than the tariffs they had at home. O'Leary knew this plan would not fit with the business of her local market When the directive came, she had to act: I told my team, "No, we're not going to do that we're going to let our customers bring their home tariff abroad." My team said, 'Group will push back on this." But I told Group that the initiative would be too confusing for customers, and too expensive to implement. It would be a mistake, and we could make mistakes implementing it. In the end, we became the only operator in Ireland to market the "take your home tariff abroad for roaming' as a key differentiator. Our brand scores and net promotor scores went up our customer chum rates went down, because it's easy for customers to understand. Group could have stopped me, but they didn't. They understood why I believed and that it was the right thing to do. Hiring is another area that requires leaders to comply or justify. Every year, the company hires as many as 800-900 top university graduates. Schellekens says that the best operating company CEOs have the maturity and problem-solving skills to deal with the tension of how many people to hire based on their short-term P&L, and talent pipeline for the future. In his view, the tension is crucial to the success of the model, because it gives operating company CEOs a sense of ownership over their P&L and responsibility for their local company's performance-even though there are levers they don't directly control: "Obviously, there is some tension in such [a] system. And the worst thing you can do is resolve that tension - by making everyone either completely local or completely global. The magic lies in keeping the tension." Too Ambiguous for Middle Managers Colao often hears that "Vodafone is neither global nor local. You are a strange beast." Some within the company even "mildly accused" him of accepting ambiguity. While the "International Values, Local Roots' model had a clear shape at the top and at the bottom, it was less clear for middle management should they impose their functional views, or leave the local markets alone? As Colao puts it "the most repeated question directed at me regarding the Vodafone Way was, 'why don't we decide once and for all?Colao remained adamant about the importance of maintaining tension between local and global decisions, even though he understood the criticisms; I have some sympathy for the middle guys, who have to resolve ambiguity for no glory, and see decisions go in different directions depending on the matter. But I always believed that too many rules turned organizations into bureaucracies. I irritated many good people when I called central HQ staff in a large meeting "overhead" and "bureaucrats from the Paddington office." I regret those comments now, and I have mellowed quite a bit, knowing that in reality organizations are not matches of "entrepreneurs vs. bureaucrats," as I implied then, but games of builders and architects." The CEO of a Multinational Corporation: "Father, Judge, and Architect" For Colao, one of the biggest challenges of leading a multinational corporation is knowing when to dictate, when to push, and when to evaluate and change design. In his words, "It's almost like having 6 to be a father, a judge, and an architect" The final decision still rests on the head of the company. Colao recalls an exchange with a country CEO about the wording of The Vodafone Way: Amanda Nelson - then CFO in the Netherlands, now CEO in Hungary - remarked publically that the choice of words "admired by customers" was very male, and she preferred "loved by customers." I publically told her very harshly, "great. I prefer admired, discussion closed." I think I have apologized publically to her for at least 5 years. Others in the company believed that this top-down approach was potentially harmful to the growth of the company. They advised a more conventional bottom-up process of building a leadership model adopted at other multinational corporations, which conducted workshops and interviews to gain input from all levels of the organization. But once again, Colao remained adamant It was top-down indeed. But Vodafone's pendulum went from being born as a federation of completely unrelated companies in the early 2000s to a very bureaucratic "global organization and strategically rigid company in the mid-2000s. We were not recognizing differences in competitors, and talent was being driven away - including me. when I left in '06. It was definitely my vision of the world and to some extent imposed. but the "consultation process would not have led to a prevailing opinion and we preferred to save time and do what I firmly believed in. As the company grew under Colao's leadership, some viewed the organizational model as his own philosophy of the world, driven by his strong values and conviction. One regional CEO even referred to him as a "benevolent dictator." Understanding Local Markets Firsthand Colao believed in cultivating relationships not only with executive committee members, but also with the heads of the company's far-flung businesses. At the same time, he also believed in the importance of considerable external presence as well Going out to the markets to listen and observe customers in action, then weighing their observations against what he's learned from internal interactions was important. Such external experiences can reveal important nuances in the market. For instance, Colao- or any of Vodafone's local CEOs - might wander into a retail store in a Tier 1 city and ask the manager about customers' shopping behaviors. The manager's response could provide insight on what matters most to those customers. According to Colao, analyzing competitors' advertising is another crucial form of extemal presence: When you operate in 25 countries, you have a lot of different competitors. You can't always visit every country office physically to evaluate the various players' advertising but you have to understand the tone and see how the differences play out across markets. And you have to make time to discuss these things with local leaders. Early in his role as Vodafone's CEO. Colao set a goal of visiting each local Vodafone market once a year. In his first three or four years on the job, he racked up almost a million airline miles. Over time, he learned to prioritize and started to visit the largest Vodafone markets twice a year and medium-size markets yearly. For visits to the smallest markets, he would go himself only if time permitted: otherwise, he could delegate the visit to someone else on his team. Nevertheless, he maintains that seeing customers and markets firsthand is crucial to the job of leading a multinational company like Vodafone: If you don't go yourself, you don't appreciate the differences. You don't see the opportunities, either, such as noticing that a particular product design or channel strategy that works well for customers in Egypt would also work well for those in Tanzania, Froment-Curtil describes Colao's commitment and deep understanding of the company's local markets: His level of insight into the local population, and societal problems is extreme. With any one of our countries, we could have a deep conversation about the latest political dynamics and what's happening in the different regions within the country. There's not a single conversation where I needed to explain to him what I saw happening in Egypt Colao also maintains that a Group CEOs commitment to external presence in local markets ultimately sets an example for operating CEOs. In addition, visiting local markets without a big staff in tow sends the message that the Group CEO is there to directly engage. This approach contrasts sharply with requiring local CEOs to travel to headquarters - a practice that underscores a rigid hierarchy in which global has priority over the local. At Vodafone Colao says. "Global is not better than local. It's local that has the customer, and global that coordinates. It's two different jobs." Global Citizen-Local Identity Colao emphasizes the importance of leaders being global citizens while feeling that they belong to a local community. He cites examples from his upbringing in Italy: he was one of the first Italian undergraduate students to study abroad, well before Europe's Erasmus Program was established to make higher education more accessible between countries. His inherent interest in different cultures came from the high-level of diversity even within Italy itself. He says: In theory, Italy is a single country, but the cultural diversity is very high. I mean even the language - not the accent the language. The very words are different We had not been a country until 150 years ago. So this concept of "we belong but we all preserve our own identity is very ingrained in older Italians. Colao has observed a similar dynamic in his business experiences. For example, if he were at a meeting at the Vodafone office in India and sensed discord, confusion, or divisions between people, he would ask himself what cultural norms might be involved, and consider the communities from which the participants came. The diversity in Vodafone's executive committee has helped the company manage this tension between local community involvement and global citizenship. The committee has members from many nations and cultures-from Sweden, the Netherlands, France, India, Turkey, Portugal, Germany and of course Vodafone's headquarters in Great Britain. Colao admits: We are a bit of a zoo, and we make fun of ourselves and enjoy it. We don't take comments about our backgrounds personally. When I'm arguing with my Italian colleagues, the others say, "Okay, here we go with this big Italian drama. Let them have their fun." Colao suspects that this kind of energy and affectionate mutual ribbing might not fly in all cultures, but he believes that as long as colleagues know they have each other's respect the teasing is healthy rather than hurtful 8 Taking proactive steps to show such respect can help. For example, at a management meeting during Ramadan, Colao had the 230 executives in attendance hold off dining until after sunset out of respect for the six members of the group who were observing Ramadan's fasting rules. Vodafone also prepared a booklet explaining the meaning of Ramadan as a way to educate the executives. "I don't think that hiding your religious and cultural background strengthens bonds in a company. Talking about them actually does." While such backgrounds can be highly diverse, respect for differences constitutes a shared value. Moving Forward Colao understood that his guiding premise of International Values and Local Roots would be under scrutiny as he contemplated his response to the two pressing accounting issues uppermost in his mind. Should Vodafone readjust the employees' bonuses, or take more drastic measures that affected their positions in the company? Does each situation require a separate response? Would a variable approach be too risky? How does Colao respond in a way that preserves the organizational model and culture that took years to establish? 9