Watch How These Innovative 5 Year Old'sTurn Plastic Trash Into Sustainable Eco-Bricks

Small Business Strategy: 6 Leadership Styles, And When You Should Use Them

Taking a team from ordinary to extraordinary means understanding and embracing the difference between management and leadership. According to writer and consultant Peter Drucker, "Management is doing things right; leadership is doing the right things."
Manager and leader are two completely different roles, although we often use the terms interchangeably. Managers are facilitators of their team members’ success. They ensure that their people have everything they need to be productive and successful; that they’re well trained, happy and have minimal roadblocks in their path; that they’re being groomed for the next level; that they are recognized for great performance and coached through their challenges.
Conversely, a leader can be anyone on the team who has a particular talent, who is creatively thinking out of the box and has a great idea, who has experience in a certain aspect of the business or project that can prove useful to the manager and the team. A leader leads based on strengths, not titles.
The best managers consistently allow different leaders to emerge and inspire their teammates (and themselves!) to the next level.
When you’re dealing with ongoing challenges and changes, and you’re in uncharted territory with no means of knowing what comes next, no one can be expected to have all the answers or rule the team with an iron fist based solely on the title on their business card. It just doesn’t work for day-to-day operations. Sometimes a project is a long series of obstacles and opportunities coming at you at high speed, and you need every ounce of your collective hearts and minds and skill sets to get through it.
This is why the military style of top-down leadership is never effective in the fast-paced world of adventure racing or, for that matter, our daily lives (which is really one big, long adventure, hopefully!). I truly believe in Tom Peters’s observation that the best leaders don’t create followers; they create more leaders. When we share leadership, we’re all a heck of a lot smarter, more nimble and more capable in the long run, especially when that long run is fraught with unknown and unforeseen challenges.
Change leadership styles
Not only do the greatest teammates allow different leaders to consistently emerge based on their strengths, but also they realize that leadership can and should be situational, depending on the needs of the team. Sometimes a teammate needs a warm hug. Sometimes the team needs a visionary, a new style of coaching, someone to lead the way or even, on occasion, a kick in the bike shorts. For that reason, great leaders choose their leadership style like a golfer chooses his or her club, with a calculated analysis of the matter at hand, the end goal and the best tool for the job.
My favorite study on the subject of kinetic leadership is Daniel Goleman’s Leadership That Gets Results, a landmark 2000 Harvard Business Review study. Goleman and his team completed a three-year study with over 3,000 middle-level managers. Their goal was to uncover specific leadership behaviors and determine their effect on the corporate climate and each leadership style’s effect on bottom-line profitability.
The research discovered that a manager’s leadership style was responsible for 30% of the company’s bottom-line profitability! That’s far too much to ignore. Imagine how much money and effort a company spends on new processes, efficiencies, and cost-cutting methods in an effort to add even one percent to bottom-line profitability, and compare that to simply inspiring managers to be more kinetic with their leadership styles. It’s a no-brainer.
Here are the six leadership styles Goleman uncovered among the managers he studied, as well as a brief analysis of the effects of each style on the corporate climate:

1. The pacesetting leader expects and models excellence and self-direction. If this style were summed up in one phrase, it would be “Do as I do, now.” The pacesetting style works best when the team is already motivated and skilled, and the leader needs quick results. Used extensively, however, this style can overwhelm team members and squelch innovation.
2. The authoritative leader mobilizes the team toward a common vision and focuses on end goals, leaving the means up to each individual. If this style were summed up in one phrase, it would be “Come with me.” The authoritative style works best when the team needs a new vision because circumstances have changed, or when explicit guidance is not required. Authoritative leaders inspire an entrepreneurial spirit and vibrant enthusiasm for the mission. It is not the best fit when the leader is working with a team of experts who know more than him or her.
3. The affiliative leader works to create emotional bonds that bring a feeling of bonding and belonging to the organization. If this style were summed up in one phrase, it would be “People come first.” The affiliative style works best in times of stress, when teammates need to heal from a trauma, or when the team needs to rebuild trust. This style should not be used exclusively, because a sole reliance on praise and nurturing can foster mediocre performance and a lack of direction.
4. The coaching leader develops people for the future. If this style were summed up in one phrase, it would be “Try this.” The coaching style works best when the leader wants to help teammates build lasting personal strengths that make them more successful overall. It is least effective when teammates are defiant and unwilling to change or learn, or if the leader lacks proficiency.
5. The coercive leader demands immediate compliance. If this style were summed up in one phrase, it would be “Do what I tell you.” The coercive style is most effective in times of crisis, such as in a company turnaround or a takeover attempt, or during an actual emergency like a tornado or a fire. This style can also help control a problem teammate when everything else has failed. However, it should be avoided in almost every other case because it can alienate people and stifle flexibility and inventiveness.
6. The democratic leader builds consensus through participation. If this style were summed up in one phrase, it would be “What do you think?” The democratic style is most effective when the leader needs the team to buy into or have ownership of a decision, plan, or goal, or if he or she is uncertain and needs fresh ideas from qualified teammates. It is not the best choice in an emergency situation, when time is of the essence for another reason or when teammates are not informed enough to offer sufficient guidance to the leader.

Bottom line? If you take two cups of authoritative leadership, one cup of democratic, coaching, and affiliative leadership, and a dash of pacesetting and coercive leadership “to taste,” and you lead based on need in a way that elevates and inspires your team, you’ve got an excellent recipe for long-term leadership success with every team in your life.
Robyn Benincasa is a two-time Adventure Racing World Champion, two-time Guinness World Record distance kayaker, a full-time firefighter, and author of the new book, HOW WINNING WORKS: 8 Essential Leadership Lessons from the Toughest Teams on Earth, from which this article is excerpted. (Harlequin Nonfiction, June 2012)
[Image: Flickr user Bas Kers]

via fastcompany.com

Social Innovation: How Businesses and Communities Can Learn to Work Together

The most powerful component within social innovation is collaboration. There are signs that this new approach is helping shape the planet’s future. There is huge support for collaborative, multi-sector processes focused on modest initiatives; now is also the time for corporations to take on the challenges, work locally across sectors and push for better reporting, and more accountability. It’s a view supported by former U.S President, Bill Clinton who at a recent appearance in Oxford at Resource 2012, called for more to be done to persuade voters to support schemes that tackle global warming and resource scarcity. He highlighted his view of a multi-sector strategy and that the way forward is not more conferences with politicians, but lies in the ability of governments, businesses and NGOs to work together.

With the collapse of intergovernmental and global processes, it is becoming clear that we must use new mechanisms and social innovation that bring businesses and communities together. Sustainability must be advanced through collaborations among multiple business sectors, levels of government and not- for-profit organisations. Politicians no longer lead the process; instead they work with those who can identify issues and propose solutions. A good example of how this has worked well is collaborative water stewardship.

Companies in the developing world have stepped in to bridge the water network gap and between 2000 and 2007 the number of people served by private water operators in emerging markets almost doubled from 94 million to more than 160 million.

Now businesses are playing an integral role in supporting sustainable development through access to portable water and sanitation. In a world where vast amounts of information are widely accessible and corporate transparency is fundamental to leading companies, businesses are now meeting the demands from consumers, investors, regulators and the NGO community to work holistically and together. I have recently written about big, global brands such asHershey, PepsiCo and Chrysler which are leading on innovative environmental and community projects. These corporations have focused on stewardship in direct operations, supply chain, collective action, public policy andcommunity engagement.

These efforts are a direct reflection of the corporate sector’s understanding of their role in stewardship in the face of dwindling natural resources. For the planet as whole to survive and succeed, we need social innovation, new ways to define and measure goals, and achievements. Saving the planet is no longer the work of political leaders or even superheroes. It is down to us all – grass root communities, small, big businesses and organisations to create combined solutions. Together, we are the real superheroes to save the planet.

Photo Credit: buyhomesindetriot.com  via socialearth.org

 

For more than 25 years  Jim Woods and the Nonprofit Center for Creative Leadership and Entrepreneurial Strategy  has worked towards a singular goal of innovating organizations, children, families and communities as they strengthen and create conditions that propel vulnerable children and people everywhere to achieve success as individuals and as contributors to the larger community and society. Learn more about what you can do to help entrepreneurism and personal leadership improve the world. You’ll also learn to instill innovation and principled centered leadership into the core of your organization. Please join us.

 

21 Inspiring Quotes for Social Entrepreneurs and Innovators

Being an entrepreneur can be lonely.  Being a social entrepreneur can be lonely and disheartening.  There are social entrepreneurs around the globe (see here, here, and here) who are striving to make the world a better place, but the community is highly fragmented.  This can equate to a very lonely path.

Please don’t give up.  Keep pursuing your mission- millions of people that you have never met depend on the work you’re doing right now. Whether it is 4:30am in the morning, or 11:00pm at night; keep moving forward.  To inspire you on your entrepreneurial journey, here are 21 quotes which I hope keeps the fire burning strong.

Social Entrepreneurship

“The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty.”
-Winston Churchill

 

“Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.”
-Bill Drayton (Ashoka Founder)

“Social entrepreneurs have existed throughout history. St. Francis of Assisi, the founder of the Franciscan Order, would qualify as a social entrepreneur — having built multiple organizations that advanced pattern changes in his “field.” Similarly, Florence Nightingale created the first professional school for nurses and established standards for hygiene and hospital care that have shaped norms worldwide. What is different today is that social entrepreneurship is developing into a mainstream vocation, not only in the United States, Canada, and Europe, but increasingly in Asia, Africa, and Latin America. In fact, the rise of social entrepreneurship represents the leading edge of a remarkable development that has occurred across the world over the past three decades: the emergence of millions of new citizen organizations.”
-David Bornstein (How to Change the World : Social Entrepreneurs and the Power of New Ideas)

“We need to reverse three centuries of walling the for-profit and non-profit sectors off from one another. When you think for-profit and non-profit, you most often think of entities with either zero social return or zero return on capital and zero social return. Clearly, there’s some opportunity in the spectrum between those extremes. What’s missing is the for-profit finance industry coming in to that area. Look at the enormous diversity of the for-profit financial industry as opposed to monolithic nature of the non-profit world; it’s quite astonishing.”
-Bill Drayton (Ashoka Founder)

“I’m encouraging young people to become social business entrepreneurs and contribute to the world, rather than just making money. Making money is no fun. Contributing to and changing the world is a lot more fun.”
-Muhammad Yunus

Inspiration

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat.”
-Theodore Roosevelt

 

“Our imagination is the only limit to what we can hope to have in the future”
-Charles F. Kettering (American Engineer)

“Each time someone stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope.”
-Robert F. Kennedy

“Founded on the principles of private initiative, entrepreneurship and self-employment, underpinned by the values of democracy, equality and solidarity, the co-operative movement can help pave the way to a more just and inclusive economic order”
-Kofi Annan

“If you have built castles in the air, your work need not be lost; that is where they should be. Now put foundations under them.”
-Henry David Thoreau

Perseverance

“All great masters are chiefly distinguished by the power of adding a second, a third, and perhaps a fourth step in a continuous line. Many a man has taken the first step. With every additional step you enhance immensely the value of your first.”
-Ralph Waldo Emerson

 

“The reasonable man adapts himself to the world. The unreasonable man adapts the world to himself. All progress depends upon the unreasonable man.”
-George Bernard Shaw

“Slaying the dragon of delay is no sport for the short-winded.”
-Sandra Day O’Connor

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
-Aristotle

Taking Action

“The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing.”
-Albert Einstein

Learn more about what you can do to help teach entrepreneurism personal leadership to inner cities.

“Science may have found a cure for most evils; but it has found no remedy for the worst of them all — the apathy of human beings.”
-Helen Keller

“Opportunities are usually disguised as hard work, so most people don’t recognize them.”
-Ann Landers

Challenges

“My greatest challenge has been to change the mindset of people. Mindsets play strange tricks on us. We see things the way our minds have instructed our eyes to see.”
-Muhammad Yunus

 

Poverty is unnecessary.
-Muhammad Yunus

“Today, if you look at financial systems around the globe, more than half the population of the world – out of six billion people, more than three billion – do not qualify to take out a loan from a bank. This is a shame.”
-Muhammad Yunus

“Great spirits have always encountered violent opposition from mediocre minds.”
-Albert Einstein

 

 

Creating A Life of Purpose - Clayton Christensen

Clayton Christensen - "How Will You Measure Your Life?" The Trap of Marginal Ethics

Editor's note: Every year, HBS Professor Clayton Christensen teaches students that well-tested academic theories can help them succeed not just in business, but in life. He expounds upon those lessons in his forthcoming book, How Will You Measure Your Life? Co-authored with James Allworth (MBA 2010) and Karen Dillon, the book uses meaningful corporate and personal anecdotes to extoll the value of theory in finding and creating happiness.

"You'll see that without theory, we're at sea without a map or a sextant," Christensen writes. "If we can't see beyond what's close by, we're relying on chance—on the currents of life—to guide us."

Christensen also believes that certain common business principles are misguided and even dangerous. In the following excerpt, he explains why focusing on marginal costs and revenues can lead to personal, professional, and moral failure.

The Trap of Marginal Thinking

In the late 1990s, Blockbuster dominated the movie rental industry in the United States. It had stores all over the country, a significant size advantage, and what appeared to be a stranglehold on the market. Blockbuster had made huge investments in its inventory for all its stores. But, obviously, it didn't make money from movies sitting on the shelves; it was only when a customer rented a movie that Blockbuster made anything. It therefore needed to get the customer to watch the movie quickly, and then return it quickly, so that the clerk could rent the same DVD to different customers again and again. It wasn't long before Blockbuster realized that people didn't like returning movies quickly, so it increased late fees so much that analysts estimated that 70 percent of Blockbuster's profits were from these fees.

Set against this backdrop, a little upstart called Netflix emerged in the 1990s with a novel idea: rather than make people go to the video store, why don't we mail DVDs to them? Netflix's business model made profit in just the opposite way to Blockbuster's. Netflix customers paid a monthly fee-and the company made money when customers didn't watch the DVDs that they had ordered. As long as the DVDs sat unwatched at customers' homes, Netflix did not have to pay return postage-or send out the next batch of movies that the customer had already paid the monthly fee to get.

"As Blockbuster learned the hard way, we end up paying for the full cost of our decisions, not the marginal costs, whether we like it or not."

It was a bold move: Netflix was the quintessential David going up against the Goliath of the movie rental industry. Blockbuster had billions of dollars in assets, tens of thousands of employees, and 100 percent brand recognition. If Blockbuster decided it wanted to go after this nascent market, it would have the resources to make life very difficult for the little start-up.

But it didn't.

By 2002, the upstart was showing signs of potential. It had $150 million in revenues and a 36 percent profit margin. Blockbuster investors were starting to get nervous—there was clearly something to what Netflix was doing. Many pressured the incumbent to look more closely at the market. "Obviously, we pay attention to any way people are getting home entertainment. We always look at all those things," is how a Blockbuster's responded in a 2002 press release. "We have not seen a business model that is financially viable in the long term in this arena. Online rental services are 'serving a niche market.' "

Netflix, on the other hand, thought this market was fantastic. It didn't need to compare it to an existing and profitable business: its baseline was no profit and no business at all. This "niche" market seemed just fine.

So, who was right?

By 2011, Netflix had almost 24 million customers. And Blockbuster? It declared bankruptcy the year before.

Blockbuster's mistake? To follow a principle that is taught in every fundamental course in finance and economics. That is, in evaluating alternative investments, we should ignore sunk and fixed costs, and instead base decisions on the marginal costs and revenues that each alternative entails. But it's a dangerous way of thinking. Almost always, such analysis shows that the marginal costs are lower, and marginal profits are higher, than the full cost.

This doctrine biases companies to leverage what they have put in place to succeed in the past, instead of guiding them to create the capabilities they'll need in the future. If we knew the future would be exactly the same as the past,that approach would be fine. But if the future's different—and it almost always is—then it's the wrong thing to do. As Blockbuster learned the hard way, we end up paying for the full cost of our decisions, not the marginal costs, whether we like it or not.

You End Up Paying the Full Price Anyway

Case studies such as this one helped me resolve a paradox that has appeared repeatedly in my attempts to help established companies that are confronted by disruptive entrants—as was the case with Blockbuster. Once their executives understood the peril that the disruptive attackers posed, I would say, "Okay. Now the problem is that your sales force is not going to be able to sell these disruptive products. They need to be sold to different customers, for different purposes. You need to create a different sales force." Inevitably they would respond, "Clay, you have no idea how much it costs to create a new sales force. We need to leverage our existing sales team."

The language of the disruptive attackers was completely different: "It's time to create the sales force." Hence, the paradox: Why is it that the big, established companies that have so much capital find these initiatives to be so costly? And why do the small entrants with much less capital find them to be straightforward?

The answer lies in their approach to marginal versus full costs. Every time an executive in an established company needs to make an investment decision, there are two alternatives on the menu. The first is the full cost of making something completely new. The second is to leverage what already exists.

Almost always, the marginal-cost argument overwhelms the full-cost. When there is competition, and this thinking causes established companies to continue to use what they already have in place, they pay far more than the full cost—because the company loses its competitiveness. As Henry Ford once put it, "If you need a machine and don't buy it, then you will ultimately find that you have paid for it and don't have it." Thinking on a marginal basis can be very, very dangerous.

An Unending Stream of Extenuating Circumstances

This marginal-cost argument applies the same way in choosing right and wrong: it addresses a question I discuss with my students: how to live a life of integrity—and stay out of jail. The marginal cost of doing something "just this once" always seems to be negligible, but the full cost will typically be much higher. Yet unconsciously, we will naturally employ the marginal-cost doctrine in our personal lives. A voice in our head says, "Look, I know that as a general rule, most people shouldn't do this. But in this particular extenuating circumstance, just this once, it's okay." And the voice in our head seems to be right; the price of doing something wrong "just this once" usually appears alluringly low. It suckers you in, and you don't see where that path is ultimately headed or the full cost that the choice entails.

"The marginal cost of doing something 'just this once' always seems to be negligible, but the full cost will typically be much higher."

Recent years have offered plenty of examples of people who were extremely well-respected by their colleagues and peers falling from grace because they made this mistake. Nick Leeson, the twenty-six-year-old trader who famously brought down British merchant bank Barings in 1995 after racking up $1.3 billion in trading losses before being detected, suffered exactly this fate and talks about how marginal thinking led him down an inconceivable path. In hindsight, it all started with one small step: a relatively small error. But he didn't want to admit to it. Instead, he covered it up by hiding the loss in a little-scrutinized trading account. It led him deeper and deeper down a path of deception.

He lied to cover lies; he forged documents, misled auditors, and made false statements to try to hide his mounting losses. Eventually, he arrived at his moment of reckoning. He was arrested at the airport in Germany, having fled his home in Singapore. As Barings realized the extent of Leeson's debt, it was forced to declare bankruptcy. The bank was sold to ING for just 1 pound. Twelve hundred employees lost their jobs, some of them his friends. And Leeson was sentenced to six and a half years in a Singaporean prison.

How could hiding one mistake from his bosses end up leading to the undoing of a 233-year-old merchant bank, a conviction and imprisonment for fraud, and ultimately the failure of his marriage? It's almost impossible to see where Leeson would end up from the vantage point of where he started—but that's the danger of marginal thinking.

As soon as he took that first step, there was no longer a boundary where it suddenly made sense to turn around. The next step is always a small one, and given what you've already done, why stop now? Leeson described the feeling of walking down this dark road in an interview with the BBC: "[I] wanted to shout from the rooftops … this is what the situation is, there are massive losses, I want it to stop. But for some reason you're unable to do it."

100 Percent of the Time Is Easier Than 98 Percent of the Time

Many of us have convinced ourselves that we are able to break our own personal rules "just this once." In our minds, we can justify these small choices. None of those things, when they first happen, feels like a life-changing decision. The marginal costs are almost always low. But each of those decisions can roll up into a much bigger picture, turning you into the kind of person you never wanted to be.

I came to understand the potential damage of "just this once" in my own life when I was in England, playing on my university's varsity basketball team. It was a fantastic experience; I became close friends with everyone on the team. We killed ourselves all season, and our hard work paid off-we made it all the way to the finals of the big tournament. But then I learned that the championship game was scheduled to be played on a Sunday. This was a problem. At age sixteen, I had made a personal commitment to God that I would never play ball on Sunday because it is our Sabbath.

So I went to the coach before the tournament finals and explained my situation. He was incredulous. "I don't know what you believe," he said to me, "but I believe that God will understand." Every one of the guys on the team came to me and said, "You've got to play. Can't you break the rule, just this one time?"

It was a difficult decision to make. The team would suffer without me. The guys on the team were my best friends. We'd been dreaming about this all year. I'm a deeply religious man, so I went away to pray about what I should do. As I knelt to pray, I got a very clear feeling that I needed to keep my commitment. So I told the coach that I wasn't able to play in the championship game.

In so many ways, that was a small decision—involving one of several thousand Sundays in my life. In theory, surely I could have crossed over the line just that one time and then not done it again. But looking back on it, I realize that resisting the temptation of "in this one extenuating circumstance, just this once, it's okay" has proved to be one of the most important decisions of my life. Why? Because life is just one unending stream of extenuating circumstances. Had I crossed the line that one time, I would have done it over and over and over in the years that followed.

And it turned out that my teammates didn't need me. They won the game anyway.

If you give in to "just this once," based on a marginal-cost analysis, you'll regret where you end up. That's the lesson I learned: it's easier to hold to your principles 100 percent of the time than it is to hold to them 98 percent of the time. The boundary—your personal moral line—is powerful because you don't cross it; if you have justified doing it once, there's nothing to stop you doing it again.

Decide what you stand for. And then stand for it all the time.

From the forthcoming book HOW WILL YOU MEASURE YOUR LIFE? by Clayton M. Christensen, James Allworth & Karen Dillon. Copyright (c) 2012 by Clayton M. Christensen, James Allworth & Karen Dillon. To be published on May 15, 2012 by HarperBusiness, an imprint of HarperCollins Publishers. via HBR Works

 

How My Depression Can Help You - Jim Woods

You probably haven’t noticed I was depressed recently. I hope this post will help you.

Despite what many think my ranting has a dual purpose. To be authentic. To help you as well as myself. We have far too many shallow people. I am a smart man but I'm working out my life as I go along just like you. The last two months have been the most traumatic of my life. I married the love of my life only to awaken one morning with her having absconded with everything I had owned. Everything!! By the time I entered my office that morning she had not only left with everything she had changed her Facebook status as well. She took more than things. My hard earned reputation. Emptied my bank and PayPal accounts. Literally everything. And worst cheated on me. So, here is the point to this personal, very painful story. 

I went into a state of depression which you would not have known. Wondering what did I do wrong. Where could I have been better. I worked hardest on myself not her. I forgave her. Then I went back to work. So, here is why you should listen carefully. All change comes from the inside out. And, if love or a business does not work out, you open the blinds, and go back to work on every area of your life. Just like I did. Because my friend, it takes guts not stupidity for me to write this. If I can rise above what has happened to me, so can you. Whatever you are going through I understand you. You will be just fine. Now stand up into the light.

www.innothinkgroup.com

How Did Peter Drucker See Corporate Responsibility? - Frances Hesselbein - What Does Business Owe the World?

(Editor's note: This post is part of the HBR Debate "What Does Business Owe the World?")

What must our organizations do today to help our country maintain its greatness and to sustain the democracy? What does business owe the world?

These are not abstract questions we can ignore as someone else's business, or with "comfortable indifference," to use Dr. John W. Gardner's memorable admonition. For our country is made up of institutions, enterprises, and organizations in three interdependent and equal sectors, and its greatness will be determined in part by how we in our own enterprises and institutions, in our own way, respond to these challenging questions.

According to Peter Drucker, "Leaders in every single institution and in every single sector ... have two responsibilities. They are responsible and accountable for the performance of their institutions, and that requires them and their institutions to be concentrated, focused, limited. They are responsible also, however, for the community as a whole."

Peter strived to make business leaders see the community as the responsibility of the corporation. He called on leaders to embody "the Spirit of Performance" by exhibiting high levels of integrity in their moral and ethical conduct; focusing on results; building on strengths; and leading beyond borders to meet the requirements of stakeholders, ultimately serving the common good.

It is my passionate belief that leadership is a matter of how to be, not how to do. Yet it is what leaders do that others see and judge, not what leaders are. So what can a leader do?

Ensure that your actions are congruent with your values. Challenge the gospel — there should be no sacred cows as we challenge every policy, practice, procedure, and assumption. Joseph A. Maciariello, a great Drucker disciple, tells us that an organization high in spirit of performance is one that is led by executives who are committed to doing the right thing and to getting the right things done.

The world continues to be more connected and more than ever the actions of organizations are scrutinized by the media and the public. Having an effective appreciation and approach toward corporate social responsibility and ethical, principled leadership is essential. The need to make a profit should be balanced with fair trade, sustainability, corporate social responsibility, and other ethical principles.

Ignoring externalities threatens excellence, ethics, and engagement in organizations, but addressing these externalities can transform challenges into opportunities. When we truly focus on the common good, service is a privilege —not a chore but a remarkable opportunity.

In the complexity and the context of our lives as leaders, leading in tenuous times, there are the most magnificent, most compelling, most significant opportunities to lead, to find solutions, and to build a healthy, diverse, inclusive community that cares about all of its people.

For leaders in all three sectors there is a new appreciation that when we build the healthy community, it is for the greater good. And even for a leader with little concern about the greater good, there is the reality that a sick and ailing community cannot produce the healthy, energetic, productive workforce our enterprises demand if indeed they are to be viable and even present at the end of this turbulent decade.

The bottom line of every social sector organization is "changed lives." That is possibly why Peter Drucker said, "It is the social sector that may yet save the society." But only in collaboration with our partners in the private and public sectors can we move beyond the walls and build this essential, cohesive community.

Frances Hesselbein is President and CEO of the Leader to Leader Institute, formerly the Peter F. Drucker Foundation. She is the co-editor of 27 books in 29 languages.

via blogs.hbr.org

 

Are You A Bit Of A Loser? Don't Worry, You're Probably Really Creative - Jennifer Miller

Are you a recovering high school geek who still can’t get the girl? Are you always the last person picked for your company’s softball team? When you watched Office Space, did you feel a special kinship to the stapler-obsessed Milton Waddams? If you answered yes to any of these questions, do not despair. Researchers at Johns Hopkins and Cornell have recently found that the socially rejected might also be society’s most creatively powerful people.

The study, which is forthcoming in the Journal of Experimental Psychology is called “Outside Advantage: Can Social Rejection Fuel Creative Thought?” It found that people who already have a strong “self-concept”--i.e. are independently minded--become creatively fecund in the face of rejection. “We were inspired by the stories of highly creative individuals like Steve Jobs and Lady Gaga,” says the study’s lead author, Hopkins professor Sharon Kim. “And we wanted to find a silver lining in all the popular press about bullying. There are benefits to being different.”

The study consisted of 200 Cornell students and set out to identify the relationship between the strength of an individual’s self-concept and their level of creativity. First, Kim tested the strength of each student’s self-concept by assessing his or her “need for uniqueness.” In other words, how important is it for each individual feel separate from the crowd. Next, students were told that they’d either been included in or rejected from a hypothetical group project. Finally, they were given a simple, but creatively demanding, task: draw an alien from a planet unlike earth.

If you’re curious about your own general creativity level (at least by the standards of Kim’s study), go ahead and sketch an alien right now…Okay, got your alien? Now give yourself a point for every non-human characteristic you’ve included in the drawing. If your alien has two eyes between the nose and forehead, you don’t get any points. If your alien has two eyes below the mouth, or three eyes that breathe fire, you get a point. If your alien doesn’t even have eyes or a mouth, give yourself a bunch of points. In short, the more dissimilar your alien is to a human, the higher your creativity score.

Kim found that people with a strong self-concept and were rejected, produced more creative aliens than people from any other group, including people with a strong self-concept who were accepted. “If you’re in a mindset where you don’t care what others think,” she explained, “you’re open to ideas that you may not be open to if you’re concerned what other people are thinking.”

This may seem like an obvious conclusion, but Kim pointed out that most companies don’t encourage the kind of freedom and independence that readers of Fast Company probably expect. “The benefits of being different is not a message everyone is getting,” she said.

But Kim also discovered something unexpected. People with a weak self-concept could be influenced toward a stronger one and, thus, toward a more creative mindset. In one part of the study, students were asked to read a short story in which all the pronouns were either singular (I/me) or plural (we/us) and then to circle all the pronouns. They were then “accepted” or “rejected” and asked to draw their aliens.

I’ve read article after article about how organizations want creative people. But it appears to me that all companies want candidates from the same schools, with the same background, and the same experiences.

Kim found that all of the students who read stories with singular pronouns and were rejected, produced more creative aliens. Even the students who originally had a weaker self-concept. Once these group-oriented individuals focused on individual-centric prose, they became more individualized themselves. And that made them more creative.

This finding doesn’t prove that you can teach someone to have a strong self-concept but it suggests that you can create a professional environment that facilitates independent and creative thought.

“I’ve read article after article about how organizations want creative people,” Kim says. “But it appears to me that all companies want candidates from the same schools, with the same background, and the same experiences.” Kim hopes her study will have an impact on how companies think about who they hire, how they can retain the most creative individuals, and whether they’re really facilitating creative thinking among their employees. She says even small changes, like relaxing a dress code, can help.

Of course, there’s an irony here. If creativity depends on rejection, then companies would want to make it more difficult for employees to individuate, not less. Kim isn’t so worried about this outcome, however. “Even in a company where you feel happy, there are still plenty of opportunities to be rejected,” she says. “You can still pitch that great idea to your boss and your boss will say, ‘um, no.’”

via fastcocreate.com

 

How Can Leaders Reinvent Themselves? 3 Leadership Questions with Ken Blanchard

It’s that time of year when many of us pause, look back, and reflect on the past twelve months.  One of the most powerful ways you can improve the performance of your company is by evaluating the quality of your leadership.  What can you do for this coming year?  Here’s some advice for leaders from bestselling author and management guru Ken Blanchard.

How can a leader reinvent himself or herself? 

A. I think a leader reinvents himself or herself by constantly wanting to learn.  When you stop learning, you might as well lie down because you’re dead. I think every leader ought to set a personal goal each year about what will they be able to put on their resume next year that they didn’t have last year.  It might be learning a new language.  It could be learning a new computer program.  Constantly put yourself in a learning mode.

What does it take to be a good leader?

A. The biggest thing it takes to be a good leader is humility.  People with humility don’t think less of themselves—they just think about themselves less.  I think Rick Warren said it well in his book, The Purpose Driven Life.  The first sentence of that book is a whole leadership training program.  He said, “It’s not about you.”  We can accomplish that if we can get leaders to realize that they are there for the mission, for their clients, for their people, and not for themselves.

Can a leader also be a good coach?

 A. Yes, coaching is a definite part of leadership.  There are two parts of leadership.  One is the visionary direction part of leadership which is, “Where are we going?” and “What are we trying to accomplish?”  That has to be the responsibility of the traditional hierarchy.  It doesn’t mean that you don’t involve other people, but people look to the president, department chairman, and other traditional leaders to make sure that everybody knows where they are going.

The second part of leadership is implementation, which is “How do we live according to the vision, direction, and values that we have established?”  With that you have to turn the traditional hierarchy upside down.  So now the leaders who played a major role in setting the vision are at the bottom cheerleading, supporting, and coaching.

This is where the coaching process comes in because in developing your people there are three parts: Performance Planning where you are setting the goals and objectives; Day-to-Day Coaching when you are helping people win and accomplish their goals; and then there is Performance Evaluation.

In most companies, the majority of time is spent on performance evaluation with managers focused on judging people’s behavior.  Some companies do a pretty good job of goal setting but then they file the goals away until somebody says it is performance review time and then they run around looking for the goals. The thing that is least done is the day-to-day coaching, so coaching is a very important part of leadership.

What can you do from a personal leadership perspective to help your people and your organization perform at a higher level in 2011? 

Successful leaders recognize that profit is the applause you get for taking care of your customers and creating a motivating environment for your people.  What can you do to create that type of environment within your organization? The New Year is a great time to start!

PS: Ken Blanchard will be conducting a free webinar with Colleen Barrett, president emeritus of Southwest Airlines, on January 26.  It’s based on their new book, Lead with LUV.  To learn more, or to register, visit Lead with LUV: A Different Way to Create Real Success at the Blanchard website. via leaderchat.org

 

More Than Innovation Adaptability is The New Competitive Advantage

Globalization, new technologies, and greater transparency have combined to upend the business environment and give many CEOs a deep sense of unease. Just look at the numbers. Since 1980 the volatility of business operating margins, largely static since the 1950s, has more than doubled, as has the size of the gap between winners (companies with high operating margins) and losers (those with low ones).

Market leadership is even more precarious. The percentage of companies falling out of the top three rankings in their industry increased from 2% in 1960 to 14% in 2008. What’s more, market leadership is proving to be an increasingly dubious prize: The once strong correlation between profitability and industry share is now almost nonexistent in some sectors. According to our calculation, the probability that the market share leader is also the profitability leader declined from 34% in 1950 to just 7% in 2007. And it has become virtually impossible for some executives even to clearly identify in what industry and with which companies they’re competing.

All this uncertainty poses a tremendous challenge for strategy making. That’s because traditional approaches to strategy—though often seen as the answer to change and uncertainty—actually assume a relatively stable and predictable world.

Think about it. The goal of most strategies is to build an enduring (and implicitly static) competitive advantage by establishing clever market positioning (dominant scale or an attractive niche) or assembling the right capabilities and competencies for making or delivering an offering (doing what the company does well). Companies undertake periodic strategy reviews and set direction and organizational structure on the basis of an analysis of their industry and some forecast of how it will evolve.

But given the new level of uncertainty, many companies are starting to ask:

• How can we apply frameworks that are based on scale or position when we can go from market leader one year to follower the next? 

• When it’s unclear where one industry ends and another begins, how do we even measure position? 

• When the environment is so unpredictable, how can we apply the traditional forecasting and analysis that are at the heart of strategic planning? 

• When we’re overwhelmed with changing information, how can our managers pick up the right signals to understand and harness change? 

• When change is so rapid, how can a one-year—or, worse, five-year—planning cycle stay relevant?

The answers these companies are coming up with point in a consistent direction. Sustainable competitive advantage no longer arises exclusively from position, scale, and first-order capabilities in producing or delivering an offering. All those are essentially static. So where does it come from? Increasingly, managers are finding that it stems from the “second-order” organizational capabilities that foster rapid adaptation. Instead of being really good at doing some particular thing, companies must be really good at learning how to do new things.

Those that thrive are quick to read and act on signals of change. They have worked out how to experiment rapidly, frequently, and economically—not only with products and services but also with business models, processes, and strategies. They have built up skills in managing complex multi-stakeholder systems in an increasingly interconnected world. Perhaps most important, they have learned to unlock their greatest resources—the people who work for them. In the following pages we’ll look at how companies at the leading edge are using these four organizational capabilities to attain adaptive advantage. We’ll also discuss the implications of this fundamental strategic shift for large, established corporations, many of which have built their operations around scale and efficiency—sources of advantage that rely on an essentially stable environment.

A pattern similar to that illustrated in the exhibit above can be observed in many other industries.Learn more here.

The Ability to Read and Act on Signals

In order to adapt, a company must have its antennae tuned to signals of change from the external environment, decode them, and quickly act to refine or reinvent its business model and even reshape the information landscape of its industry.

Think back to when Stirling Moss was winning Formula One car races: The car and the driver determined who won. But today the sport is as much about processing complex signals and making adaptive decisions as about mechanics and driving prowess. Hundreds of sensors are built into the cars; race teams continuously collect and process data on several thousand variables—ranging from weather and road conditions to engine rpm and the angles of curves—and feed them into dynamic simulation models that guide the drivers’ split-second decisions. A telemetric innovation by one team can instantly raise the bar for all.

In this information-saturated age, when complex, varying signals may be available simultaneously to all players, adaptive companies must similarly rely on sophisticated point-of-sale systems to ensure that they acquire the right information. And they must apply advanced data-mining technologies to recognize relevant patterns in it.

For example, a leading media company that was suffering from a high rate of customer churn revamped its analytic approach to customer data, applying “neural network” technologies in order to understand patterns of customer loss. The company found hidden relationships among the variables that were driving churn and launched retention campaigns targeting at-risk customers. The accuracy rate in predicting churn was an impressive 75% to 90%—a huge benefit, given that every percentage point in churn reduction added millions of dollars to the bottom line.

Companies are also leveraging their signal-reading capabilities to make operational interventions in real time, bypassing slow-moving decision hierarchies. The UK-based grocery retailer Tesco continually performs detailed analyses of the purchase patterns of the more than 13 million members of its loyalty-card program. Its findings enable Tesco to customize offerings for each store and each customer segment and provide early warning of shifts in customer behavior. They also supported the development of Tesco’s hugely successful online platform, which has extended the company’s business model, enabling Tesco to become a store without walls and to offer a broader range of products and services, including media and financial services. To put the icing on the cake, instead of being purely a cost center, the rich databases and analytical capabilities produce a stream of direct revenue: For a fee, Tesco allows other enterprises to access its technologies and insights.

Google is another example. It uses algorithms to update the position of an ad on the basis of the ad’s relevance to an individual search or website as well as the advertiser’s bids on key words. The more relevant an ad, the higher the click-through rate—and because advertisers pay per click, this means more revenue for Google. By linking its advertising data directly to its operations, Google can respond to changing ad conditions on a split-second basis, without the intervention of human decision makers.

The Ability to Experiment

That which cannot be deduced or forecast can often be discovered through experimentation. Of course, all companies use some form of experimentation to develop and test new products and services. Yet the traditional approaches can be costly and time-consuming, and may saddle the organization with an unreasonable burden of complexity. Furthermore, research based on consumers’ perceptions is often a remarkably poor predictor of success. The real world is an expensive medium for experimentation, and failed market-facing tests and pilots may jeopardize a company’s brand and reputation.

To overcome these barriers, a growing number of adaptive competitors are using an array of new approaches and technologies, especially in virtual environments, to generate, test, and replicate a larger number of innovative ideas faster, at lower cost, and with less risk than their rivals can. Procter & Gamble is a case in point. Through its Connect + Develop model, it leverages InnoCentive and other open-innovation networks to solve technical design problems. It uses a walk-in, 3-D virtual store to run experiments that are quicker and cheaper than traditional market tests. And by employing Vocalpoint and other online user communities, it can introduce and test products with friendly audiences before a full launch. In 2008 alone, 10 highly skilled employees were able to generate some 10,000 design simulations, enabling the completion in hours of mock-ups that might once have taken weeks. More than 80% of P&G’s new-business initiatives now make use of its growing virtual toolbox.

In addition to changing the way in which they conduct experiments, companies need to broaden the scope of their experimentation. Traditionally, the focus has been on a company’s offerings—essentially new products and services. But in an increasingly turbulent environment, business models, strategies, and routines can also become obsolete quickly and unpredictably. Adaptive companies therefore use experimentation far more broadly than their rivals do. We’ve seen that Tesco illustrates the power of experimenting with business models as well as with product range.

Ikea, like Tesco, leverages existing assets and capabilities to experiment with business models. After the company entered Russia, managers noticed that whenever it opened a store, the value of nearby real estate increased dramatically. So Ikea decided to explore two business models simultaneously: retailing through its stores and capturing the appreciation in real estate values through mall development. It now makes more profit in Russia from developing and operating malls than from its traditional retail business.

Finally, experimentation necessarily produces failure. Adaptive companies are very tolerant of failure, even to the point of celebrating it. For example, the software company Intuit, which has been extremely successful at using adaptive approaches to grow new businesses, launched a marketing campaign in 2005 to reach young tax filers through a website called rockyourrefund.com. The site offered discounts at Expedia and Best Buy and the opportunity to get tax refunds in the form of prepaid gift cards. The campaign was a flop, and practically no one used the site. The amount of money involved was negligible—“almost a rounding error,” says Rick Jensen, the vice president of product management for Intuit’s consumer tax division. But the marketing team documented what it had learned from the failure and won an award from company chairman Scott Cook, who said, “It is only a failure if we fail to get the learning.”

The Ability to Manage Complex Multicompany Systems

Signal detection and experimentation require a company to think beyond its own boundaries and perhaps to work more closely and smartly with customers and suppliers. This flies somewhat in the face of the unspoken assumption that the unit of analysis for strategy is a single company or business unit.

With an increasing amount of economic activity occurring beyond corporate boundaries—through outsourcing, offshoring, value nets, value ecosystems, peer production, and the like—we need to think about strategies not only for individual companies but also for dynamic business systems. Increasingly, industry structure is better characterized as competing webs or ecosystems of codependent companies than as a handful of competitors producing similar goods and services and working on a stable, distant, and transactional basis with their suppliers and customers.

In such an environment advantage will flow to those companies that can create effective strategies at the network or system level. Adaptive companies are therefore learning how to push activities outside the company without benefiting competitors and how to design and evolve strategies for networks without necessarily being able to rely on strong control mechanisms.

Typically, adaptive companies manage their ecosystems by using common standards to foster interaction with minimal barriers. They generate trust among participants—for example, by enabling people to interact frequently and by providing transparency and rating systems that serve as “reputational currency.” Toyota’s automotive supply pyramids, with their kanban and kaizen feedback mechanisms, are early examples of adaptive systems. EBay’s complex network of sellers and buyers is another; the company relies on seller ratings and online payment systems to support the online marketplace.

If the experience curve and the scale curve were the key indicators of success, Nokia would still be leading the smartphone market; it had the advantage of being an early mover and the market share leader with a strong cost position. But Nokia was attacked by an entirely diff erent kind of competitor: Apple’s adaptive system of suppliers, telecom partnerships, and numerous independent application developers, created to support the iPhone. Google’s Android operating system, too, capitalized on a broad array of hardware partners and application developers. The ability to bring together the assets and capabilities of so many entities allowed these smartphone entrants to leapfrog the experience curve and become new market leaders in record time. As Stephen Elop, Nokia’s CEO, wrote in a memo to his staff , “Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem.” Through broader signal detection, parallel innovation, superior flexibility, and rapid mobilization, multicompany systems can enhance the adaptiveness of individual companies.

The Ability to Mobilize

Adaptation is necessarily local in nature—somebody experiments first at a particular place and time. It is also necessarily global in nature, because if the experiment succeeds, it will be communicated, selected, amplified, and refined. Organizations therefore need to create environments that encourage the knowledge flow, diversity, autonomy, risk taking, sharing, and flexibility on which adaptation thrives. Contrary to classical strategic thinking, strategy follows organization in adaptive companies.

A flexible structure and the dispersal of decision rights are powerful levers for increasing adaptability. Typically, adaptive companies have replaced permanent silos and functions with modular units that freely communicate and recombine according to the situation at hand. To reinforce this framework, it is helpful to have weak or competing power structures and a culture of constructive conflict and dissent. Cisco is one company that has made this transformation. Early on, it relied on a hierarchical, customercentric organization to become a leader in the market for network switches and routers. More recently the CEO, John Chambers, has created a novel management structure of cross-functional councils and boards to facilitate moves into developing countries and 30 adjacent and diverse markets (ranging from health care to sports) with greater agility than would previously have been possible.

As they create more-fluid structures, adaptive companies drive decision making down to the front lines, allowing the people most likely to detect changes in the environment to respond quickly and proactively. For example, at Whole Foods the basic organizational unit is the team, and each store has about eight teams. Team leaders—not national buyers—decide what to stock. Teams have veto power over new hires. They are encouraged to buy from local growers that meet the company’s quality and sustainability standards. And they are rewarded for their performance with bonuses based on store profitability over the previous four weeks.

Creating decentralized, fluid, and even competing organizational structures destroys the big advantage of a rigid hierarchy, which is that everyone knows precisely what he or she should be doing. An adaptive organization can’t expect to succeed unless it provides people with some substitute for that certainty. What’s needed is some simple, generative rules to facilitate interaction, help people make trade-offs, and set the boundaries within which they can make decisions.

For example, Netflix values nine core behaviors and skills in its employees: judgment, communication, impact, curiosity, innovation, courage, passion, honesty, and selflessness. The company’s executives believe that a great workplace is full of “stunning colleagues” who embody these qualities; thus the Netflix model is to “increase employee freedom as we grow, rather than limit it, to continue to attract and nourish innovative people, so we have a better chance of long-term continued success.” Consistent with this philosophy, Netflix has only two types of rules: those designed to prevent irrevocable disaster and those designed to prevent moral, ethical, and legal issues. It has no vacation policy and does no tracking of time—the company’s focus is on what needs to get done, not how many hours or days are worked. As the Netflix “Reference Guide on Our Freedom & Responsibility Culture” puts it, “Avoid Chaos as you grow with Ever More High Performance People—not with Rules.”

The Challenge for Big Business

Becoming an adaptive competitor can be difficult, especially for large, established organizations. Typically, these companies are oriented toward managing scale and efficiency, and their hierarchical structures and fixed routines lack the diversity and flexibility needed for rapid learning and change. Such management paradigms die hard, especially when they have historically been the basis for success.

However, several tactics have proved effective at fostering adaptive advantage even in established companies. To the managers involved, they may look like nothing more than an extension of business as usual, but in fact they create a context in which adaptive capabilities can thrive. If you are the CEO of a large company that wants to be more adaptive, challenge your managers to:

Look at the mavericks. Fast-changing industries are characterized by the presence of disruptive mavericks—often entirely new players, sometimes from other sectors. Ask your managers to shift their focus from traditional competitors’ moves to what the new players are doing and to think of ways to insure your company against this new competition or neutralize its effect. They should also look at what’s happening in adjacent or analogous industries and markets and ask, “What if this happened in mine?” Although pattern recognition is harder in an uncertain environment and can easily be obstructed by entrenched beliefs and narrow industry definitions, it has tremendous competitive value.

Identify and address the uncertainties. Get your managers to put aside the traditional single-business forecast and instead examine the risks and uncertainties that could significantly affect the company. This simple extension of the familiar long-range strategy exercise can force people to realize what they don’t yet know and to address it. Your organization needs to distinguish “false knowns” (questionable but firmly held assumptions) from “underexploited knowns” (megatrends you may recognize and perhaps have even acted on, but without sufficient speed or emphasis) and “unknown unknowns” (intrinsic uncertainties that you can prepare for only by hedging your bets).

Put an initiative on every risk. Most companies have a portfolio of strategic initiatives. It should become the engine that drives your organization into adaptability—and it can, with a couple of simple enhancements. First, every significant source of uncertainty should be addressed with an initiative. Depending on the nature of the uncertainty, the goal of the initiative may be responding to a neglected business trend, creating options for responding to it down the line, or simply learning more about it. In managing these initiatives, your company should be as disciplined with metrics, time frames, and responsibilities as it would be for the product portfolio or the operating plan.

Examine multiple alternatives. In a stable environment it is sufficient to improve what already exists or to examine single change proposals. The simple step of requiring that every change proposal be accompanied by several alternatives not only surfaces a more varied and powerful set of moves, but also legitimizes and fosters cognitive diversity and organizational flexibility.

Increase the clock speed. The speed of adaptation is a function of the cycle time of decision making. In a fast-moving environment, companies need to accelerate change by making annual planning processes lighter and more frequent and sometimes by making episodic processes continual.

---

The adaptive approach is no universal panacea. If your industry is stable and relatively predictable, you may be better off sticking to the traditional sources of advantage. But if your competitive reality is uncertain and rapidly changing, as is true in an increasing number of industries, you need a dynamic and sustainable way to stay ahead. Your survival may depend on building an organization that can exploit the four capabilities behind what we think of as adaptive advantage. via BCG

This article originally appeared in the Harvard Business Review and is republished here with permission.

 

 

How Executive Leadership Can Create A Culture of Innovation

A Step-By-Step Guide for Business Innovation

Innovation, true institutional innovation, makes indelible, positive impacts on a business’s corporate culture and ability to drive revenue. When implemented, successful innovation programs can attract top talent, improve staff retention, drive new lines of business, and create an agile organization able to adapt to changing environments.

A culture of innovation requires executive leadership to engage the entirety of their staff to take ownership of innovation development, and incorporate it into their daily job functions. Every employee has a unique view of the organization, and can identify opportunities to better serve their constituents. Identifying these gaps should be an organizational priority, because each gap is an opportunity to innovate a new program or fill a need.

These days, it is insufficient to rely on a suggestion box in the break room to drive innovation. You need to present your employees with the resources and support necessary to effect a change on the problem they have identified.

Step 1: Create Opportunities for Awareness and Innovation

When the American Cancer Society initiated its Futuring and Innovation Center in 2002, they were inundated with ideas on how to solve constituent challenges. The Center drove a cultural change within the greater organization by developing a structure through which even the most junior staff were able to submit ideas and participate in their development. Beyond the value of the new programs, and beyond the new revenue from them, The Center fostered a culture of individual responsibility and gave every staff person the tools and opportunity to make lasting and meaningful changes to the way that the organization operated. The lesson? Encourage your employees to extend themselves outside of the prescribed job descriptions.

Additionally, Royal Dutch Shell PLC was a pioneer in organization awareness, able to engage their entire company — top to bottom level. Shell developed and implemented an innovation identification and development program called “Game Changer,” which actively sought outside ideas for energy production, distribution, and even new sources that could drive profitability and overall growth of the company. Shell calls out to its entire network asking “If you have a creative mind and you believe your invention can transform the energy industry, perhaps you should be speaking to us. We invest in novel, early stage ideas that could impact the Energy System to help you get them from your mind to ‘proof of concept.’”

But awareness need not solely be an external effort. Air Products and Chemicals considered awareness as an internal challenge. Air Products employs a vast array of engineers with diverse background and interests. However, this vast resource was not being tapped, simply because the interests and skills sets of each engineer were hidden. Air Products recognized the challenge and created an internal system to catalog all of their engineer’s technical expertise and passions. Now, project managers leverage the system to create high relevance ad-hock technical teams that align people with their technical skills and passions. The result is better products and engaged employees.

Step 2: Take A Systematic Approach

In the Innovation and Commercialization 2010 McKinsey Global Survey, one of the biggest challenges expressed by participants was the need for better organization of innovation. In fact, 42 percent of survey respondents said that improvement in innovation organization would make a profound positive impact on their ability to drive innovation.

Interestingly enough, “organization” was closely followed by “developing a culture and climate that fosters innovation” as the second biggest challenge. The report is telling when it says, “Organizational factors, including innovation-specific processes and links to support functions, remain a challenge. As hard as it is for companies to implement organizational changes in increasingly complex environments, the results suggest that when companies make the effort, they will experience more success with innovation.”

The lack of a highly functioning innovation system is one of the preeminent barriers to developing a culture of innovation. An innovation structure provides individuals with great ideas the resources and corporate support to usurp the standard business development process.

The Shell Game Changer is a strong example of how a large organization can act nimbly by creating a separate pathway for ideas to route. Game Changer relies on a stage-gate process to bring in, evaluate, validate, test, and launch new innovations. The American Cancer Society leveraged the success of the Shell system and adopted a similar framework for their innovation development program called Springboard. Both programs took a regimented and systematic approach to innovation development, passing hundreds and thousands of ideas through screens until they were left with only the most viable innovations. At which point, those ideas received not only funding, but developmental support.

Step 3: Turn Ideas into Business Reality

Here is an easy guide for transforming all those wonderful innovations from words on an email, to actionable programs or products:

1. Discovery. Gather business concepts from your staff and volunteer network. Create challenges for them by posing particular questions and asking for solutions, and have an open channel for people to send in their unique ideas for consideration.
2. Scoping. Give concepts an initial review against your carefully selected criteria. Some key criteria are: Scalability, Sustainability, Cost Basis, Tie to Organizational Mission, and Capacity for Execution. This is where your process begins to pay off. By weeding out unsustainable ideas early on you preserve development energy and funding for viable ideas.
3. Create a Business Case. Once approved, engage the person who submitted the idea to draft a business plan of their concept. The business plans should thoroughly outline the mission, goals, evaluation tools/metrics, and resources to test the viability of the idea as a prototype. A review committee should consider a completed business plan as a formal application for funding.
4. Conduct Constituent Market Research. Engage the idea submitter to commission a market research study to determine what demand exists for their concept. Ideally, you already know the problem it is going to solve, and the value it will bring your customers or constituents. Now you need to see if there is a market for it. Your research can be as complex as engaging a firm, or as simple as creating an online survey.
5. Development and Testing. Create a rapid prototype to prove the concept works. We suggest that you aim to prove the concept within a nine- to twelve-month time frame. We strongly encourage limiting funding to encourage bootstrapping, and keep the effort focused on proving the viability of the concept, not creating a full-fledged program.
6. Launch. If chosen for implementation, work closely with the idea submitter to identify the resources and department support best suited to deliver the program to market, and arrange the smooth transition and success of the new program.

From the outside, brilliant business innovation may seem like art. But it’s more science than you think. We work in nonprofits, where innovation is the name of the game: Now, you know our strategy for success.

via chiefexecutive.net

 

Seven Strategy Questions: A Simple Approach for Better Execution

Business leaders can't develop and execute effective strategy without first gathering the right information, says Harvard Business School professor Robert Simons. In his new book, Seven Strategy Questions: A Simple Approach for Better Execution, Simons explains how managers can identify holes in their planning processes and make smart choices. Here's an excerpt outlining the seven questions every manager should ask.

1. Who Is Your Primary Customer?

The first imperative—and the heart of every successful strategy implementation—is allocating resources to customers. Continuously competing demands for resources—from business units, support functions and external partners—require a method for judging whether the allocation choices you have made are optimal.

Therefore, the most critical strategic decision for any business is determining who it is you are trying to serve. Clearly identifying your primary customer will allow you to devote all possible resources to meeting their needs and minimize resources devoted to everything else. This is the path to competitive success.

It's easy to try to duck the tough choice implied by the adjective primary by responding that you have more than one type of customer. This answer is a guaranteed recipe for underperformance: the competitor that has clarity about its primary customer and devotes maximum resources to meet their specific needs will beat you every time.

2. How Do Your Core Values Prioritize Shareholders, Employees, and Customers?

Along with identifying a primary customer, you must also define your core values in a way that ranks the priority of shareholders, employees, and customers. Value statements that are lists of aspirational behaviors aren't good enough. Real core values indicate whose interest comes first when faced with difficult trade-offs.

Prioritizing core values should be the second pillar of your business strategy. For some companies, shareholders come first. For others, it may be employees. In other companies, it may be customers. There is no right or wrong, but choosing is necessary. To illustrate this point, I'll contrast Merck's $20 billion decision to pull Vioxx from the market with Pfizer's decision to continue marketing Celebrex.

3. What Critical Performance Variables Are You Tracking?

Once you're confident that the foundation of your implementation is sound—you've allocated resources correctly and provided guidance for tough decisions—it's time to get everyone who works for you focused on the job at hand.

Tracking performance goals—the third implementation imperative—requires you to set the right goals, assign accountability, and monitor performance. It's easy to fail this imperative by focusing on the wrong performance indicators or monitoring scorecards that have an overload of irrelevant measures. Underperformance is the result.

It's your job to ensure that your managers are tracking the right things by singling out those variables that spell the difference between strategic success and failure. Like the preceding two questions, the focus in this question is again on an adjective, this time the word critical. I will show you a simple but counterintuitive technique that you can use to be sure you're tracking the right things, and I will describe how companies such as Nordstrom and Apple illustrate some unorthodox performance measurement choices that provide the pathway to superior results.

4. What Strategic Boundaries Have You Set?

Every strategy brings with it the risk that an individual's actions will pull the business off course. Here again, it's easy to fail to inoculate the business against this risk. As we will see, the trick is in setting clear boundaries.

Controlling strategic risk is the fourth implementation imperative. Strategic boundaries—which are always stated in the negative—ensure that the entrepreneurial initiative of your employees aligns with the desired direction of the business. Strategic boundaries can also protect you from the types of errant actions that destroyed Enron and brought financial service firms such as Fannie Mae and Lehman Brothers to their knees.

5. How Are You Generating Creative Tension?

Once you're satisfied that you are tracking the right performance goals and controlling strategic risk, it's time to turn to the fifth implementation imperative: spurring innovation. This imperative is woven into the fabric of every healthy organization, and we all know that companies that fail to innovate will eventually die. No company is immune.

But sustaining ongoing innovation in organizations is notoriously difficult. People fall into comfortable habits, sticking with what they know and rejecting things that cause them to change their ways.

To overcome such inertia, you must push people out of their comfort zones and spur them to innovate. I will provide a menu of techniques you can use to generate creative tension to ensure that everyone is thinking and acting like a winning competitor.

6. How Committed Are Your Employees to Helping Each Other?

For most companies, it's critically important to build norms so that people will help each other succeed—especially when you're asking people to innovate. But there are exceptions. Some organizations can, and should, be built on self-interest, with every man or woman working for him- or herself.

I suspect that the choice between commitment to help others and self-interest is deeply ingrained in your organization, yet has never been discussed. But if you haven't addressed this choice explicitly—and worked to make it happen—you have increased the potential that your strategy implementation will fail.

Building commitment is the sixth implementation imperative. I will offer a menu of techniques to foster commitment to achieving shared goals. Or, if rewarding self-interest is more appropriate for your business, I will explore alternative approaches you should employ.

7. What Strategic Uncertainties Keep You Awake at Night?

No matter how good your current strategy is, it won't work forever. There will be booms and busts, customer preferences will change, competitors will introduce new products, and disruptive new technologies will emerge in unexpected places.

This brings us to the final implementation imperative: adapting to change. Adapting is critical to survival, but it's extremely difficult to do. With change constantly surrounding us, employees often do not know where to look or how to respond.

I will consider the techniques that companies such as Johnson & Johnson use to search for new information and ideas as markets inevitably change. Your personal attention is the critical catalyst to focus your entire organization on the strategic uncertainties that keep you awake at night. After all, everyone watches what the boss watches. I will discuss how you can use this principle to guide the emergence of new strategies for the future.

Reprinted by permission of Harvard Business Review Press. Excerpt from Seven Strategy Questions: A Simple Approach for Better Execution. Copyright 2010 Robert Simons. All rights reserved. via hbswk.hbs.edu

Learn to collaborate across the organization to gain critical perspectives, solve complicated problems, create buy in and manage politics.

Book Jim Woods to speak at your next event. Contact us for fees and available.719-266-2703.