Effective Executive
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April '10 | |
INDEX
INNOVATION HONEYMOON
-- Kai-Alexander Schlevogt
It is often highly beneficial for leaders to open and empty the "idea barn" filled during the Innovation Honeymoon™, the unusually insightful and creative initial period for an organizational newcomer. Intellectual openness enhances the image of their organization, liberates them and allows them to focus on leveraging ideas, helps them to build networks and benefit from reciprocity, provides access to collective intelligence, serves as a disguise, and pre-empts competitors.
INNOVATION HONEYMOON
-- Dr. Jay Rajasekera
If social network is going to bring any value co-creation and innovation in digital business, the company must create communities with stakes for its members. Toyota did just that by having stakes in suppliers and partnering with them. That is what made Toyota Production System, otherwise known as Lean Manufacturing, successful.
INNOVATION HONEYMOON
-- Jeffrey Shuman and Janice Twombly
Collaboration is a purposeful, strategic way of working that leverages the resources of each party for the benefit of all by coordinating activities and communicating information within an environment of trust and transparency.
INNOVATION HONEYMOON
-- Dan Coughlin
Once you have earned your leadership platform, never take the privilege of having a platform to influence other people lightly. It can take many years to earn a platform as a leader and a few minutes to lose it.
INNOVATION HONEYMOON
-- Stephanie Jones
An example of when customers have been a source of new product innovation was given by Dijkstra while talking about how Ranpak divides customers into small, medium and large segments.
INNOVATION HONEYMOON
-- Dr. KV Subramanian
Mentoring should start with the parents, right from the time their first child is born, targeting them even while they are in the organization, so that we help and mold future societies.
PERSPECTIVE
-- Rob Jolles
There are many who consider themselves great coaches, but the greatest coach I've ever seen is John Wooden. In case you have never heard of Coach Wooden he coached the UCLA Bruins to a national championship in 1963 and 1964. Duke and Kentucky are the only other teams in history to win back-to-back championships, so I guess you could say that puts Coach Wooden in rare company.
INTERVIEW
-- Miklos Sarvary
The interview was conducted by Syed Abdul Samad (TL) and Fareeda (Sr. RA)
IBS CDC, www.ibscdc.org
Our Second Life campus is intended to enhance and extend our current programs by offering alternative options for virtual collaboration and learning. We do not imagine that it would ever replace our face-to-face interactions, which are key to the success of our programs, together with our virtual solutions.The interview was conducted by Syed Abdul Samad (TL) and Fareeda (Sr. RA)
IBS CDC, www.ibscdc.org
INTERVIEW
-- Venkat Ramaswamy
The interview was conducted by Dr. Nagendra V Chowdary,
Consulting Editor, Effective Executive
Dean, IBS CDC, www.ibscdc.org
The customer has traditionally been viewed as a "target to be had". That may seem difficult to accept today, and that's the point. Customers were seen as passive pockets of demand for the goods and services that the company could sell. This still holds, i.e., selling goods and services, but what has changed is that the informed, connected, and empowered customer have different expectations today.The interview was conducted by Dr. Nagendra V Chowdary,
Consulting Editor, Effective Executive
Dean, IBS CDC, www.ibscdc.org
INTERVIEW
-- Carmine Gallo
The interview was conducted by Dr. Nagendra V Chowdary,
Consulting Editor, Effective Executive
Dean, IBS CDC, www.ibscdc.org
Steve Jobs doesn't use focus groups. Instead, he inspires his team to create products they would like to use. He once said that he and Wozniak built the Apple II for themselves and their peers. Jobs asks himself, What is it about a design experience that I would enjoy?The interview was conducted by Dr. Nagendra V Chowdary,
Consulting Editor, Effective Executive
Dean, IBS CDC, www.ibscdc.org
INNOVATION HONEYMOON
The Blessings of Intellectual Openness : Generously Share Ideas in the Innovation Abode and Prosper Beyond Imagination!
It is often highly beneficial for leaders to open and empty the "idea barn" filled during the Innovation Honeymoon™, the unusually insightful and creative initial period for an organizational newcomer. Intellectual openness enhances the image of their organization, liberates them and allows them to focus on leveraging ideas, helps them to build networks and benefit from reciprocity, provides access to collective intelligence, serves as a disguise, and pre-empts competitors.
Once upon a time, a rich farmer's crop exceeded his storage space. So he conceived the plan of pulling down his old barns and constructing larger ones, after which he intended to enjoy life. But before he could realize his worldly scheme, God told him: "Fool, time is up!" The Almighty announced that during the ensuing night he would take back the life of the wealthy man who had not been rich to his creator and provider.
This parable should serve as a wake-up call for leaders in different walks of life. Storing riches for his organization while ignoring the outside world, which sustains his collective, can spell disaster for an idea farmer. He may have harvested many novel proposals during what I call the Innovation Honeymoon™, the unusually insightful and creative initial period of organizational newcomers. Undoubtedly, there needs to be time for introspection when the newly conceived ideas are mentally digested. During this phase, the headman, with his team, should reshape them and select the most promising options. But then, he must not hesitate to open and empty what I call the "idea barn", whenever the benefits of doing so outweigh the costs in terms of giving up secrecy and exclusivity.
I. The Blessings of Intellectual Openness
There are five interrelated advantages of exposing outsiders to a nascent concept as soon as possible after it has been earmarked for the first stage of implementation (See Exhibit I).
1. Image enhancement
Idea tinkerers have to leave their garage and look at the big picture before it is too late. Even nerds must realize that what is good for the country, is also good for the organization that resides in it! As institutional citizens, organizations need to promote the welfare of what I call the "innovation abode", because they will ultimately benefit from a flourishing environment. Besides, the leader of an organization has a moral obligation to give back to society, which gave birth to his institution or at least is currently hosting it. Gratitude is expressed not only by donating money, but also by disseminating valuable ideas without unnecessary delay.
By holding back key insights and insisting on exclusive rights, leaders stifle the diffusion of innovation. This leads to suboptimal outcomes; the potential of a market economy will not be actualized. In contrast, through idea-sharing and collaboration, men of premier rank can transform their habitat into a center of excellence. It may serve as a platform for international expansion and become a key driver of sustainable growth.
A wide variety of stakeholders will perceive the proactive permeable and outpouring organization not only as a dynamic innovator, but also respect it as an unselfish, open, honest, fair and generous player. Stakeholders, many of whom are becoming increasingly demanding and outspoken, are less likely to objurgate it for being an aggressive monopolist or evil cult.
2. Liberation and focus
If the guiding light stops coveting, hording, and locking away ideas, he will be free to concentrate on their real purpose, which is to create value for all constituents, part of which his organization can capture. Having emptied his store, he will be mentally ready and have space at his disposal to receive diverse blessings. As a result of his new attitude, he probably will direct his efforts at actually making use of ideas together with outsiders.
The torch-bearer thus will avoid spending all his resources on keeping his mental products secret, which often is a futile attempt anyway. Because loyalty to employers is waning and many employees can be easily poached, competitors often do not find it difficult to gain access to the well-guarded idea laboratory of their rivals.
3. Networks and reciprocity
By letting outsiders partake in ideas, organizational chieftains can achieve exponential growth in human, social and intellectual capital. They will be able to develop trust-based networks with many members of their "extended innovation family", who otherwise could easily turn into enemies. For example, if you grant suppliers and customers access to your "insight factory", they probably will become eager to work with you. Honored to be invited as expert reviewers, as well as co-creators and co-owners of ideas, they will gladly join forces and help you shape the environment.
Spontaneous collaboration could finally be institutionalized in strategic alliances, for example. As another networking effect, the positive organizational image will attract and motivate a pool of talent, who will potentiate the benefits.
If you open up and share ideas, others will feel compelled to reciprocate. Many stakeholders are likely to reach out to you to propose and discuss exciting business opportunities. When others ask you for input, you have the unique opportunity of jointly shaping their future with them.
4. Collective intelligence
If you design an open system and, as a reality check, allow outsiders to scrutinize your ideas, you can obtain valuable feedback. You may be able to prune errors before products have progressed to the development stage, when changes become prohibitively expensive. By building an "open innovation home", in which outsiders are also allowed to dwell, you are likely to absorb and generate ideas through the process of cross-fertilization.
In contrast, close-loop organizations, which develop products in isolation, face high risks. When institutional introverts finally unveil what they hail as a highly relevant product sensation, it may be perceived as insignificant and outdated, a classic case of "too little, too late". Besides, customers may complain about shortcomings that might have been corrected if the ideas had been subjected to external validation before the surprise launch.
5. Disguise and preemption
In most circumstances, even intellectual Machiavellians will find it beneficial to share ideas as soon as possible. It is an effective stratagem to give utmost publicity to the greatest secret. In contrast, the more you try to cover something up, the harder others will toil to uncover the truth. Most gratified with any discovery, they will eagerly capitalize on it.
Idea-sharing can also preempt competition. If a rival learns that a powerful player is working on a new key technology, for example, it might feel disheartened. Furthermore, after you have shared intellectual property with competitors, they will become reluctant subsequently, to use it without your permission, since their transgression would be obvious and embarrassment at the very least would be unavoidable.
Organizational character is destiny! Leaders must choose between giving in order to receive, and suffering the freedom of the fugitive. Those who appreciate the true value of sharing ideas as soon as possible with outsiders and actually empty their intellectual stores will be able to triumph like the man who exclaimed: "My barn having burned to the ground, I can now see the moon!"
II. Watch out for Idea Sentinels
Saint Paul wrote in one of his epistles: "What I want to do I do not do, but what I hate I do".
Those who really want to capitalize on the innovation honeymoon have to share ideas with outsiders as soon as possible. But, alas many people fail to do so. This is due to the presence of what I call "idea sentinels". These are forces that keep insights captive in the organization, preventing the flow of novel thoughts to the innovation abode. A man of premier rank first has to identify the five most powerful interrelated idea blockers, which form a cordon around the organization, before he can formulate and implement effective counter strategies (See Exhibit II).
1. Leadership
Despite a verbal praise of innovation, many headmen act as idea guards. Their intellectual tightness, which is likely to be emulated by followers or, at least, reduce degrees of freedom, can be due to various reasons. Some helmsmen are simply unaware of how much emptying their idea barn matters in the process of innovation. Further, there are rulers who place excessive confidence in themselves or the organization. As a result, they may simply be unable to imagine that outsiders could add any value that could not be created internally.
Some organizational chieftains are too self-absorbed and proud to ask for outside feedback. There are also many executives who crave ownership and recognition. Covetous leaders are more interested in taking than giving. They also find it difficult to let loose. They are anxious to originate all ideas themselves, for only then they can delight in the sense of intellectual ownership. He who longs for applause trusts in the following worldly logic: If he were to allow strangers to improve one of his ideas, he later would not be entitled to claim full credit for it and thus could not bask in the resulting fame.
Certain standard-bearers simply are very risk adverse and thus prefer not to tell a stranger about their insights. In reality, this approach is extremely hazardous, since costly errors may not be corrected. Besides, some guiding lights fear that confidential and sensitive information could be leaked, expecting that this would harm some constituents. Undoubtedly, this danger is clear and present in certain organizations, such as the military and intelligence services, and certain organizational functions. But even there, isolation in all matters usually is not splendid, since it is beneficial for certain new concepts to be shared with the outside world at an early stage, for example, to test their effectiveness.
2. Collective mental maps
Shared mental maps can act as a powerful impediment to passing on ideas to outsiders. Oftentimes, traditional beliefs and approaches used by the previous generation are simply accepted by the next one without questioning, even though they might be inappropriate in the information age.
In many cases, you will be able to diagnose whether an organization is open as soon as you arrive at its gate. You might either receive a warm greeting from the security guard or be treated like a terror suspect. Oftentimes, protective, sect-like organizations are not only wary of letting outsiders in, but also about letting ideas out and collaborating with aliens. Selection and socialization usually ensure that their members share a common mental map, on which the organization is an island surrounded by a hostile environment.
It is also useful to analyze the language that leaders and followers are commonly using. The members of closed organizations often speak of "war" to describe competitive rivalry and refer to competitors by using the word "enemy". Because language influences thoughts and resulting action, they are reluctant to bounce off ideas in the market.
In some cultures, people clearly distinguish between family members, who are trusted, and the outside world, which is treated with deep suspicion. When this national culture pervades the organization, members tend to circle the wagons.
3. Strategic posture
The strategic orientation of an organization can act as another idea lock. Leaders may pursue what I call a "gold standard strategy". They may aim at producing highly differentiated products that are to become the industry reference in terms of innovation and sophistication. These movers and shakers are always hunting for the next "big thing", eager to come up with a killer application. Their strategy of choice often, is to launch proprietary products, which endow their companies with monopolistic pricing power. Organizational members adopting such an approach usually are obsessed with being first in the market and thus reluctant to transmit ideas to outsiders.
4. Formal Controls
Formal structures, processes and systems can also prevent idea exchange with outsiders. There is a trend for many large organizations to centralize power in globally integrated units. This concentration can reinforce isolationist tendencies at the top. Even inside the companies, feedback is often neither welcomed nor taken seriously; outside opinions carry even less weight. This structural arrangement makes it all the more difficult to quickly act on the local knowledge of front line staff.
Besides, many companies have established specialized functions, such as compliance departments, which draw uptight rules, standardize procedures, and design complex systems to ensure that the behavior of all organizational citizens is lawful. In contrast, many firms fail to create specialized roles that span the boundary with the external environment. Compliance officers often act as gatekeepers. Eager to conform with regulations, they might actually overshoot and impose a virtual information embargo on the whole organization. To prevent anti-trust suits, they tend to strongly discourage interaction with competitors.
5. Capabilities and resources
Many organizations also lack the means for effectively sharing nascent ideas with outsiders. Its members may not be competent in reaching out to strangers and effectively communicating with them. Employees might not have learned how to exchange ideas while safeguarding the interests of their employer. Besides, many companies fail to create a seamless technological interface with suppliers and other stakeholders. Further, firms may not fund any outreach activity.
Interlocking idea sentries create an iron curtain, fencing off the organization from its innovation abode. The problem is rooted in the hearts and minds of leaders and their followers. Undoubtedly, it is an uphill struggle to change their disposition. Albert Einstein remarked: "It is harder to change a pre-conceived opinion than it is to split the atom".
III. How to Orchestrate the Idea Exodus
In a literary critique, T S Eliot wrote that immature poets imitate, whereas mature poets steal!
Unfortunately, this witty and provocative assessment only focuses on the sourcing of ideas. The antithesis to coveting, exploiting and transforming the intellectual assets of others in an original manner is a veritable Copernican revolution. The volte-face takes the possessions of the idea creator himself as a departure point and can be summarized in the following counter-intuitive maxim: Empty yourself, in order to be filled with abundant treasures!
A leader wanting to share nascent ideas generated during the innovation honeymoon of new organizational members must pierce the cordon formed by various idea sentinels. As mentioned above, these factors, which cause the organization to keep its gates shut, include: Leadership, collective mental maps, strategic posture, formal controls, as well as capabilities and resources.
An organization needs a cohesive battle plan that spells out interconnected remedial action aimed at removing each of these blockages (See Exhibit III). The result is what I call a well-orchestrated "idea exodus" into the Promised Land where innovation flowed as milk and honey in biblical Canaan.
1. Role-modeling openness at the top
Instead of adopting a boss-centric and restrictive leadership style, a helmsman should serve as exemplar of humility, transparency, openness and intellectual generosity for the outside world. The chieftain's determination and action sends powerful signals to his senior leaders who will contribute to the changing of the leadership climate.
To combat inbreeding, the man in the saddle should share his vision and insights regarding emerging trends with outsiders. For example, a Canadian technology entrepreneur, based in Singapore, took the courage to break with previous habits and emptied his intellectual barn. He gave a newspaper interview, outlining his intriguing view on the next "big thing" and revealed which Internet-based voice communication systems his firm was developing.
His openness paid off: Shortly after the publication of his comments, many businessmen contacted him to explore partnerships. Surely, followers will emulate the intellectual openness of such an enlightened boss.
2. Campaigns creating awareness and trust
It is also of paramount importance to redraw collective mental maps that are useless. Case studies of unsuccessful proprietary technologies developed inside a secret system without the benefits of network effects often prove effective for this purpose. Examples include spectacular white technological elephants created by overconfident and ignorant government officials together with their national industrial champion.
Pilots followed by a thorough analysis of feedback from a wide variety of dwellers in the innovation abode also are likely to demonstrate the value of emptying the barn and build trust in outsiders. Examples of constituents who should be blessed with nascent ideas are: Customers, suppliers, competitors, scientists, legal experts, bankers, journalists, politicians, members of non-governmental organizations and spiritual leaders.
Sometimes, the design of such studies can be very simple indeed. For instance, an airline may ask a student to make trial bookings on its new system before the official launch. It is amazing that many companies invest tens of millions of dollars on complex IT applications, but because of dysfunctional mental maps, fail to ask naïve outsiders to perform simple checks to hone out errors.
3. Shared value creation schemes
As an antidote to proprietary product schemes, companies can opt for strategic openness. Software firms may freely share their source codes, enabling others to build complementary applications that make its product more attractive. Electronics companies can design open standards.
Organizations also must choose their part in the value chain. Even though Nestlé designed the Nespresso machines, it emptied its intellectual property barn for these products, licensing the technology to well-entrenched manufacturers. Here is a positive side-effect: When, instead of being highly integrated, a firm strongly relies on outsiders, it often is compelled to share much with web participants.
To overcome strategic closure, companies may move along a "shared growth trajectory". Pilkington licensed its revolutionary float glass process to other producers instead of walking alone. Thus, other companies, instead of acting as rivals, became contractual partners who remunerated the pioneer.
In some circumstances, a proprietary strategy may still pay off. But oftentimes, increasing returns can be reaped through sharing. Five loaves of intellectual bread and two fish, when freely distributed in the right spirit, can feed 5,000 men plus women and children, and there will still be plenty nourishment left!
4. Seamless organizational design
Organizations that develop into complex bureaucracies as they grow increasingly become intellectual straightjackets for their members. As an antidote, especially large institutions have to adopt novel organizational arrangements fostering intellectual outreach. One possible move is to endow front line staff with more authority and information, which may be shared with strangers.
Another example is the development of dedicated innovation abodes for selected technologies. Further, a new rule might govern what I call "sharing time": It could allow organizational members to spend 10% of their time on communicating emerging ideas to the outside world.
It is also crucial to analyze and possibly reconfigure routine processes. For example, with changed regulations, it might no longer be necessary to keep certain information confidential.
5. Powerful asset platform
A company also needs a pool of tangible and intangible assets enabling the opening of intellectual floodgates. A cadre of what I call "corporate missionaries" is de rigueur. Those must spread the good news associated with nascent ideas and carefully listen to their audience. Examples of communication enablers are shared databases and communication platforms, which facilitate the flow of ideas. An organization also must set aside dedicated funds to finance their outreach activities.
Invisible assets, such as reputation, matter tremendously, too. Many companies overlook the high costs associated with proprietary standards. An example is customers' dissatisfaction with incompatibility and their anger about the company shamelessly taking advantage of its dominant position.
Headmen must ensure that their ideas, like their money, actually work for them, producing high tangible and intangible returns. For to him who possesses ideas and put them to good use in a spirit of sharing, more shall be entrusted, resulting in intellectual abundance. But from the unfaithful and slothful, who hides his intellectual belongings in his barn, even the little that he has shall be taken! For those secretive tinkerers at the top whom I call "black-box leaders", operating in obscurity and consequently facing outer darkness, it is high time to imprison the idea captivators and release the enslaved thoughts.
Note: This is the fifth part of my series on the “Innovation Honeymoon”.
Kai-Alexander Schlevogt is an expert in transformational leadership, with a particular focus on crisis management and innovation. He serves as the first professor of management practice at the National University of Singapore (NUS) Business School. He writes the widely-read column "Prof. Kai on Strategic Leadership" for the Jakarta Post, the leading English-language newspaper in Indonesia. He also serves as columnist for Euro, the largest monthly capital market magazine in Germany. Kai-Alexander has also been invited to become a Member of Duke Corporate Education (CE)'s Global Learning Resource Network, an elite circle of the world's top executive educators.
Kai-Alexander was elected Fellow of the McKinsey & Co. Global Institute (MGI), San Francisco and Shanghai. Prior to this, he founded the Schlevogt Business School, the first school in Germany focusing on European-Chinese economic relationships, and served as its President. He was also appointed as the first regular foreign professor in the history of Peking University. Besides, he served as a senior faculty member at the Australian Graduate School of Management (AGSM), a joint venture of the University of New South Wales and the University of Sydney.
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INNOVATION HONEYMOON
Toyota Type Value Co-Creation in Digital Businesses : The New Paradigm
If social network is going to bring any value co-creation and innovation in digital business, the company must create communities with stakes for its members. Toyota did just that by having stakes in suppliers and partnering with them. That is what made Toyota Production System, otherwise known as Lean Manufacturing, successful.
History is filled with examples of successful value co-creations. In any so-called "developed" country, the underlying model is value co-creation, where a strategy or a platform is established, often under an able leadership, to bring together the citizens to achieve a common goal.
In the modern times, however, where companies often cross boundaries of their own confines to find innovative ways to create value not only for themselves, but to third parties as well, value co-creation has taken a different notion. If one considers a world model for creating value, Toyota, the top Japanese automobile maker, must be the leader of the pack.
Toyota is, of course, not just creating value for itself; it is co-creating value for basically everyone in its value chain, from downstream suppliers to upstream auto dealers and finally to the customers who buy its brand of automobiles.
Exploring how Toyota creates value and understanding the value co-creation process to see if companies in digital businesses could learn something can be of interest, especially for those businesses which are trying hard to become competitive under the enormous challenges and opportunities brought upon as a result of the emergence of the Internet.
Toyota
Toyota Motor Corporation, established in 1937, is a relatively old. In terms of entrepreneurship and innovation, Toyota has an illustrious past.
The history of entrepreneurship in Toyota goes back to Sakichi Toyoda, born in 1867, who worked relentlessly and invented numerous wooden devices to automate weaving. His inventions played an important role in revolutionizing the textiles industry in Japan. In 1891, at the age of 24, he obtained his first patent for the Toyoda wooden handloom.
Focusing on continuous improvement or "Kaizen," which is even now a trademark of Toyota Corporation, Toyoda, in 1924 invented the Type-G Toyoda automatic loom with non-stop shuttle change motion, the first of its kind in the world. The Type-G was a "groundbreaking invention" containing a number of features such as automatic thread replenishment, etc. Platt Brothers & Co. Ltd., of England, a world leader in the loom industry of the time, paid the equivalent of one million yen for transfer of the rights to Type-G loom. Toyoda earned the title "King of Japanese Inventors" for his contribution to Japanese industry. He established the Toyoda Automatic Loom Works in 1926. His son Kiichiro Toyoda was put in charge of the auto-making division at Toyoda Automatic Loom Works. The new business was a change of strategy from that followed by the senior Toyoda. The Automobile Department later would become the Toyota Motor Corporation.
Among the corporations that symbolize Japan, Toyota is the leader. But, Toyota's path to success was not an easy one. In fact until the 1950s, Toyota could not break into becoming a viable business. Also, Japan's venturing into the automobile industry itself was so bad that the Governor of Bank of Japan, in 1950, was reported to have recommended companies to "give up such capital-intensive industries as automobile manufacture" altogether.
But, Toyota hung on and started to turn things around dramatically to become the top automobile maker in the world, thanks to a new way of auto making, known as Toyota Production System or TPS.
The crust of TPS rests on two pillars: Jidoka or automation and Just-In-Time or JIT. Why automation? Indeed its roots go back to the Type-G Toyoda automatic loom.
Automation makes the production fast. But, automation also needs standard parts in order for the machines to work without getting clogged in the manufacturing process.
In the loom machine that Toyoda invented, there was a device to automatically stop the operation if any one of many warp threads broke or the weft thread ran out. The same principle in functioning has been carried on over the years. Even today, a visitor to a Toyota factory can witness how this type of automatic monitoring mechanism had been extended to an entire production line wherein the entire functioning would come to a stop the moment any one of the process steps did not work according to the specification. (See Exhibit I).
And, JIT, of course, is an original Toyota manufacturing philosophy, which is used by companies across the world even today to improve a business' performance. JIT is a strategy that basically aims at elimination of wastes, thus, earning the name lean manufacturing to describe it alongside TPS. One of the prerequisites of JIT manufacturing is enhancing the relationship of the company with the entire supplier network by making the whole production and assembly process efficient.
TPS and Suppliers
At the outset, it may be important to understand as to why Toyota would need suppliers?
A modern automobile is said to have about 5000 or so major parts, but when all the smaller parts are included, a complete automobile has about 20,000 parts. According to Toyota, just the engine assembly requires about 500 parts
In the 1920s, when the automobile industry was in its infancy, England was the first country to start manufacturing on a commercial basis. Then, the manufacturers in the country produced all the required automobile parts internally. But, when the American companies - there were hundreds of such at the beginning - got into auto business they used a different strategy by relying on the existing bicycle industry to procure the necessary automobile parts. It is said that in 1920s, there were around six hundred automobile part makers just in Chicago, Outsourcing the manufacture of the automobile parts and performing the final assembly of the parts pushed the production volume up and soon American companies became the world's leading automobile manufacturers - a title they held until recently.
When Toyota started its auto business in 1930s, it basically tried to copy the technology from models developed by American companies such as GM, Ford, and Chrysler. First, it emulated the engine design and functioning and then gears, two of the most important components in an automobile. For most of the rest of the parts, it relied on outside suppliers. Overcoming the initial difficulties, Toyota eventually succeeded in making a decent quality car.
But, Toyota faced difficulties quite often from the automobile part suppliers since the quality of the parts supplied were not up to the mark. As such, Toyota had to rely on foreign suppliers for obtaining the parts, which increased the manufacturing cost and also disrupted the production process due to frequent supply delays. In order to ensure an undisrupted supply of quality automobile parts and, follow the principles of TPS, Toyota had to develop and maintain good relationships with the suppliers, which included sharing knowledge. This strategy was improvized upon in 1950s and eventually became part of TPS.
Indeed, the modern automobile manufacturing industry, around the world, is heavily dependent on part suppliers. Studies have often characterized the success of an auto maker to the nature of relationship between the supplier network, which could number hundreds or even thousands of companies, and the automobile manufacturer, which basically performs the final assembly operations.
For sales in 170 countries, Toyota operates more than 50 production bases around the world. That needs operating an excellent supplier network. Toyota is known in the industry for maintaining excellent relationships with its suppliers. In order to keep suppliers happy, it is essential that Toyota relies on value co-creation.
How can Toyota create value for itself? Surely, by ensuring that suppliers provide excellent quality automobile parts and at cost-effective prices. But, what about suppliers? What could add value to them?
Value co-creation for Toyota and its suppliers is indeed a major part of TPS. TPS calls for Toyota, among other things, to focus on cost control, quality, standardization, and use common platforms. The basic idea of focusing on all these is to cut down waste, or "muda" and making the whole supply and production chain lean.
One could visualize the structure of TPS in terms of a house. As stated earlier, TPS is heavily dependent on automation and JIT. However, to ensure the continuous supply of parts, attention must also be paid to the supplier network. All of these can be assumed to be the walls that sustain TPS. Supplier network is a partner to Toyota's efforts to maintain quality and the company relies heavily on standardization of parts and uses common platforms. Platform structure is an effective method used by Toyota to manage the production process by creating cross-functional teams and keeping the customer as the main focus. The platform structure helps Toyota in effectively following the methodology of concurrent engineering. Thus, the foundation can be thought of layers comprising of cost control, quality, standardization, use of common platforms, as shown in Exhibit II.
Value Co-Creation: The Toyota Way
The guiding principle of Toyota for its suppliers states five main expectations:
Toyota expects its suppliers "to grasp these expectations and to address them a step ahead of their competition through innovative products and technologies." The five expectation points of Toyota have been chosen by keeping the customer as the central focal point. While safety, quality, and cost may have a direct impact on the customers, the remaining two will make sure that customer service is at the best possible level. By ensuring that the suppliers adhere to these principles, Toyota can create value for itself and also grab a huge market share.
Indeed, keeping track of a supplier network as extensive as that of Toyota's is not a simple task. Toyota's suppliers are basically categorized into a hierarchical system comprising of 4 layers:
It must be noted that each company (supplier) in any of the layers could have its own sub-suppliers, making the entire network a multi-tier supplier network.
Toyota deals directly with partners, which includes companies such as Denso, Aisin, and JTEKT, each of them currently employing more than 10,000 workers. Denso, the biggest of the partners, with annual sales of more than $30 bn, employs over 35,000 workers in Japan itself. Toyota normally holds a stake in partner companies. In each of the three partners mentioned above, Toyota has a stake of about 23%. Toyota, in Japan itself, has 14 partner companies that supply different auto parts.
The engineers of Toyota often have direct interactions with the engineers in these partner companies. They are even invited as "guest engineers" into Toyota's own design centers for 2-3 years stay while working on key projects. Toyota expects its partners to have their own R&D capabilities. The partner companies are also open to deal with other automobile companies also. Denso, for example, does about 50% of its business with Toyota, and the rest with many of Toyota's competitors, including GM and Ford.
Most of the suppliers (mature companies) normally deal with Toyota by getting specifications and then providing parts, usually less complex, according to the same. Consultative companies are the ones making standard products such as batteries and tyres. Toyota consults such companies at the product design stage itslf to make sure the parts would fit its end product. And, contractual companies are picked up by Toyota to supply cataloged parts, such as nuts and bolts.
While studying the TPS, in terms of social media, it is interesting to observe the underlying network relationship. Each of Toyota's suppliers - partner, mature, consultative, or contractual - could have its own sub-suppliers, thus making a sizable network; it may not number hundreds of millions, as we see in Facebook, but it could easily be in thousands.
Often TPS values, instigated by Toyota, propagate in this network. And, it is well known that Toyota itself gets many of its ideas from the suppliers. Thus, there is considerable value creation, both ways, in this supplier network.
Let us take the case of Denso, one of the suppliers to Toyota. As mentioned, it is a $30 bn plus company with operations in 32 countries and a worldwide workforce of 120,000. Between 2005 through 2009, its profits increased gradually from more than one billion to three billion US dollars. It finally suffered losses in 2009 due to the global financial crisis. It is clear that the company has certainly created value in terms of earning profits.
Another indicator of value co-creation can be measured in terms of innovation. Denso alone applied for more than 3000 patent applications every year on a regular basis. Creating "innovative products" is one of the Toyota's guiding principles for suppliers and the high number of Denso's patent applications, each year, is an indication of how closely this principle was followed by its partners. But, a more reflective indicator is the joint number of patents Toyota files with its suppliers, as highlighted in Exhibit III (Source: Kanno-2007).
Digital Businesses and SNS
The digital age started with the invention of transistor at Bell Laboratories in 1947. Digital technology took a new turn when Sony, under the able leadership of its founders Akio Morita and Masaru Ibuka, invented the world's first transistor radio in 1955. After that, the digital age had expanded to computers, TV, Internet, mobile phones, music players, and host of other gadgets. And, the expanding use of Internet in the early 1990s created the huge digital media extravaganza that is still a goldmine for innovation and new businesses, despite the setback caused due to the dotcom doom in the year 2001.
Internet has created quick, efficient and economical ways to bring people together. Today, Social Networking Sites or SNSs have become huge communities in terms of size; rivaling even the most populated nations of the world.
If Facebook were to be considered a country, it would be the third largest nation of the world. Indeed, it is at present the fastest growing "nation" of the world. And the important aspect that distinguishes this SNS from any existing nation is that everyone who is a member is `wired', has an e-mail address, and has his or her own community and shares information with other members of the community. (See Exhibit IV)
Communities inside the huge SNSs or communities formed for a special interest hold the most vital data in terms of value. When, politically unknown, Barack Obama was exploring his chances of winning the US Presidential elections, he chose Facebook to connect with the youth. Within months, thousands of groups had sprung in various SNSs, each having different interests. These special interest groups gave very interesting tips to Obama for his campaign speeches and fundraising activities.
Communications within SNSs often generates many ideas, but not all the ideas are good ones. Research has shown that the probability of generating ideas that may lead to good innovations will go up when the information or knowledge being exchanged is relevant to the subject of discussion. This can only happen by creating special interest groups or communities within an SNS or creating platforms for such SNSs to emerge.
Thus, when considering an SNS, it is important to distinguish the communities within into two groups:
For the first type, let us look at the general structure of Japan's largest SNS, mixi.co.jp, with 18 million members, as highlighted in Exhibit V. The largest community within mixi is a one dedicated to Gourmet Food with about 2.5% of the members of the entire SNS. The largest communities for iPhone and Sony PlayStation, both popular among the youth, have about 0.4% and 0.2% of the members of the community respectively. Most of the members of these large communities are general users looking to exchange comments about popular applications.
For the second type, companies or third parties need to create special interest or "objective" in order to attract members. How would they do that?
Traditionally, for example, if one considers a company as a whole, its employees form a community. Does such a company-based community, by virtue, makes an SNS? Certainly not, if one uses the contemporary definition of SNS as an Internet community.
But, a company could connect the employees via Intranet, e-mail, etc. and make the whole company or large part of it, an SNS. The company could even go further to expand such an SNS to its partners as well. Even the company's customers could be encouraged to join this SNS. For example, in Japan, there are `cosmetic' company websites offering various services to the general public if they use the company's latest products and give their comments about the products via the Internet. Even though different members in such an SNS have different roles, each one has some stake or an objective to stay within the SNS.
Another model that has proved successful in this conext is the Software Development Kits or SDKs. Apple, Google, Facebook, all offer such SDKs for free. The objective is that developers would use the open standards available with SDKs and develop third party applications.
The developers who would download a SDK, in turn, could make many sub-SNSs among themselves. Often, they take the form of software forums and blogs.
We can call the second type of SNS an "Objective SNS", because the creator has a clear objective to take advantage of the community; and, the members as well have a clear objective in joining.
Value Co-Creation by Objective SNSs
These SDK-based SNSs can be quite large and are built on a specific platform or created with a specific objective in mind. Exhibit VI shows the amount of SDK downloads and the number of applications that had been actually developed using the respective SDK as a platform for three companies Facebook, Apple (iPhone) and Google (Android).
Where is value creation or innovation in the SDK-based SNS - what we called the Objective SNS?
For the business models used by Facebook, iPhone, and Google's Android, the underlying value is the number of users. But, the users get attracted to such models, because these make available large number of applications, some free and others sold, at very low prices. The more the applications the higher is the number of user in general.
At the same time, a third party developer, could become a "partner" of the business model, by freely downloading a SDK and developing an application by using his or her own resources and money, but with the expectation that the application would be accepted by the likes of Facebook, Apple, or Google - whoever gave the SDK for free - and the application would be a hit. If the application sells well, the developer would get a part of the sale. In case of iPhone applications, for each sale, Apple retains 30% of the revenue and 70% is given to the developer, value co-creation for both parties. The whole community as well could get monetary benefits by windfall due to the increased popularity of the entire business model if applications keep attracting increasing number of users to the business model.
Objective SNS and Toyota Production System
However, for the SDK-based SNS system to work, it has to pass through several important steps.
One such step is that the application must pass a virus test. This is to make sure that the users of, say Facebook, iPhone or Android Phone, would not damage their hardware or software while using or accessing this particular application. In other words, this is a kind of "safety" check.
Note, "Safety" was one of Toyota's guiding principles, as stated earlier.
Another step of course is quality. If the application developed by the third party supplier is of poor quality, it will damage the reputation of the "parent company", which in this case is the creator of the SDK, like Facebook, Apple, or Google. Note again, "Quality" was one of Toyota's guiding principles, as well.
Indeed, it is easy to see why the remaining guiding principles: Delivery and Production, Cost, and Technological Capabilities, as also quite relevant for this value co-creation to succeed.
How Objective-SNSs used in Internet or digital businesses, in general, can learn from TPS may be explored by making a thorough comparison of the relevant business entities in both the systems. To begin, with we can consider a SDK-based Internet business model.
For TPS, the community is the supplier network and Toyota, the parent company. For the SDK-Based Internet business model, the community is the Objective-SNS and the parent company - e.g. Facebook, Apple, etc.
The remaining key elements of TPS, shown in the foundation in Exhibit II, along with the guiding principles, can be compared to the equivalents in the Internet model as shown in Exhibit VII.
It must be noted that, when adopting Toyota's TPS model, there are still some areas in Internet-based businesses involving SNS partners that can be "improved". Two are marked in color in the Exhibit VII table, on the right side column.
One is "Delivery" of software. Here we must note the difference between software and a piece of a part in an automobile assembly, where the products are more or less modular. Each component can be made or assembled from parts which, in turn, have been created by following clearly stated standards and specifications. In the software business, however, software integration is still a gray area that often requires sizable customization.
The other gray area in software business is "Technology. In TPS, the technology could be a new production method to manufacture the same product. Such new technologies could also be jointly developed by the suppliers and the R&D department of the parent company, Toyota in this case. In software development, new technologies, such as new algorithms to execute an intended function can be creatively designed. But, how it could be patented or intellectually protected is not very clear. Also, unlike in manufacturing car parts, where the same part would be made thousands or even million times, software is in general created only once. Of course, once created, a software application can be copied or be downloaded thousands or even million times, when distributed to customers.
There have been attempts to apply the TPS (Lean Manufacturing) technology to software manufacturing companies. In one example, Wipro, one of the top Indian software companies, based in Bengaluru, had attempted to institutionalize lean manufacturing in an attempt to duplicate the success of TPS in software business. It is reported that Wipro saw limited success. But the approach used to link TPS to software was not comprehended in terms of a company-wide SNS community.
In software manufacturing, which is a critical industry for India, it may be vital to apply new strategies, such as TPS or its equivalents, to stay competitive. For using the TPS model the ideas highlighted above could be used. Further research into this is currently being pursued by the author.
Dr. Jay Rajasekera has been associated with International University of Japan, Graduate School of International Management (GSIM), since 1995. He is currently the Director of MBA Program and Professor of Management Systems and IT Strategy. Previously he served as Dean and as Associate Dean of GSIM, which is considered the top ranked Business School in Japan, according to Economist ranking.
His professional career started in 1984 at AT&T Bell Laboratories in New Jersey, USA. Among the contributions he made while at Bell Laboratories include designing computer algorithms for the world's first Undersea Fiber Optic Cable, TAT-8, between the US and Europe, which won two awards from Bell Laboratories. His patented algorithm has been in use for designing multibillion dollar Undersea Fiber Optic Cable systems, which carry a good percentage of the Internet traffic today, by major telecommunication carriers. He is an advisor to several IT companies in Japan and overseas. He has published more than 40 technical articles and co-authored three books. His opinions had appeared in Asian Wall Street Journal, Japan Times, and Japan's top business newspaper Nihon Kezai Shimbun. He has wide consulting experience with top IT and telecommunication companies both in and outside Japan, and with government organizations in both in Japan and other countries.
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INNOVATION HONEYMOON
The Real Power of Collaboration : Collaborative Business
Collaboration is a purposeful, strategic way of working that leverages the resources of each party for the benefit of all by coordinating activities and communicating information within an environment of trust and transparency.
Collaborative Rhetoric
A clear sign that organizations find a skill or ability valuable is when it begins to find its way into the competencies used to evaluate employee performance. Such is the case today with collaboration. Even the recent awarding of the Nobel Peace Prize to President Barack Obama appears to be in support of the collaborative approach he espouses to international issues. However, collaboration isn't a single skill or competency - it's a purposeful way of working intended to gain access to and leverage valuable resources in pursuit of objectives. This is the real power of collaboration: Combining the knowledge, expertise, relationships, and other resources of people in ways that benefit and help achieve the objectives of all concerned.
Collaboration is generally considered to be synonymous with cooperation or teamwork. But neither cooperation nor teamwork adequately describes collaboration. Cooperating is only one step beyond acquiescing and cooperation can be voluntary or it can be forced. Working on teams is likely a required aspect of every professional's job. True, collaboration does require working together with another party as teamwork implies. It also requires cooperation. But neither demands the resource leverage that is the advantage offered by collaborating. No one can be forced to give of their insights, make a recommendation, or use the passion of another to create new energy, direction and value, all of which are integral to the true nature of collaboration.
Likewise, having the tools of technology at one's disposal doesn't make collaboration occur. Yes, essential information may be more easily shared and transparency promoted through technical means. With so many people working from remote locations, tools that help people work together more efficiently are needed. Technology is an enabler of collaboration, and nothing more.
When practiced appropriately collaboration is a set of behaviors - a way of working that involves coordinating specific activities and communicating certain information to leverage resources in the purposeful pursuit of objectives. It requires an environment of trust and transparency. Collaboration opens up the possibility of accessing the resources, knowledge, and relationships other people and organizations have and using each party's resources for mutual benefit. It also raises the specter of counting on someone who has no stake in your success. Thus, it is a sophisticated ability that depends on much agility in utilizing a range of skills through an iterative process of achieving desired outcomes. Collaboration is a means to an end, not an objective in and of itself.
Collaborative Reality
Working collaboratively requires people to make assumptions about how to achieve their objectives, apply knowledge and skill in a particular situation, assess progress, and then determine their next step. Thus they need the freedom to use their best judgment in any given circumstance, without prescribed rules. There are three key principles of collaboration which form a backdrop for all such activity:
Collaboration is fit for purpose
Collaboration is a continuum, not an on or off switch. We collaborate a little or a lot depending on the task at hand. The intensity of collaboration is defined by the degree to which activities are coordinated; information of appropriate relevance, quality, and timeliness is shared; and participants' resources are leveraged for the benefit of all parties. The intensity of the collaboration is dependent on the nature of the resource leverage sought. The more one seeks to gain, the greater the collaborative intensity needed. Any greater level of collaboration implies that resources are squandered. Any lesser level of collaboration and the endeavor leaves money on the table or worse, may fail outright.
In this way, collaboration is directly linked to trust, without which no collaboration will occur. Like collaboration, trust also exists on a continuum. There needs to be enough trust to engage in the activity at hand, and the endeavor must be collaborative enough to achieve its objective. With this in mind, think about the growth of social networks, such as Facebook and Twitter. One need not collaborate with great intensity or have a high degree of trust if the purpose of the network is to connect with friends and provide updates on activities. Yes, some information may be exchanged, but it is generally of limited richness. And unless it is an activist network where the purpose is to influence decisions and policy, there is generally little coordination of activities within socially oriented networks.
Contrast a social network with the collaboration that must occur to develop and market a new product within a strategic alliance. Not only must activities be coordinated and relevant information exchanged among counterparts, but all of the individual activity must come together so that objectives are achieved by organizations and individuals alike.
Collaboration has many currencies of value
The reason for any collaboration is the currencies - sources of value - that can be put to use in achieving both the overall intent of collaborating and each party's individual objectives. In collaboration, one gets what one wants by helping others achieve their desired outcomes. The fuel for this exchange of value is "relationship currencies"; the insight, access, knowledge, and physical resources of one party, which another can only tap into because a collaborative relationship exists. Relationship currencies, such as access to a thought leader or decision maker, knowledge of a company's technology roadmap, or credibility through association, are only available within the context of a relationship built on trust and reciprocity.
People implicitly use relationship currencies all the time in their interactions with others. When their existence and use are made explicit and purposefully linked to strategic objectives, they become powerful instruments for creating value. This is especially true when one considers that the knowledge, connections, experiences, and skills of people are the primary drivers behind business success today. People control how they share these sources of value and only do so when they feel they'll be properly used in the conduct of good work.
It is a truism and reality that one must give to get. A salesperson won't introduce a partner to one of his or her sources of information regarding potential customers in a joint territory, unless the salesperson has a relationship with that partner and is confident the introduction will be treated as valuable. The salesperson expects that the partner will reciprocate and offer something that will be of value to him or her at a future date. Collaboration occurs over time, with many interactions comprising the relationship. A single interaction may be 70% you gain and 30% the other party gains. The next interaction could be 20/80 in favor of the other party. What matters is that the parties believe that the give and get balances out over time. One-sided relationships don't last; however, the give back doesn't have to happen immediately. The best business relationships have a rhythm to them. The give and get over time is what builds trust, validates or invalidates assumptions about how to achieve objectives, and develops innovative ways of creating value for all concerned.
Using relationship currencies takes time and effort, as does offering yours to someone else. Unless the value of the currencies relative to their utility to the recipient for achieving his/her goals is greater than the effort it takes to access and use those currencies, collaboration won't succeed. Collaboration is work. It challenges traditional ways of thinking, acting, and relating in business. As Chris Huxham, professor at the University of Strathclyde, Glasgow, Scotland says, "Don't collaborate unless you must." We agree. However, given the complexity of the challenges of work and the problems organizations are seeking to solve, collaborate we must.
Collaboration occurs in networks
One can think of organizations today as dynamic collections of components which are brought together because of their individual capabilities and assembled for a specific purpose. Each assemblage is a network. Every organization has multiple customer needs it seeks to fill and thus will have multiple networks and sub-networks in which it operates. Within pharmaceutical companies, each therapeutic area can be thought of as a network, comprised of internal personnel as well as partners and other external parties. Within that there are multiple teams that must work together and individuals must navigate all of these groups. That's the reality of organizational life today - a constant defining and redefining of boundaries, finding commonality of purpose amongst various objectives, and building shared understanding and alignment. No wonder collaboration is showing up as an area of professional development!
What is apparent, however, is that seldom do people stop and consider the time and effort of collaborating relative to the work of their "day jobs." As a result, it is often considered to be "extra work" and not worth it if one has not previously taken the time to build necessary relationships. For the flow of currencies to occur - the resource leverage that is the purpose of collaborating - one must have clarity around the communication and coordination that helps each party to achieve their shared and individual objectives. This sounds simple, but how many of us really think about our goals and carefully identify how we intend to achieve them? Take a look at your calendar or diary for the next week. How many of the meetings and phone calls scheduled directly contribute to achieving objectives?
Thus the ability to prioritize amidst all of this complexity is a critical skill in building one's ability to collaborate. Prioritizing the use of resources is a key objective of management. Individuals, too must prioritize where they put their chief resource - their time and energy. Put your time and energy into the relationships that offer a return and you'll enrich yourself and be better able to accomplish your own objectives. This simple equation (Exhibit I - The Benefit of Collaboration) can help make decisions about when to collaborate.
If a simple "gut check" is insufficient, then criteria can be established and ranked to provide a more objective analysis, even when the value is not quantifiable financially. For example, if an individual has expertise highly relevant to a problem a team is trying to solve, but because of that expertise it is almost impossible to get that person as an active participant on such a team, it is likely worthwhile to spend more time and effort in understanding how that expert can benefit from participation on the team. Getting someone to do what you want of them because they see that it will benefit them is the skill of negotiating the give and get. The skeptics among us may see it as "using" or "manipulating" someone, but that is a false criticism as long as both parties benefit. If both parties don't benefit, it isn't collaboration.
Without a doubt, developing the collaborative ability of every individual and the organization overall is important to business success. However, simply including collaboration as one of many skills the organization deems important, really misses the point. When collaborative networks are how the organization needs to be thought of, then collaboration isn't just a single skill, it is how work in a network gets done. It takes many different individual skills to collaborate effectively, as well as an organizational environment and structure that support it (see Exhibit II - Key Collaborative Competencies).
These competencies have varying levels of mastery and are rarely fully embodied in any one individual. Depending on context, some have more importance than others. Yes, there are some people who are naturally collaborative. At times, they can be viewed as manipulative because they always seem to get what they want. The best way to describe these individuals is entrepreneurial - they rally people and their resources around a vision - their vision. Data collected by The Rhythm of Business on more than 8,000 individuals shows that better collaborators are more successful. They simply know how to combine their tool box of skills with their currencies and the currencies of those in their network to accomplish more for less. In today's business environment, that is a winning formula.
Using the Real Power of Collaboration
Organizations collaborate to achieve objectives. So do people. Working collaboratively is an iterative process of using Give and Get thinking to accomplish objectives. The key collaborative competencies are put to use in this thinking model (see Exhibit III - The Iterative Process of Working Collaboratively) by relating each step in the process to a specific question focused on accessing and leveraging the resources needed to achieve objectives:
Following this process and applying the key skills of collaboration at the right time in the process helps embed collaboration as a way of working, a way of developing solutions to complex challenges. There are not hard and fast lines between the steps; rather the alignment of specific skills with the steps suggests emphasis.
In the planning stage, what matters is to prioritize objectives. What are you trying to do? Answering this question provides an initial screen on the complexity of all the many networks that comprise one's activities. It also aligns individual behavior with organizational strategy. People should clearly see how their individual objectives contribute to achieving the vision the CEO has set forth. If what you are doing doesn't align with that, why are you doing what you are doing?
In the preparation stage, one's co-collaborators are engaged. It is in this stage of collaboration where what is needed to accomplish objectives is defined and partners sought. One must build relationships, develop a common understanding of what each is trying to accomplish and identify where those objectives intersect. Much of the conventional thinking about collaboration is based on the assumption that the parties must have common goals. The perpetuation of this myth is perhaps one of the greatest hindrances to collaboration. Yes, collaborators work on something that is mutually beneficial in that it results in the exchange of relationship currencies each party can put to use toward their individual objectives. But they don't need the same purpose for collaborating. If that is the case, they are more likely competitors than collaborators. To take a simple example, a biotech company and a big pharma are collaborating on developing a drug. Both want the drug to come to market and be a commercial success, but the motivations for collaborating are different. The biotech wants development resources and access to customers. The big pharma wants a new product it can sell. The ability to influence someone or some organization over which one has no authority begins to come to bear in this step as a means of engaging the other party - by helping them see that it is in their best interest to work together, although the objectives for working together are likely different.
It is also essential in this step that the parties develop understanding. The many differences that exist imply the need to step back and ensure each party is clearly understood. No two collaborations are the same and the parties may have different mental models. Misunderstandings can occur over the use of certain terms that seemed clear at the time they were negotiated. For example, two parties agree to split expenses for a launch meeting "fifty-fifty." However, one company brings 30 people while another only brings 10. The company with 30 people expects to split total meeting expenses, while the other party only expects to pay for 10, representing its "half." This type of misunderstanding can cause discord and lead to a breakdown in trust.
The next step, interaction, is where the actual collaboration occurs. In this step the exchange of currencies takes place as the work is carried out. It is also where differences of priority, philosophy, and other conflicts may arise that have to be worked through. To use a simple example, one party may be convinced that exhibiting at a trade show is the best use of available resources, while the other party thinks it is not. Good collaborators will take this diversity of thought and develop a solution that incorporates each party's objectives. The best solutions aren't compromises, which only offer a "half a loaf" to each party. Instead, they forget about the position each party may have taken and work to understand their interests - what really matters to them - and forge an innovative solution. Interests are often unstated and may be hidden, therefore having a relationship built on trust and transparency is essential to understanding what is really motivating someone. When one understands "what is in it for me" from the other party's perspective, it is much more likely that a solution including currencies of value to both parties is found.
The fourth step, analysis and refinement, focuses on results and what has to happen differently. Accountability is required by all concerned. Nothing destroys trust like a failure to demonstrate trustworthiness. The collaborators also have to establish milestones or metrics against which to objectively assess progress toward their objective. Defining success should be done in the planning as part of developing the shared mental model. When collaborating one-to-one, the analysis could be as simple as asking oneself, "Did I get the introduction (or expertise or any other currency) I wanted? Did I ensure that the other party benefited?" If not, what should be done differently, including perhaps, looking for someone else to provide the needed currency? This is an essential part of collaboration that should not be overlooked. In fact, in firm-to-firm collaboration, regular monitoring of the effectiveness of the alliance or partnership has been shown to be the most important tool for ensuring success.
The four steps of the iterative process of working collaboratively could occur almost simultaneously, or over a longer period of time. The key is to ask oneself the questions:
Some people intuitively understand the give and get and how to rally people and their resources around a vision. For an organization to fully partake in collaboration with other entities it must not only have people with the skills, it also needs processes and systems to make collaboration an organizational capability. There are many challenges to developing a pervasive organizational ability to collaborate. Collaboration is complex, time consuming, and sometimes counter-cultural. Effective collaboration requires growing trusting, purposeful, mutually beneficial relationships through which you can access and leverage resources. That's the real power of collaboration.
Jeffrey Shuman has been building networked business models and presiding over global collaborative supply networks and strategic alliances for many years. Shuman has co-founded and operated five companies in diverse industries. He has consulted for numerous others, including startups, Global 10 companies, and national economic development agencies. He is co-founder of The Rhythm of Business, Inc. and professor of management at Bentley University, Waltham, MA.
Together with business partner Jan Twombly, Shuman has co-authored numerous books, articles, and white papers and regularly speaks at a variety of venues around the world on the ongoing transformation of traditional organization structures to dynamic collaborative networks.
Janice Twombly is co-founder of The Rhythm of Business where she has led the development of a comprehensive management methodology to design, implement, measure, and assess the effectiveness of collaborative networks, including strategic alliances, public-private partnerships and cross-business unit research teams. Engagements include intervening in troubled situations, coaching good collaborations to become great collaborations. She works with management to develop organization-wide collaborative capability as well as the systems to manage a network of networks, often in conjunction with an organization's strategic alliance professionals.
Janice Twombly, has held several leadership positions - including partner and human resources director in a leading Boston CPA firm and president of a business conference and publishing company. She has formed and operated collaborative networks to advance the use of microcredit and basic education to help women out of poverty and was a delegate to the global Microcredit Summit. She has board level experience in both commercial and not-for-profit businesses. She currently serves on the Finance Commission within her local government and is a member of the executive committee of the Association of Strategic Alliance Professionals
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INNOVATION HONEYMOON
Leadership is Not a Label : Thought Leader's Perspectives
Once you have earned your leadership platform, never take the privilege of having a platform to influence other people lightly. It can take many years to earn a platform as a leader and a few minutes to lose it.
It's official. I'm at the halfway point in my career. 25 years ago, with my mechanical engineering degree in hand, I started my career as the head soccer coach at Tri-State University in Angola, Indiana. Over the last 25 years of working with individuals and groups the topic I have studied the most is leadership. It is my favorite topic of all. Here are five lessons I've learned about leadership.
Lesson #1: Leadership is Not a Label
While studying leaders and working side-by-side with leaders as an executive coach in over 30 industries, I have always searched for what these individuals had in common. First, here is what they did not have in common: height, size, race, gender, sexual orientation, spiritual focus, or personality type. Leaders come in every size and shape. Some are men and some are women, some are tall and some are short, some are big and some are thin, some are light-skinned and some are dark-skinned, some are straight and some are gay, some are devoutly spiritual and some are atheists, some are quiet and some are loud. I found no title, income level, or authority that ever automatically made a person an effective leader.
Lesson #2: Leadership Means Influencing How Other People Think
After studying leaders for a long period of time, I discovered that leadership really means influencing how other people think in ways that generate better sustainable results both for the organization and the people in it. It is the person's ability to influence how other people think that determines his or her effectiveness as a leader.
Lesson #3: Leaders Answer Four Critical Questions
I did find one thing that all effective leaders have in common. They all actively worked to answer the Four Critical Leadership Questions. Now they didn't call it that and most of the time they didn't write down these questions. However, each person did work to find the answers to these questions and then persevered to implement his or her answers.
The Four Critical Leadership Questions are:
1. What outcome do I want to improve for my organization and why do I want to improve it?
2. Who do I need to influence in order to improve that outcome?
3. What do I need to influence them to think about?
4. How will I influence them?
Take out a sheet of paper and write down your answers to these four questions. Let's go through the four questions together and I'll offer some additional thoughts for each of them.
Leadership is not acting. You can't just walk into a room and say with a deep voice, "Let's go out there and rock the world." Leadership has to be geared toward improving some outcome. On your sheet of paper, write down the specific outcome you want to improve in your organization. Be as clear as you can be about what it is you want to have happen. Then write down as many reasons as you can think of as to why you want to improve that outcome.
After you identify the desired outcome, then write down who needs to be involved in improving that outcome. Be clear about whom it is that you need to influence.
Notice an important point here. The question doesn't say, "What do I need to tell people to do?" If people are just doing something because they are told to do it, what happens when you're not there to tell them what to do? The key is to identify what you want them to think about when you are not present. For example, if your desired outcome is to have customers who are vastly more loyal to your brand than your competitors, you might want to influence your fellow employees to think about the value of significantly more loyal customers. Once people start thinking about that outcome they can come up with all kinds of ideas on how to improve the customers' experience. If they buy into the idea that vastly more loyal customers will improve their careers over the long term, they may very well focus to an even greater degree than you do and in more of a hands-on fashion than you can toward improving the customer experience on a consistent basis.
Now we are getting down to the act of leading, or influencing, others. There are 11 different types of leaders I've met or studied in my career. Each type can be effective in leading other people, and you can be more than one type of leader as you go about trying to influence your target audience to improve the desired outcome. I'll explain the 11 Types of Leadership in just a moment.
Lesson #4: There are Different Types of Leaders
While reflecting on the various individuals I have watched effectively influence the way other people think and generate significant and sustained results for their organizations, I have found that each of them provided one or more of the following types of leadership.
Types of Leaders
1. The Researcher
this person's advice is based on data and carefully selected examples from the past.
2. The Exemplar
this person's behaviors and personal choices model the desired performance so well that he or she influences other people simply by being watched.
3. The Teacher
this person breaks down the idea and explains it so well that other people truly get it and can run with it even when he or she is not present.
4. The Visionary
this person describes a compelling dream of what the future can look like and that vision is what people hold on to as they go about their daily activities.
5. The Storyteller
this person tells stories that convey a powerful point.
6. The Coach
this person engages the other person in a conversation and offers advice based on observed behavior.
7. The Facilitator
this person asks open-ended questions and gets multiple people involved in developing the answers.
8. The Collaborator
this person exchanges ideas with the other person and works together with the other person to develop even better ideas.
9. The Organizer
this person influences other people based on the roles he or she places them in and the way resources are distributed.
10. The Motivator
this person provides inspiring words with an inspiring tone, but his or her impact oftentimes has a short shelf life.
11. The Dictator
this person tells people exactly what to do and how to do it, but this approach is generally only useful in dramatic life-or-death short-term situations.
To familiarize yourself with these different types of leadership, here are a few exercises for you to consider doing.
Think of three leaders who affected your life in an important way. Then scan the list above and determine which type or types of leadership they provided.
Think of a time when you were an effective leader. Then scan the list above and determine the type or types of leadership you provided.
Write down how you will influence the individuals you identified earlier. Which type or types of leadership are you going to provide to influence them to think about what you want them to think about?
Lesson #5
You have to earn your platform in order to lead regardless of the type of leader you want to be in any given situation, you have to earn the right to be the leader. Speaking from a platform is not difficult. You walk up three steps, walk over to the middle of the platform, and start speaking. The greater challenge is to earn your platform as a leader, which is the privilege of having people trust you and be willing to consider your influence. Tony Dungy, the former Indianapolis Colts head football coach, talked about this in his book, Uncommon: Finding Your Path to Significance.
Once you have earned your leadership platform never take the privilege of having a platform to influence other people lightly. It can take many years to earn a platform as a leader and a few minutes to lose it.
What do you need to do to earn other people's trust and their willingness to consider your influence? Anyone can be a leader, but no one is guaranteed to be a leader. Take the time to answer the four critical leadership questions, and then every day act in a way that other people can trust you and will want to consider your influence.
Interviews with Experts on Leadership
A relatively new feature on my website is my Featured Book Recommendations section. In this section I provide an in-depth book review and conversation with the author(s). Currently this section contains interviews with three experts on leadership.
The first expert on leadership is Steve Jamison, who is in my opinion the world's best author at interviewing extraordinarily successful athletic coaches and extracting their insights on leadership and teamwork. He has worked very closely in writing books with the late Bill Walsh, the former head coach of the San Francisco 49ers, John Wooden, the former UCLA men's basketball coach and winner of 10 NCAA Division I Championships, and Brad Gilbert, the extraordinarily successful tennis coach of Andre Agassi and Andy Murray.
The second expert on leadership is Jason Jennings, who has studied in depth more carefully selected business leaders than anyone I know of. In his most recent book, Hit the Ground Running, he studied the 10 most successful new CEOs in the first seven years of the 21st Century.
The third expert on leadership is Roy Spence, CEO of GSD&M Idea City, who along with Haley Rushing from GSD&M Idea City, wrote the book, It's Not What You Sell, It's What You Stand For. These two have worked closely with leaders at Wal-Mart, Southwest Airlines, BMW, and a host of other companies.
A Conversation with Steve Jamison
Insights from working with John Wooden, Bill Walsh, and Brad Gilbert
Dan Coughlin
Steve, you've co-authored three of my all-time favorite books: My Personal Best: Life Lessons from an All-American Journey by John Wooden with you; Wooden: A Lifetime of Observations and Reflections On and Off the Court by John Wooden with you; and The Score Takes Care of Itself: My Philosophy of Leadership by Bill Walsh with you and Craig Walsh. You've also co-authored several other books including Wooden on Leadership, The Essential Wooden, and Winning Ugly: Mental Warfare in Tennis - Lessons from a Master by Brad Gilbert and you.
You have interviewed at length three of the greatest coaches in American history: John Wooden, who won 10 NCAA Division I titles; Bill Walsh, who won three Super Bowls with the San Francisco 49ers; and Brad Gilbert, who coached tennis greats Andre Agassi, Andy Roddick, and Andy Murray.
What have you found that they had in common that made them successful?
Steve Jamison
Beyond a complete knowledge of their profession, they each have, or had, a brilliant capacity for deductive reasoning - an analytical mind. Each was able to clearly see a problem, challenge, or issue, and then figure out how to solve the problem.
Brad Gilbert is considered the greatest tennis coach in history. His strongest attribute is his ability to size up an opponent, which is the "problem" at hand, and identify the key aspects of that problem. Then he can explain to the person he's coaching how to attack the problem successfully. One of his great maxims is never let your opponent beat you with his strength. Figure out a way to force him to try and beat you with his weakness.
Bill Walsh had 20 years of experience as an assistant coach before he became the head coach of the San Francisco 49ers. He worked under great coaches like Paul Brown, Marv Levy, and Al Davis. He had a very well-developed ability to analyze the issues that the 49ers faced combined with years of experience in seeing how other coaches handled similar situations. When he took over the team they had only won two games the year before. By the end of his third year they won the Super Bowl.
When John Wooden took over as the head coach at UCLA in 1948 the team had only won three conference games the year before. In his first year the team won the division championship. He saw what needed to be fixed and went about fixing it.
Coughlin
What differences were there between them?
Jamison
They were born in three different generations. Coach Wooden will turn 100 years old on October 14, 2010. Bill Walsh would be 78 right now. Brad Gilbert is 48. So they have some natural generational differences between them. For example, John Wooden is much more old-fashioned. He has more of an old school approach. He doesn't drink and never swears. He has a very strict personal code. Bill Walsh was more of a regular guy. He liked to have a glass of wine, he swore occasionally, and he enjoyed playing blackjack once in a while. So they are two different types of guys. Brad - he loves Metallica. Coach Wooden loves Lawrence Welk. Vast differences.
However, Wooden and Walsh had very similar leadership styles. They were both very much ethics-based coaches who demonstrated real care and concern for the members of their teams. John Wooden said that next to his own family his players were the people closest to him. He calls his former players his extended family. Bill Walsh didn't describe it exactly that way, but as long as his players and staff members didn't cross him he treated each of them with a great deal of respect and dignity. However, when someone did try to undermine his authority he did not hesitate to let the person go. He was very ruthless in that sense.
Coughlin
In my opinion, you have become the best author in the world at extracting powerful insights from highly successful athletic coaches. When you spend time with a great sports coach, how do you create an effective connection with the person that allows you to garner such powerful insights from them? What is the process you use when you craft the questions you are going to ask of these individuals?
Jamison
I've been very fortunate. I've worked with three of the greatest coaches in American history. I didn't have a plan laid out to write books with these three people. It happened little by little. My first book was with Brad Gilbert. We happened to belong to the same tennis club in California. He was a pro outplaying guys like McEnroe and Borg. I was just a recreational player. We got to know each other and the more I got to know him the more I realized that his insights and coaching methods could make for a great book. Winning Ugly became the biggest selling tennis book worldwide in the last 25 years.
Soon after I interviewed John Wooden for an article I was writing. I thought about what Coach Wooden said and I felt very strongly that it was valuable and would make for a very good book. It took me six months to convince him to work with me to write the book, but since then we've written several together. He and I get along very well. Sometimes he will say to me, "Steve, you write it better than I say it." I say, "No, that's not true. I've just put your ideas down on paper and organized them for the reader."
There's no secret to the questions I ask. I don't see myself as a great interviewer. I have a genuine interest in what the person has to say, and I'm very curious about their ideas. The other big thing is trust. If the other person trusts me then he will be more forthcoming. Also, I have a passing knowledge of sports, but I don't ask extremely detailed questions about why the coach did a certain thing in a certain situation on a certain day. I don't go into the crazy details of sports. I'm more interested in the person's ideas regarding leadership and important events in their lives than in discussing X's and O's. The real key is to show interest in what the other person has to say.
The one value I will take credit for is my ability to take what they say and put it down on paper in a way that is accurate and reflects their style, sensibility, and substance. As you read the books, you don't sense Steve Jamison is in there at all. You feel as though the coach is talking to you directly. These coaches are the stars, obviously not me.
I received an e-mail from a reader who told me he was at an airport bookstore. He had already decided that he was not going to buy any leadership books. He said coaches who tell business people how to do their jobs drive him crazy. Then he started reading My Personal Best by John Wooden and me. He wrote, "I thought John Wooden was standing there next to me talking to me." I took that as a big compliment. He bought it, too.
When I was writing my first book with John Wooden I sent my dad an early manuscript. He said, "Steve, everything John Wooden says is pure gold. Don't mess it up." So I've always tried to stay out of these books as much as possible. Readers want to learn from these coaches. My job is to present in its purest form.
Coughlin
The title of your newest book, The Score Takes Care of Itself, by you and Bill Walsh is intriguing to me. I have witnessed a great debate over the years among business managers about how to generate great business results. Some believe and say, "If we do all the right things, then eventually we will achieve great results." Other managers believe and say, "We have to set audacious goals in order to achieve great results." Based on all of your work with these three great coaches, what are your thoughts on this management debate?
Jamison
I tend to repeat what they believe. Bill Walsh said the score takes care of itself. And he really meant that. In our conversations, he explained how he placed his emphasis on doing things the right way. His primary focus when he took over the 49ers was not on telling everyone when the team would win the Super Bowl. He talked a great deal about his expectations for everyone in the organization. He wanted players, coaches, and staff members to focus on executing the details of their roles.
John Wooden has some maxims on this topic that I really like. He says, "Little things make big things happen," and "There are no big things, only an accumulation of little things done well." He never said, "We will win a championship this year," or "Our goal is to go undefeated." He never talked like that. He never announced an audacious goal such as winning a national championship. He focused on doing the right things right now.
For example, he started every season by explaining to the players at the first practice how to put on their socks. This was not a symbolic act or some kind of joke. He really wanted the players to put on their socks properly in order to avoid blisters, pain, and injury that could ultimately affect the team's performance in the games. In the end no one will ever match John Wooden's achievements of four perfect seasons, 10 championships in 12 years, and seven championships in a row. Did I mention the 88-game winning streak? However, he never focused on the achievements. He focused on the process necessary to achieve those things. Or, more accurately, the process necessary to achieve success as he defined it: peace of mind that is a direct result of self-satisfaction in knowing you made the effort to become the best you are capable of becoming.
Brad Gilbert was somewhat the same. He worked with tennis players to focus on the little things they could do to be successful. Andre Agassi credits Brad a great deal in his new book, Open, for dramatically improving his performance.
These coaches focused primarily on doing what it takes to be successful rather than on talking about some achievement they expected the group to accomplish.
Coughlin
Some business executives believe they should include their employees in a discussion on determining the corporate values for guiding behaviors in their organizations. Other executives feel it is his or her responsibility to decide on the values by himself or herself and then to communicate to all employees the expected values/behaviors. Based on your highly in-depth research of massively successful athletic organizations, what are your thoughts on how executives should develop and communicate the expected values/beliefs for employees throughout their organization?
Jamison
At the beginning of every season John Wooden handed his players a sheet of paper called his Pyramid of Success. This outlined very clearly the personal qualities he believed in. There are 15 personal qualities, or building blocks, in his Pyramid of Success. They include things like industriousness, self-control, enthusiasm, team spirit, poise, and confidence. He told the players these were the things he expected from them and that they could expect from him. He didn't test them on it. He didn't ask them to repeat the personal qualities back to him. However, during the season if a player demonstrated one of the personal qualities, Coach Wooden might say something like, "Yes, that's what I like to see, real enthusiasm like in the Pyramid of Success." That's not a quote, but it reflects his message.
Bill Walsh had a very clear Standard of Performance defined in his mind when he took the job as the head coach of the 49ers. It includes directives such as, "Exhibit a ferocious and intelligently applied work ethic directed at continual improvement."
To answer your question, there was not a discussion with the players, assistant coaches, or staff members about the values or expected behaviors. This was not a topic that was up for debate with John Wooden or Bill Walsh.
John Wooden and Bill Walsh really focused on using the Four Laws of Teaching/Learning: explanation, demonstration, imitation, and repetition. This was how they instilled their values into their teams.
However, they were both open to ideas on how to achieve the desired objectives. For example, even though Bill Walsh had a brilliant mind for offensive football, he was always open to hearing ideas from players or other coaches if they had something that might improve the offense. In that sense he was very flexible.
Coughlin
You have studied, observed, interacted with, and written about John Wooden and his approach to leadership and coaching more than any other person. As you look across the broad spectrum of his ideas, what do you think are the two to three most important concepts from John Wooden that business executives and managers should try to remember and implement?
Jamison
If I had an hour to answer that question, I could fill it up. If I had two hours, I would include everything from the first hour and then fill up the second hour. If I had two days, I could fill it up.
If I have to select just two things, then one of them would be his attention to details that I mentioned earlier. A few years ago he and I were in his hotel suite at the NCAA Final Four tournament. A waiter came in to deliver his meal. The waiter did all of the little things the right way. Coach Wooden started chuckling to himself. After the waiter left, Coach said, "I was smiling because I get such a kick out of people doing the little things well." Then he said, "If there is a secret to success that may be it: little things done well."
Coach Wooden never said things like that - declaring such and such the secret of success. He never spoke with a loud voice and made big pronouncements about what generates success. When he said it that night, I reached across the table, pulled out my notebook, and wrote it down. It seemed then and it still does as a profound statement from a very successful man.
The second important concept I would say in answer to your question, which is even more important than the first, is his definition of success. On his Pyramid of Success, John Wooden wrote "Success is peace of mind which is a direct result of self-satisfaction in knowing you did your best to become the best that you are capable of becoming." He doesn't mention bonuses, stock options, cars, or money. His focus is on doing the intrinsic work that generates extrinsic achievements as a byproduct. He teaches us to take our eye off of the extrinsic achievement and focus on achieving perfection in our area of work. If a group of people in a business can really buy into that, the organization would be super charged. The key is to start with the details. And before that, to start with teaching the organization to focus on intense effort properly applied as the highest goal.
It took me a long time to really grasp the true meaning of what Coach Wooden was talking about, but now I get it. The whole key is to do whatever you need to do as well as you can do it. Let go of winning or losing the "trophy" and focus your attention on doing what it takes to perform at your highest level in ways that serve the organization.
Coughlin
You got to know Bill Walsh very well. If you were giving advice based on your conversations with Bill Walsh to a business executive taking over a poorly performing organization or business unit, what would that advice be?
Jamison
My advice would be to do what he did. First, know what you are doing. Know the business, know the industry, and know your customers. Bill was on the fringes waiting for his chance to be a head coach for so long that when he finally got it he knew exactly what he was doing. You can't fake it. If you don't know your business, then it's going to become pretty obvious very quickly.
The other thing is you have to have the determination and courage to hang in there. Bill couldn't get the name of people he wanted to help him run the 49ers. So he brought in a group of coaches that he knew really well and that he could communicate with.
You also have to be able to endure pain. When you are coming up from the bottom you are going to deal with a lot of pain. Bill did have some emotional meltdowns during those 10 years in San Francisco, but he endured. When he talked about his second year with the 49ers, he said, "There's no sure way to get to success, but you do have to go through the town called failure in order to get there. You have to be able to endure pain."
Bill is the only NFL coach to retire after winning a Super Bowl and stay retired. He told me, "I gave myself zero points for winning and negative points for losing. I could never get ahead on points." Ultimately, that is what drove him out of the game. John Wooden, on the other hand, said, "You can't let the score determine who you are. You have to determine who you are. Losing hurts, but it didn't change my opinion of who I am, nor did winning."
Coughlin
If you were giving advice based on your conversations with Bill Walsh and John Wooden to an executive who has run a successful organization for several years but now wants to take the organization to a significantly higher performance level, what advice would you give that person?
Jamison
Keep preparing and improving. Focus on improvement. Both of those coaches won multiple championships, but they kept preparing and always looking for improvement. One difference between them was Bill talked a great deal about the challenge of having to deal with success. He said that the `success disease' was something he had to work very hard to overcome with his players after they won a Super Bowl. He talked about how easy it was for the players to become overconfident and feel that they had arrived and no longer needed to strive for mastery.
On the other hand, John Wooden said getting to the top was much harder than being at the top. He said when you are on top you attract good people to you. He didn't think in terms of levels. His focus was always the same: take what you have and maximize it. He said, "Whether a leader's organization has talent to spare or is spare on talent, the goal is the same: to get the most out of what you've got."
Coughlin
Brad Gilbert has coached some of the most successful tennis players in history including Andre Agassi, Andy Roddick, and Andy Murray. If you were giving advice based on your conversations with Brad Gilbert to an entrepreneur who runs a one-person business, what advice would you give that person?
Jamison
Brad has a natural tendency to always put the player's interest first. Players responded very well to that. When Andre Agassi was turned down for a date twice by Steffi Graf and was ready to give up, Brad said, "When did you start taking no for an answer." Brad had Agassi first on his radar, and he put himself second. To this day he only says good things about the people he coached. My advice to an entrepreneur would be to always put the customer first. And before that, put your team first, the people on it. Don't make yourself more important than the customer. Don't make yourself more important than your players.
The connection between sports and business is that people skills are just a notch below the importance of knowing what you are doing. You do have to know your business, but technical skills without people skills is a formula for disaster.
A Conversation with Jason Jennings
on How to `Hit the Ground Running' It's Not What You Expected
Dan Coughlin
Jason, I've just finished reading your book about the best-performing new CEOs of America's Publicly-Owned Companies in the 21st Century (Hit the Ground Running - A Manual for New Leaders Portfolio Publishers March 2009). Since both you and I have invested thousands of hours on coaching executives in a wide array of industries, I think your book makes for a very interesting foundation for us to discuss the behaviors of high-performing executives. It's not what one expects.
The first trait I would like to discuss with you is humility. It's been my experience that the word humility can be used in a couple of ways by an executive, and one is very unproductive.
First, it can mean putting the long-term good of the organization and the long-term good of fellow employees ahead of the good of the executive. This is the productive way in which to be humble. I think this is what you are referring to at the end of your book when you talk about stewardship. This type of a humble executive searches for quality answers and doesn't care who they have to ask for help from. This seems to be the type of humility you refer to in your book.
The second way in which to be "humble" is when the executive says to groups, "I'm really very fortunate to be surrounded by such smart and hard-working people," but then in private says, "I have to pump these people up, but the truth is most of them couldn't make an effective decision without me." These are the polite dictators who invariably ruin the organization's performance. They're publicly humble and privately arrogant.
What has been your experience with "humble" executives?
Jason Jennings
Let me tell you a story. There was a cardinal, a bishop, and a janitor.
Late one Saturday night, the cardinal was overcome by religious awe. The next day he delivered an inspired sermon telling his congregation, "He was nothing before his Maker." The bishop heard his boss's passionate homily and was similarly inspired saying "I too am nothing before God." The Cathedral's custodian, touched by the selflessness and humility from these two princes of the Church, made a similar confession. At which point, the bishop turned to the cardinal and said, "Look who thinks he's nothing!"
In my experience most "humble" executives belong to your second group. They're like the bishop… they don't practice what they preach - and everybody knows it. All of the best performing CEOs I studied belong to your first group.
They said things like, "I don't have a corner on all the good ideas." and "It's not about the CEO getting credit. It's about making your organization more than it is." and "Doubt your own infallibility." Truly humble comments that characterized their beliefs about leadership.
But just to be sure that these "best performing CEOs" meant what they said I dug deeper, getting a 360 degree assessment from boards, peers, and employees. The results were unanimous - all were authentically humble - in their words and deeds.
It stands to reason. Life is too short for truly capable and principled subordinates to hang around credit stealing, pontificating blowhards. Imperial CEOs and other fakers get the entourage they deserve - full of overpaid weasels and yes men. Humble executives attract the best talent. As one of the top CEOs explained, "People see a lot more than we give them credit for. They know if you're genuine. And they can see if it is all about you or if it is about us."
Coughlin
I found throughout your book that the best-performing CEOs were extraordinarily anti-fancy. Several of them changed the large fancy private offices they inherited into much smaller working offices for themselves and their teams. Some took out the fancy furniture and put in conference tables. One even insisted on removing his private bathroom and asked why in the world he would need his own bathroom.
Jason, I've noticed this pattern over the past eleven years. When I meet an executive for the first time and he or she spends the first thirty minutes bragging about a new car, a country club membership, where his or her kids went to college, or the past heroic achievements in his or her career, I have a hunch that something is seriously wrong. Invariably these executives end up losing their positions and often their jobs within the next twenty-four months. I think there's something to be said for "The Plainness Factor," as in "the more plain" an executive is in his or her approach to work, the better his or her chances are for long-term success.
What are your thoughts on this?
Jennings
Have you ever seen Trader Monthly, the magazine that celebrated the gaudiest, shallowest, most tasteless indulgences of Wall Street types? It featured $20,000 bottles of liquor, $300,000 record players, and other overpriced nonsense and labeled each a "huge middle finger to everyone." That was the attitude! And even today I saw a news report suggesting that "above average testosterone" was the reason why Wall Street behaved badly. Really they're more manly… Puh-leeese!
The fact is psychology 101. All that overindulgence was compensating behavior for people with serious infantile issues. One sure thing we've seen proven over the history of leadership is that, serial incompetence and infantile personal issues are always linked. History has repeated itself again.
You're right. The CEOs who hit the ground running were anti-fancy/schmancy. Out went the floral displays, the private bar, the exclusive CEO elevators, 24/7 chauffeurs, and the extravagant furniture from the former CEOs. Why? They didn't have to compensate. They were comfortable in their own skin and understood that every dollar of waste was a soldier lost in the battle for productivity and a successful future in business.
Coughlin
Another form of anti-fancy in your book was the absolute lack of business buzzwords. There were no stories of elongated vision statements, six-month strategic business reviews with twenty-four page summaries from insanely expensive consulting firms, or banners laden with lofty-sounding themes being posted all over the business locations.
Instead it was a series of stories about companies that clarified their desired destinations, established the steps necessary to reach those destinations, determined when and where to execute those steps, and conducted regular reviews of progress to see if the plans were working out. It's no wonder these CEOs haven't made the cover of major business magazines. What they're doing seems so boring, and yet it is so extraordinarily effective.
Now that you've had some time to reflect on your research while studying these ten CEOs, what are your thought on this "Kill the Buzz" approach? Have you found it to be true with other successful executives you've worked with in your career?
Jennings
Jeff Loberbaum of Mohawk is one of the smartest guys I've ever interviewed. (I didn't ask his IQ but it has to be up there.) Yet his cardinal rule - the one thing that helped him hit the ground running was "oversimplify everything." Fred Eppinger (former McKinsey Consultants brainiac) now CEO at Hanover Insurance was on that same page. So was Ron Sargent of Staples. No one used buzzwords or failed to simplify everything. Each spoke plainly and coherently. It was refreshing. I've always quoted Albert Einstein to MBAs and others who get so enamored with buzzwords, insider acronyms and complicated theories. Einstein said, "If a physical theory cannot be explained to a child… it's probably worthless." I'm no Einstein but I think the same is true of business theories and complex strategies.
So the lesson I learned is, kill the buzzspeak and learn to simplify everything if you want to hit the ground running.
Coughlin
One interesting thing that these CEOs and their companies did not have in common was their industries. From office supplies, floor coverings, jams and jellies, natural gas, aerospace, and specialty metals to health care and health insurance, property and casualty insurance, and communications equipment, these incredibly high-performing CEOs come from a wide range of industries. In other words, the industry does not dictate great executive performance, the individual does.
I've seen this demonstrated in my own work. A wildly successful company or industry did not make an individual executive successful, and a company or industry going through terrible times did not make an executive unsuccessful. A far greater indication of his or her success was the behavior he or she demonstrated on a regular basis.
What has been your experience in comparing an industry's rise or fall and an executive's individual performance?
Jennings
There's no arguing that if you land in an industry with the wind at your back it's a big help… for a while. But when the wind dies (like at E-bay, Yahoo, and Krispy-Kreme) and luck isn't enough anymore, leaders need great skills, judgment, and perspective to have long-term success.
All the CEOs I studied had some luck that helped them hit the ground running but they also had prepared themselves learning what to do when their luck ran out. None were pampered. They all said yes to difficult assignments. Everyone had led a turnaround. Some even had nicknames like "Cleanup on aisle nine" and "The human white flag." The lessons learned in those rough and rowdy situations prepared them to do the right thing in good and bad economic times. These skills, judgment, and perspective are what separated the best from the rest. As Louis Pasteur said, "Chance [or luck] favors the prepared mind."
Coughlin
Here are four more asymmetric patterns that jumped out at me in your book. Some of the CEOs quickly replaced direct reports and others quickly assured their direct reports that they were not going to be replaced. Some of the CEOs quickly changed the direction of their companies when they took over and others said there was no need to change directions. Some of the CEOs had been part of the organizations they took over for a long time and some were hired in as the CEO or as the COO, soon to be named CEO. Some felt it was important to really understand the trends of their competitors, and some felt it was a waste of time to ever study the competition.
What I took away from these four patterns, or lack thereof, is that it doesn't matter where the CEO came from, what process they chose to assemble their leadership team, or how they landed on their business strategy. Rather what does matter is that an effective CEO is hired and that he or she assembles an effective leadership team, clarifies an effective strategy for long-term success, and sticks to the plan while remaining flexible in its execution.
Jason, what do you make of these seemingly large differences between these top-performing CEOs?
Jennings
You nailed it when you said "seemingly large differences." For example conventional wisdom says outsiders won't hit the ground running. That's wrong. It also says "bring in your own team if you want loyal lieutenants." Wrong again!
All of the best CEOs followed an unconventional wisdom. They started by expending a lot of effort to gain belief… as critical for insiders as for outsiders. They understood and respected "tribal knowledge", making sure that they had an abundance of it in their top leadership circles. Each focused on the customers and not competitors. They weren't secretive about their strategies. And when they said "accountability is the key", they all were taking responsibility themselves - not pointing their fingers at others.
After three books and thousand of case studies (on making speed a competitive advantage, cracking the code on productivity, and lessons that fuel consistent growth in public and private firms) I thought I had a pretty good idea of the right way to hit the ground running. But I admit that some of my thinking was pretty conventional. I was as surprised as anyone. The research gave me a set of fresh eyes and now I see leadership differently.
A Conversation on Purpose
Insights On What Drives Extraordinary Organizational Performance
Dan Coughlin
Roy and Haley, I just finished reading for the second time your wonderful new book, It's Not What You Sell, It's What You Stand For (Portfolio Publishers February 2009). This is by far the best book I've ever read on how to clarify and communicate the purpose of an organization in ways that generate better sustainable business results. You touched on many important details regarding this topic, and I want to explore a variety of areas with you that I believe will be of practical value to executives and managers in a variety of organizations.
On page 10 you gave the best definition of a purpose I've read. You said, "A purpose is a definitive statement about the difference you are trying to make in the world." What practical suggestions do you have for dealing with people in a meeting who say, "Purpose talk is touchy-feely. It's pure fluff. When you're ready to talk about real business issues, then I'll listen in and contribute."
Roy Spence and Haley Rushing
If they want to talk about performance, we can talk about all of the studies that have been done, not the least of which is by esteemed scholar and author Jim Collins, that validate the correlation between high performance and great purpose.
If they want to talk about employee productivity, we can talk about the link that The Gallup Organization has identified between employee engagement and feeling a sense of commitment to a mission or the purpose of the organization that is important to the employee.
If they want to talk about operational and strategic alignment, we can talk about the power of having a purpose as your organizational North Star to create an alignment with both the head and the heart of a workforce.
Fortunately, our own direct experience with purpose has been more than validated by the best business strategists of our era and we find ourselves having to convince fewer and fewer business leaders of the power of purpose to drive performance in the market place today.
Coughlin
How does a group of people craft a purpose statement that is both noble and necessary? How do they make it both aspirational and operational? In other words, how does a group make sure that a purpose statement affects the heads and the hearts of the people in the organization in ways that both inspire people to take meaningful action and conduct the right actions to grow the organization successfully? For example, on page 94 you talk about Whole Foods and the way in which their purpose affects the heads and hearts of managers, employees, and customers. How can any organization make this happen?
Spence, Rushing
There's a great quote from Aristotle that can help answer this question: Where your talents and the needs of the world meet, there lies your calling. Your `Purpose'. When you start on the journey of discovering your purpose, start by analyzing the real talents of the organization. What does the organization do better than anyone else? Where does the organization really shine? What has the organization accomplished that people are most proud of. This is about determining the facts of the matter. Then turn to the market place and see where those talents can best be put to use. Where is there an unmet need in the market place? What segment of the market is poised to benefit from the talents and gifts that your organization has to offer?
When you pinpoint the intersection of your strengths and the world's needs, a purpose that is both inspirational and operational begins to emerge. Take Whole Foods Market. When they began over 30 years ago, the world needed a reliable source of natural and organic foods. John Mackey had the talent, passion and vision to create a new kind of grocery store - one that not only served the needs of the burgeoning segment of organic and natural food enthusiasts, but also served the communities in which it operated (by building community engagement into the business model) as well as the planet at large (by operating in sustainable ways). Their purpose continues to inspire each new generation of team members who are passionate about finding new ways to fulfill the purpose of providing choices for nourishing the body, the community and the planet.
Coughlin
How do you write a purpose statement that affects senior executives as well as front line and hourly workers? Oftentimes front line workers can be at odds with senior executives. Yet the organizations that have a clear, meaningful purpose that hits home with people throughout the organization seem to get the best results over the long term.
Spence, Rushing
When you're operating in the realm of purpose there is no `us' vs. `them.' What we've found is that if you ask a front-line employee or a Senior Vice President to discuss what they're most proud of- in terms of their work - their answers will not vary as much as one might think.
When we were working with Wal-Mart, store level associates were able to talk passionately about the pride they felt in seeing a mother say `yes' to their child - able to afford the things that their families wanted and needed because of the everyday low pricing Wal-Mart is famous for. They could relate to the value of Wal-Mart on a very personal level as they were shoppers too. The executives at Wal-Mart were equally motivated to serve the customer who was trying to make ends meet, trying to afford a better quality of life for their families. At the end of the day - the cashier and the CEO could all buy into the fundamental purpose of Wal-Mart: To save people's money so they can live better.
By focusing on the difference that the organization makes in the lives of the people it serves, an organization can find common ground on higher ground.
Coughlin
In Chapter Two on page 35, you talk about how to discover the purpose of an organization. A lot of what you're writing about here reminds me of anthropology. Haley, you studied anthropology in college, right? How would you compare anthropology, which is the study of human beings and their culture, to finding an organization's purpose?
Spence, Rushing
Isn't it obvious how a background in cultural anthropology would ultimately lead one to a career in Purposology? I've always been fascinated by human behavior - particularly what motivates people to do what they do. Just like we study consumers to find out what drives behavior and what makes people engaged with a brand, we can study organizational or employee behavior to find out what motivates and inspires the individuals within an organization.
We use the same kinds of ethnographic techniques inside an organization as we do with the organizations' customers. We discover what their values are, how those values express themselves in unique behaviors that you wouldn't find in other cultures, we identify what they are passionate about, we audit the unique strengths of the tribe - once we know everything about what the organization stands for, we can then find the segment of the market with similar values and motivations and let them know that there is an organization that is committed to creating real value and making a real difference in their life.
Coughlin
In Chapter 3 you write about articulating the purpose of an organization. This seems to be more of a high level art and less of a formulaic scientific approach. Based on your book, it seems that the parameters a great purpose needs to operate within are for it to be not too short and not too long, noble enough to inspire but not so lofty that it seems lost in the clouds, and idealistic enough to move people to action but not so vague that people don't know what business they are in. What are your thoughts on the making of a good purpose statement?
Spence, Rushing
You touched on many of the basic principles in your question. Here are a few simple guidelines to follow in crafting a great statement of purpose that will inspire and rally your employees.
A great purpose is single-minded and focused. Prune away multiple ideas that can end up cluttering and sucking the life out of a great purpose. One of my favorite `focused' purpose statements is from The Hilton Family: Be hospitable. That's it. It's crystal clear. It's concise. It's memorable, repeatable and, most important, it's highly relevant to the needs of the market they serve.
A great purpose statement should be immediately understandable and easy for anyone to repeat in an elevator without the aid of cliff notes. After developing what I thought was a wonderful articulation of Wal-Mart's purpose - To improve the quality of life by lowering the cost of living; my Wal-Mart client pressed me to make it so simple his younger children could understand it. That's how we arrived at: To save people money so they can live better. Much simpler. Much better.
A great purpose statement should feel like a lofty and noble goal worthy of putting your life's work into. Understand that this is the ultimate reason for your existence and not a wholly accurate assessment of all of your current operations. If you have sufficient evidence to prove that you can get there, then go for it. One great example: Transforming lives for the betterment of society. One student, one discovery at a time. That was the purpose we developed for higher education. Do they transform `all' lives for the betterment of society? Probably not. But when they are at their best they certainly do and now everyone from faculty to administration to parents understands that is the ultimate objective.
But Don't End Up in The Ether
A great purpose statement should have enough definition that people readily understand what it is you're actually doing. To change the world or to make a difference, for example, aren't sufficient.
Those four guidelines should help any organization craft a clear and compelling statement of purpose that anyone from a front line employee to a c-level executive can understand and embrace.
Coughlin
When I was a high school math teacher I used to tell the parents that there were two keys for their child to get an `A' in my class, and those two keys were creativity and grunt work. They had to do the grunt work in terms of asking questions, taking notes, doing their homework, and studying for the tests. But on the day of the test they had to be creative and be able to solve a new problem.
In Chapter 4 you talk about "find the thrill," which is the thrill that people at purpose-based companies find when they are trying to make a difference. In Chapter 5 you talk about "have the will," which is determining how the people in the organization must behave in order to fulfill the thrill in a meaningful way. This reminds me of creativity and grunt work.
How can an organization establish a purpose statement that generates effective grunt work and creativity and does so over a sustained period of time?
Spence, Rushing
An organization's purpose is informed by understanding "the thrill" for the organization and assessing "the will" it has to make it happen. Your description of the combination of creativity and grunt work is spot on. What gets an organization's creative juices flowing - what's "the thrill" for the organization? What is the organization genuinely fanatical about? Some of the organization we covered found the thrill by: serving underserved populations (Wal-Mart), creating new paradigms (Whole Foods Market), fighting for noble causes (The Air Force), enlightening and empowering people (Charles Schwab), or seeing what others can't see (Apple).
Once you have an idea of `the thrill' for your organization, it's time to roll up your sleeves and determine what must be done to accomplish it - it's time for the "grunt work" as you put it. What products/services/experiences need to be created? What pricing models could be developed? What procurement strategies could help? What R&D investments need to be made? What employee programs would reinforce the direction?
A great purpose statement captures "the thrill" for an organization and should do so in a way that inspires everyone to get to work to fulfill it in meaningful ways.
Coughlin
Most of the examples in your book are about existing businesses that you then helped to clarify and articulate the reason why they exist. On page 46 you talked briefly about establishing a purpose for a new organization. I would like for you to expound on that a bit. If Tom and/or Mary Smith come to you today and say that they have secured financing for a new business and want to start setting everything up, what suggestions or questions would you have them consider before they hire any employees or rent any office space?
Spence, Rushing
Be crystal clear about the passion and motivation for starting your business. What difference are you ultimately trying to make? The great entrepreneurs we've known did not endure the pain and hardship of starting and building a business just to make money. And in this economic environment, entrepreneurs will face more negative forces and naysayers than you can imagine. If you don't have a passion that will keep you going through the difficult times, you probably won't make it.
On the upside, the world is full of problems that need solving. Find a problem that grabs you by the heart and taps into your talents and give yourself completely to creating a business that can solve it.
Blake Mycoskie is one of these passionate entrepreneurs. Blake was inspired to start his company after spending time in Argentina and identifying a problem that he felt he could solve: poor children in need of shoes. His business model: for every pair of shoes sold, TOMS Shoes donates a pair of shoes to a child in need. He is in his third year and his company is going gang busters. His passion is contagious, his purpose is clear and his business is thriving…even in this environment.
Coughlin
The economy right now is like a tornado slicing through people's homes and ripping them out of the ground. This is true for large, mid-sized, and small businesses. It's true regarding for-profit and not-for-profit organizations. Even if companies don't change their names, they will almost all be very different companies heading into 2010 than they were heading into 2007. In the midst of this tornado, what advice regarding purpose would you give to people who want to regain a sense of stability and a strong foundation to build on for the future?
Spence, Rushing
In times of great turmoil, purpose is your anchor. It doesn't prevent you from being battered about by the storm, but it will keep you afloat while others are capsizing all around you.
Companies that have a purpose, benefit from customers who will stand by them and employees who will go the extra mile when called upon. I can't imagine any two factors more critical for weathering the current storm that we're in.
So, if you find yourself grasping for straws or searching for silver bullets, we would advise that you stop, take a deep breath, and before you do anything else, get everyone on your ship on board with the fundamental purpose of the organization. Once you do that, those ever scarcer resources can be allocated in a much more efficient and impactful way. If an initiative furthers your purpose, you do it; if it doesn't, you don't waste time, money and energy on it. Your workforce can begin coming to work motivated to contribute to something they can believe in. And your customers will begin to notice the difference that you make and will reward you with their loyalty.
Coughlin
Congratulations on making it to #6 on the Wall Street Journal Business Bestseller List. That is exciting. On February 23rd, the Wall Street Journal printed a wonderful panel discussion on entrepreneurship. Steve Demos, chairman of Next Foods Inc., talked about the perseverance required to work for twenty years before developing his massively successful soy milk product called, Silk. He said, "When you are committed to delivering a message, time is irrelevant. It is the fanaticism that drives you forward…I doubted my tenacity, sometimes, but not my product. Not my mission - never with the mission."
As I read that, I thought about your wonderful book. In your careers, where have you seen a meaningful purpose help people in organizations sustain their efforts through long dry periods and carry them through to ultimate success? What do you think are the lessons we can all learn from those stories that we can use in today's economic environment?
Spence, Rushing
We had the good fortune of meeting Bill Strickland last year. He is a total maverick and pioneer who has spent the last forty years building one of the most amazing job training centers in the country in the heart of a Pittsburgh ghetto - The Manchester Craftsmen's Guild. He was frustrated with well-intentioned programs designed to help lift people out of poverty that didn't look or feel like anything anyone would want to aspire to; they're often under-funded, under-staffed and uninspired programs that don't do anything to lift human spirits in need of serious transformation.
In his wonderful memoir - making the impossible possible - he talks about the struggles and setbacks he faced, as he tried to convince the world of his vision. And his vision is extraordinary and simple at the same time: Simply put, he believes that if you build beautiful environments, you get beautiful people. You build world-class culinary centers and you'll get world-class chefs. Build a jazz concert hall and you'll inspire a love of music as well as a cure for mental health. Create an art gallery and you'll create artists. Build a greenhouse and you'll create master horticulturists. Over the decades he's been able to convince world-class sponsors to get involved and co-create the most innovative and inspiring job training centers in the country. But raising millions of dollars to build an architecturally stunning facility in the heart of the ghetto and building world-class facilities for people most of society has given up on was no cakewalk.
The lesson to be learned from Bill goes back to one of the central points of our conversation - if you have a purpose that you are passionate about, you will have the fortitude to overcome seemingly impossible odds and create extraordinary value in the world. Passion and purpose, as Bill has proven with his life's work, can `Make the Impossible Possible' - An important lesson to remember in this seemingly impossible economic environment we're all struggling through.
Dan Coughlin is the author of Accelerate: 20 Practical Lessons to Boost Business Momentum (Kaplan Publishing 2007), which is the diary of an executive coach, and the upcoming book, The Management 500: A High-Octane Formula for Business Success (AMACOM Publishing 2009), which provides practical management lessons on generating sustainable profitable growth from the history of professional auto racing. He is a business keynote speaker on innovation, branding, sales, and leadership. Dan can be reached through www.thecoughlincompany.com
Jason Jennings is an international keynote business speaker on productivity and leadership and is the best-selling author of Less is More; Think Big, Act Small; and It's Not the Big that Eat the Small…It's the Fast that Eat the Slow (co-authored with Laurence Haughton). His new book, Hit the Ground Running: A Manual for New Leaders, is available wherever books are sold. Visit Jason at www.jason-jennings.com.
Roy Spence is founder and CEO of GSD&M Idea City, co-founder of The Purpose Institute, and author of It's Not What You Sell, It's What You Stand For (Portfolio Publishers 2009). Roy can be reached through www.itsnotwhatyousell.com
Haley Rushing is the Chief Purposologist at GSD&M Idea City, co-founder of The Purpose Institute, and co-author of It's Not What You Sell, It's What You Stand For (Portfolio Publishers 2009). Haley can be reached through www.itsnotwhatyousell.com
Steve Jamison is a best-selling author and America's preeminent authority on the leadership philosophy of UCLA's legendary Coach John Wooden whose basketball dynasty won ten March Madness national championships. For over a decade Mr. Wooden and Mr. Jamison have collaborated on projects including six best-selling books; an award-winning PBS television special, "WOODEN: Values, Victory, and Peace of Mind"; and numerous personal appearances including Disney Resorts International, General Mills, City National Bank, UCLA Anderson School of Management, Waste Connections, Inc, Barbara Sinatra's Children's Hospital, and more. He is a popular lecturer and the author of the new book, The Score Takes Care of Itself (Portfolio 2009) by Bill Walsh with Steve Jamison and Craig Walsh. Mr. Jamison serves as a consultant to the UCLA/Anderson School of Business and its John Wooden Global Leadership Program. Visit Steve at www.stevejamison.com
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INNOVATION HONEYMOON
New Product Development and Customer Involvement : Case Study of Ranpak, The Netherlands
An example of when customers have been a source of new product innovation was given by Dijkstra while talking about how Ranpak divides customers into small, medium and large segments.
Ranpak (Random Packaging) is a small, focused and innovative packaging company based in the Netherlands, and is part of a US-based concern. It may be seen as an unlikely candidate for achieving the quadrupling of the return on investment of its American owners (First Atlantic Capital, New York). However, in the four years that ended in 2005, the company's earnings before interest, tax, depreciation and amortization (EBITDA) rose substantially, whilst it maintained a strong and growing product portfolio and attracted prestigious clients. Based in Europe, the US and Asia, these clients include Fortune 500 companies in both manufacturing and services, in the automobile, electronics and pharmaceutical sectors.
One of the most important factors behind Ranpak's achievement was its track record in new product innovation and development, which contributed significantly to the company's remarkable productivity and growth. New products were created, especially through the company's close interface with its customers. Through marshalling and mobilizing his teams to continuously innovate and strengthen customer relationships, MD Joost Dijkstra was able to create more value at the business-to-business packaging firm in a dramatic way. Dijkstra's own leadership role also played a significant part in defining the opportunities and inspiring the efforts of the teams responsible for Ranpak's success in achieving improved financial results, especially through new product development and enhanced customer commitment in the process.
This article is based on an in-depth discussion between authors Dr. Stephanie Jones and Joost Dijkstra, reviewing the company's achievements in innovation, in 2006. The company has since maintained this reputation. Ranpak's leap forward in value-creation between 2002 and 2006 reveals interesting insights into the relationship between innovation and profitability; the nature of investment in new product development; the use of patents by the company to protect its new products; and the process of innovation, including the source of innovation, particularly through encouraging active customer involvement.
Background to Ranpak's Transformation
With the end of family ownership and the move to new acquirers, Ranpak faced new objectives and profit targets. So, in 2002, the CEO David Gabrielsen of Ranpak Corp. in Cleveland Ohio announced the changes about to happen to the employee team. Dijkstra, in Heerlen, called the 150-strong labor force into the canteen, and shared with them the news and its implications. He started with himself: as a European he had to get used to the American style of management. Although he pursued his MBA in the US and had lived there for several years, this involved a big personal transition. His style was one of coaching his teams and delegating functional responsibility, but the Americans required a concentrated level of detailed hands-on focus, personal control and daily monitoring to provide precise evidence of what was going on in every aspect of the business. This was all quite new to him. He had to learn fast, and so did his teams. The new focus was on value creation - something quite revolutionary. He had to manage expectations and exceed them. He had to show he could change quickly - and so must everyone else. An important part of the change process was the focus on new product development, through enhancing and leveraging the customer base.
The way that Dijkstra empowered his teams was so simple that it could be summarized on one piece of paper. It was his "value matrix" whereby each team knew very clearly the target it needed to achieve which, added to the whole, would produce the overall revenues needed, on a monthly basis. And the MD couldn't wait till the end of the month to see if his teams were on track. With the American bosses liable to call up at any minute, on any day, asking to know minute details of the packaging machines installed, the packaging materials produced, the new orders signed up and the new client prospects targeted (even to the extent of the number of pallets leaving the warehouse), each team leader had to have his finger on the pulse, and keep the boss informed. The aim was to "achieve dynamic and lasting competitive strength through innovation, marketing and sales." There would be no easy life for anyone anymore.
At every step of the way, the value of the business and its processes had to be maximized, waste minimized and costs reduced. Non value-adding activities had to be abandoned, as soon as possible. This involved change, innovation, reengineering - whatever was needed to make the profit targets happen. And team leaders, and team members were encouraged to keep thinking of new ideas to keep making things happen. Success breeds success - everyone wants to work for a successful company - and team members discovered reserves of ideas, energy and commitment which they didn't realize they had. They found new opportunities for products and segments, and new ways of making existing businesses more efficient. The lessons he shared with his teams? "Be in the lead of change or be part of change yourself. Never fight change. Accept it. Want change even faster than it is expected of you! Be eager for your own personal change plan, and inspire the involvement of others. Be accountable. Measure your outcomes regularly," explained Dijkstra, reflecting on the process to a business school MBA class.
The assumptions he made about the people in the firm and their teams were honest and straightforward. "They have talents and expectations. They want to be able to learn and be rewarded. They need clarity in goals and direction. They want to be inspired and challenged. They ask for an honest chance to earn respect", he considers.
Inevitably, Dijkstra - like all leaders in the midst of rapid change - had to overcome hostility and discomfort with the rate of change among his team members. He had been through it himself before taking his teams through this process, which helped. There were certain principles on which he insisted. Firstly, the background against which everyone worked operated with the assumption that all activities brought the firm closer to achieving its goals, confirmed and developed relationships, and took place within a fair and equitable working environment. Secondly, all his team members would have just one boss - so they would not be confused and possibly derailed by others chipping in and telling them what to do. Thirdly, they helped to set their own targets so that they all made their own contribution to the organization's success - and everyone made his or her own unique contribution. It was teamwork, and no one was more important than anyone else. Fourth, they were all in this together, and everyone would reap the rewards.
So, by the end of 2005, when the business achieved its targets for its American owners and Dijkstra decided to move on, he was allowed by his CEO to award everyone in the company a 3,000 euro bonus. It may not have been so much for the bosses, but it was a lot for the workers, and they deserved it. And, despite major change, he carried nearly all of them with him. Many team members moved into different positions and some could not catch up with the required change or became redundant - but only a few moved out of Ranpak altogether. The achievements were impressive: in the two years between 2003 and 2005, EBITDA was up 37%, whilst capital expenditure on new investments was up only 7%. The firm is still flourishing, and the teams know more than ever how to add value - better than anyone else.
The Relationship between Innovation and Profitability
Innovation was extremely important to the success of Ranpak in its achievement of double-digit growth: "new products developed at Ranpak brought in up to 3-4% of extra turnover in their first year", explained Dijkstra. Two new products introduced during 2002-05 brought in a dramatic 30% increase in turnover for the company. "This led to significantly increased profitability for the company", continued Dijkstra, "as there was very little added cost associated with these new product innovations, with improved productivity in operations and sales.
Investment in Innovation at Ranpak
Does the company set aside any investment for innovation? "We are very focused and therefore, very powerful in new product development, as our structural growth strategy, Dijkstra explained" (contrasting Ranpak with other companies who might grow mainly by acquisition). "In addition, with a disciplined sales Target & Close program, this has resulted in over 10% growth each year". It is a continuous routine for us to innovate, and it's our aim to create at least one innovation each year". If technically feasible and patentable the final decision will come from Ranpak Corp. if, when and where each new product idea will be launched. Many of these new product ideas are developed in cooperation with customers (see below).
Use of Patents by Ranpak as an Innovatory Company
"Ranpak is only a small company", Dijkstra explained, "but it reached a rank of #5 in the US for putting in new patent applications. We put in a very large number of patent requests, with each of our new products, including a significant number of separate patents for parts and processes of these products". This is a very important part of Ranpak's strategy. Each new product, despite being simple and low-tech, "has several unique characteristics that can be patented, so that the competition would find it very difficult to imitate". And copying patented products is a legal issue, and Ranpak's patent lawyers can easily follow-up on any patent infringement. Any existing competitor or new entrant threatening the company's valuable patents will be immediately attacked. Ranpak focuses on patenting the methodologies of creating its products. Patents would be related to the use of the paper, and aspects of the machines, despite them being simple mechanical devices. A single product is hard to patent, but a combination of paper and machinery adaptations can produce a series of patents which are hard to copy for anyone.
Ranpak is able to distance itself from its competitors, according to Dijkstra, "because they do not innovate at the same rate as we do. There are lots of `me too' products out there, many based on our ideas, but we never copy the ideas of our competitors. We are leaders in innovation, not followers" he insisted, which has helped Ranpak to be much more profitable in the value chain and much faster growing. Focus is an important part of this competitiveness: "Ranpak understands the features of paper fibers and paper products, whereas the competitors are in lots of other products, such as air bags, bubble wrap and loose-fill. Maybe they are innovating in their plastic products, but there are a lot of other materials and technologies here, and we have found it more advantageous to be focused and not dilute our efforts over a broader field", Dijkstra continued. Meanwhile the paper-based products are seen as environmentally more attractive, and are more acceptable to clients with a conscience, concerned with Corporate Social Responsibility and sustainability.
Another benefit of innovation for the competitiveness of the company is the impact of new products on providing an overall solid margin structure. "New products are very important in creating long-term revenue growth and profitability", Dijkstra insisted. "If we regularly bring a new product to the market then possible margin erosion on existing products will be compensated by the margin of new products that are not vulnerable to margin erosion for a long time. If you have just a small range of products and do not add to them regularly, then eventually price competition sets in. But if you have a new and unique product, that creates new value, the sales force and their distributors have a unique proposition to make, essential for creating sustainable profitability".
The Process of Innovation at Ranpak
"For example, I will explain how one of our innovations began", explained Dijkstra. "We originally had PadPak, which was used for many purposes, mainly for cushioning in a box or to fill up a box around a product, to fix it in position and stop it from moving. The cushioning was the main purpose, but it was used for void-filling too. But to use PadPak for void fill was not competitive in all cases. We felt there must be a way to fill up a box quickly and cheaply, not using as much paper as the cushioning product PadPak requires. The customers were continuously giving us this feedback, that we needed a quicker and cheaper alternative. We studied the market need; there was a gap here, so we needed something to fill up boxes rapidly with less paper usage and more simple machines".
Dijkstra and his team presented the idea to the CEO of Ranpak Corp., that this new product would cost less for the customers and could be highly competitive against loose fill or airbags, supported by the results of his market study and customer comments. He gained the go-ahead from the CEO for proto typing, and the Marketing Department set up the requirements for the new product, based especially on the need for speed to fill up the box, a reduced amount of paper for void fill, and simple machines - but with processes that could be patented - all to fill up this gap identified in the market that which the customers were demanding.
"Then the development guys got to work on new machines, taking the marketing idea into production", Dijkstra explained. "The whole process from the idea identification to the launch of FillPak took around one and a half years, including applying for the patents. Some of the patents were still pending when the CEO approved the market launch. When we had created the machinery for the new product, the Marketing Department prepared for market introduction through our distributors. We took our machine and new product to shows and exhibitions, made production-prototypes of the machines for our distributors, to get them excited about the new product. We made 400-500 machines to do the market testing. This was all the work of three development guys, trying to find a solution that the Marketing Department had identified, through our customers."
The Source of Innovation at Ranpak and the Involvement of Customers
Ideas for new products come, particularly by listening to customers, which are clarified and fed back to the company through Ranpak's distributors. "The customers tell us what the product did not do for them, and we check with the distributors how often they have heard this complaint. Sometimes the suggestions then come from distributors, or a group of distributors. Then we see if we can make the product and machine they need. Around 70-75% of ideas for new products come from the Marketing Department, and around 25-30% from the distributors, mostly based on interpreting customer needs".
"However", Dijkstra continued, "we don't count on our distributors and customers for all the new product ideas - we are much more proactive than this, we want to anticipate future needs. We put effort in thinking beyond current patterns and develop solutions for issues that really exists, but not perceived as actual problems. In this context, the handling and related cost in the whole packaging and shipping area of a company is our working field.
Dijkstra expresses his appreciation for the no-nonsense approach towards new product development of his American colleagues and how this contributes to create real value in new product ideas. We are often surprised what Ranpak Corp. can still do to simplify processes and equipment and cut cost in the whole value chain, while we, in Europe, were convinced that there was no more to gain. We are, therefore, very much aware that ideas of end users and distributor partners are very valuable, but cannot do without straightforward approach of bringing it down to the very basic function and what the Ranpak equipment in combination with the paper should do in order to provide optimal earning power. Most of our distributors have been with Ranpak for a long time. We have lost only two or three distributors in the last nine years. In our distribution model, we needed to provide clear benefits for our end users and strong earning power for our distributors. We wanted to be in the top three of packaging firms, offering high levels of profitability for our distributors as well as for our owners". "This is what we see as the triangle of success", Dijkstra explained. "There must be benefits for the end user, the distributor and Ranpak".
An example of when customers have been a source of new product innovation was given by Dijkstra while talking about how Ranpak divides customers into small, medium and large segments. Small customers might use their machine just a few times a week, and having a large machine there would be costly for them and take up space. So Ranpak made manual equipment for them, a simple device to crumple paper operated by their own packers, which enabled Ranpak to apply for another patent. "This very simple mechanical device cost very little, and it was ideal for limited usage in a manual environment, using our own paper", Dijkstra added. "It sounds simple but was hard to make, cost only around 10 euros and does the job very well", he pointed out. "This is just as much an invention as a much larger and more complex machine".
Ranpak's large customers and the need to fulfill their requirements also led to the development of new products. "Some customers may have multiple machines, with a semi-automatic production line. For example, we have customers selling through TV commercials that do have to pack a few different products in one box. We created for them, at their request, a machine which can measure the void in the box and the amount of void-fill needed to fill the box, which then automatically fills up the box as required and closes it. For large customers, this saves a lot of labor and eliminates excess packaging material. One does not have to explain they have been very happy with this innovation".
The customers are not allowed to make their own modifications to the Ranpak machines, as this would infringe the patent protection. But they can hang them on walls and position them in new and different ways to facilitate use and save space. But these are not necessarily specifically seen as innovations.
Dijkstra sees Ranpak's status as an applicator of basic technology as beneficial to the company, the distributors and the end users. "Basic technology provides incidental mechanical maintenance at low cost. Basic, commonly-available tools can be used. Another attraction is that there is no need for a large maintenance team, for the distributors and for Ranpak. We even tried once to make a machine which did not need servicing at all, which the customers were asking about. Some new equipment is practically maintenance free, which means that if they would break down, replacing the machine by a new one is then probably the best option.
Equipment and paper provide surprising properties and features that do extremely well in a packaging room environment. The focus on paper systems, the innovative drive with emphasis on low capital expenditures and the highly productive sales and distribution efforts provides a lasting business model. In this model, all participants play a certain role, end users and distributors included. Overall, it can be seen that the direct and indirect customers form very meaningful drivers of innovation at Ranpak, which is successfully transformed in a win-win outcome - the company regularly provides new sustainable innovations, the distributors gain new earning power and the customers get lower cost packaging solutions.
Note: Based partly on research for an MBA Thesis, "Fostering Innovation in a Low-Tech Environment: the case of Ranpak BV", by Laert Dogjani, intake 23, Maastricht School of Management, 2007, supervised by Dr Stephanie Jones.
Stephanie Jones is Associate Professor of Organizational Behavior at Maastricht School of Manage-ment, having graduated with a PhD from University College London, and a Bachelor's degree from the London School of Economics. Jones has authored over 25 full-length internationally published books on business and management, and has recently published articles on doing business in emerging markets, knowledge management, implementing HR systems in culturally-challenging environments, the impact of the current economic downturn on HR and CSR, and Project Management.
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INNOVATION HONEYMOON
Mentoring for Parenting : A Natural Gift!
Mentoring should start with the parents, right from the time their first child is born, targeting them even while they are in the organization, so that we help and mold future societies.
Mentoring has generated interests among corporates as well as professional academic institutions in recent times. The trigger for this appears to be the emerging issue of employability of graduates from professional institutions resulting from the experience that employers have had in dealing with the new entrants. It is reported that only about 20% of graduates who pass out of our (Indian context) professional educational institutions are considered employable. The most common reasons cited for this appalling condition include: lack of social skills, poor oral and written communication skills, low awareness of business etiquette, poor presentation skills and so on.
It was easy to associate the problem with the known tagged areas of competency described above as it suited the business interests of those offering such branded services as well as those procuring the same.
However, the issue of employability is more than confined to the few key words mentioned above. The real issue is, how a new recruit can prove to be of value to the organization employing him /her. This value comes from the ability of the candidate to effectively participate in and productively contribute to the organization's goals, and be seen to be doing so by those responsible for the individual (the supervisors) and stakeholders such as peers, customers and partners. There are two dimensions to this: the rational and the emotional.
The rational part is the knowledge aspect, i.e., the candidate being knowledgeable about the organisation's vision, mission, goals, line of business, the stated and unstated expectations, and the organizational and the business' contextual ecosystem.
The emotional part refers to all dimensions of how the candidate will respond to different situations, reflected through his / her conduct and actions, when confronted with a non-standard (not programmable) situation. Typical / standard situations are never the testing ground for someone's worth! Executives and managers are expected to be groomed to handle situations different from what the working (shop floor) class is expected to (carry out repetitive tasks as per predetermined programs for which they have been trained and where there are no surprises to be lived with). Here, at the lower operational levels what counts is skills. The behavioral element expected is inbuilt into the laid down policies, procedures, SOPs, processes, etc. Surprises are to be effectively handled by the executives, lower staff are to be shielded from the consequences of the same, and the unanticipated situations have to be translated into clear instructions to be followed at the lower levels.
However, for the executive class, the expectations are more than handling programmed maintenance functions. This class is expected to be able to handle unfolding situations, explore value in every new situation, identify new ways of handling scenarios, be forward looking and thinking, lead and handle change and so on. Doing so requires unique inherent traits and qualities that become determining factors in employability.
The behavioral part is shaped by the internalized notions of what one should desire for (ends) as an outcome from every situation in an organizational context, what means one should adopt to achieve the ends, what actions are considered right and wrong, what is rewarding and penalized, what is celebrated and castigated, what one wants and what price one is willing to pay, what is the time horizon under consideration, what options one has, how far will one go to pursue one's goals, what provides comfort and otherwise, what are one's value systems that guide behavior, etc. The behavioral element surfaces only when one is confronted with and has to resolve conflicts, both external and internal (within the individual). This guiding beacon in conflicting situations is, otherwise known as work towards achieving superordinate goals. This beacon works well at the organizational level, not the individual level.
Conflict situations, where one is expected and compelled to take certain course of action, are emotionally stressful. Sometimes individuals are at a loss in such situations. The internal conflicts fueled by external pressures may overshadow a rational approach, and one tends to lose balance and be guided by pressure points, go against one's own conscience, or seek asylum in short-term gains for oneself, as a fate accompli.
Such reactions are primarily due to not having been exposed and subjected to perform in such demanding situations, under guidance of someone in whom one trusts, who has the knowledge, experience, maturity to assess the situation, shows empathy with the junior (mentee), has the willingness to lend a shoulder to lean on, and who is perceived to have no axe to grind from the situation itself. Mentoring is the healthy relationship between an experienced person (the mentor) and one seeking such support (the mentee) leading to the `graduation' of the mentee.
The concept of mentoring has gained more prominence in the recent past due to the short time lines within which one has to demonstrate one's productivity, value and deliver on expectations. The primary driver for this has been the new technology industry which grew too fast in a short time, with phenomenal opportunities for new professional entrants, high rewards and expectations. It is also attributed to the opening up of the economy in the early nineties that brought with it opportunities and threats, placed demands on unlearning and relearning, and meeting expected delivery from hitherto less known stakeholders, in emerging business and organizational contexts.
This sudden growth phase was equally a period of unlearning and relearning, test of adaptabality and delivery capabilities even for seasoned professionals. It provided low reaction, learning and delivery time for the juniors as well. It was a phase of discovery for all, but more demanding on the green tribe, as they had not been exposed to tricky, conflicting and demanding situations so far, even in a different ecosystem. The challenge became one of managing complexity. The word mentoring and its associated terminology became key words in the corporate, training and higher education sectors.
Mentoring, as known now, is associated with the process of handling/ preparing for the transition of fresh graduates from the education space to the employment space. It primarily fills the gap between the capability attained by the candidates through formal knowledge acquisition in the classrooms, and that required to meet stated and implied expectations in the workspace. It is a process of sharing of informal knowledge about the organization and business by the mentor, an individual with considerable experience in working life, with the mentee, the recipient of the inputs. It also involves extending emotional support, handholding, providing a wall to lean on, confidence building, etc. Thus, a mentor is someone who gives direction and motivates, someone to share ideas with, confide in, seek guidance from, someone in whom one develops confidence to seek genuine advice, empathy. A mentor is one who has no axe to grind from the relationship with the mentee and at the same time has the knowledge and experience-based competence and emotional maturity to understand, foresee, visualize and weigh the problem faced by the mentee. The relationship does not entail any financial gains to the mentor, nor is the mentee under any compulsion to go by the advice of the mentor.
The process of mentoring is purely voluntary, based on mutually perceived compatibility and need for the relationship through a perceived collective emotional gain for the mentor and mentee. The relationship is not prescriptive, there are no rules, no deadlines, no hierarchy and no monetary expectations. It is largely an informal emotional support system based on the chemical bonding between two individuals, and in a limited sense, sharing practical experience, extending the benefit of being able to see what is not visible to the one who has not been in that space, and thereby be in a position to guide in choosing the right path, upfront or even forewarn about the pitfalls, if any.
The term mentoring was coined in the recent past in the context of the felt need to fill the gap between education and emloyment / work life. However the process/the act of mentoring existed even several decades ago, particularly in the joint family system in traditional India (the Eastern world). Japan and China are classic examples that follow management models (life-time /long-term employment) different from that of the West and mentoring is an inherent part of these systems.
It started in the family, in particular in the joint family system where all members of the joint family, cutting across three to four generations, lived and worked together. One could visualize a family comprising persons from age near about a century, to as low as a couple of months. In such a scenario, every individual had the opportunity to experience what people of a different age group, role and sex, went through without being directly affected by it. This is very close to a hands-on training and experiential learning.
The experience drawn from proximity and exposure had the effect of informal transfer of knowledge (we call it case study today, drawn from distant situations that we cannot even visualize, that has no emotion and so becomes a mechanical ritual!). No experiential learning can happen without an emotional involvement. The emotional support from seniors could happen seamlessly (no axe to grind, any misdemeanor by a truant would be handled effectively by those higher in the hierarchy, the junior had the comfort and obligation to learn). Intra-family hiererachy was clearly known, respected and accepted, though no written rules were laid down. Right value systems were instilled in the youngsters by the sheer presence of the elders, age and knowledge were respected, not necessarily earnings. Mentoring happened as a natural progression without going to town about it, no launching, no kickoff, monitoring, closure, certifications, or any celebrations. The entire process was a quiet effective, long-lasting sustainable, deeply ingrained and internalized affair. The roots were deep enough to hold the tree system against even a hurricane. It, in short, developed an unassailable character in the individual that is conspicuously lacking in the modern age.
What has happened in the recent past? These are times that have seen the emergence of nuclear families, youngsters breaking away from the parents and elders, rise of income, external influence by media and society eulogizing superficial sense of success, no felt obligations to the society, little/no accountability, late child bearing, and no felt need for any guidance on parenting as the young couple believe that they do not need it. The involvement by the parents/elders is seen more as a hindrance and infringement on personal freedom and intrusion into one's own space.
The transition from DINKS to DIOK (Double Income One Kid) family sets the tone for the problems to emerge. The young parents have no time, are affluent and can hence engage external help for the only child's care. The relationship between the parents and the child becomes one of a ritualistic formal official party relatonship, with all the visible gadgets thrown in for display of (misplaced) affluence and well being. The child begins to live in a make-believe world created by the parents in their own cocoon, totally cut off from the rest of the world with limited opportunity for free expression and experience (one has to go by the rules of the house, otherwise it is considered inappropriate behavior). The child grows up believing the small world ceated for him to be the whole world and aligns with it comfortably, overprotected from the harsh realities of real life by the affluent parents. The child becomes a stranger within his own homeland when having to deal with the real heterogeneous environs, as he picks up habits appropriate to has parents affluence and value systems.
In the next phase, the child attains maturity, enters a professional institution in the competitve world (gets through the competition through the rote external tutoring the parents can afford!). He suddenly gets exposed to the unprotected and non-structured ways of the real world. Disappointments set in as he is unable to deliver to the expectations of parents and the significant others. Frustration develops followed by consequences that manifest in suicides, withdrawal symptoms, mental cases, terrorism,… and then (may be some) get into employment, and get exposed to formal mentoring.
Are we not responsible for this state of affairs, where we refuse to learn from within our own system, and adopt and adapt to alien practices as they are fashionable? Is it not time to mentor the parenting process and not their offsprings, so that we can have a deep-rooted and sustainable productive society in the future?
I believe mentoring should start with the parents, right from the time their first child is born, targeting them even while they are in the organization, so that we help and mold future societies. CSR could be a viable route through which large and responsible organizations can add considerable long-lasting value and help in societal transformation. I am reminded of the Chinese' saying _ Give a man a fish he will have one meal, teach him fishing he will live for ever the rest of his life.
Dr. KV Subramanian is a graduate in Electrical Engineering from National Institute of Technology, Karnataka, Surathkal and has a PhD (Fellow) in Management from Indian Institute of Management, Bangalore. He has over 24 years of experience in management consultancy including four years in IT services marketing, ODC & relationship management, management education, consultancy for the development and infrastructure sector, and four years in engineering industry. He has had advanced training in Organizational Behavior and has done his doctoral dissertation in Management on Organizational effectiveness in the implementation of Decentralized Renewable Energy Program (a top priority program of the Government of India).
He is an independent consultant on World Bank funded projects to the Centre for Symbiosis of Technology Environment and Management, www.stemgroup.org, a consulting organization in the Infrastructure and Development sector. Earlier, he had led STEM handling both its consulting and infrastructure management education verticals. He pursues his own consultancy, corporate and short term management training practice through his organization, Prime Consulting Group, www.primeconsultinggroup.net.
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PERSPECTIVE
The Moral of the Moment : Want A Competitive Advantage? Think Like Your Customer
There are many who consider themselves great coaches, but the greatest coach I've ever seen is John Wooden. In case you have never heard of Coach Wooden he coached the UCLA Bruins to a national championship in 1963 and 1964. Duke and Kentucky are the only other teams in history to win back-to-back championships, so I guess you could say that puts Coach Wooden in rare company. That is if those were his only championships. He also won championships in 1966, 1967, 1968, 1969, 1970, 1971, 1972, 1973, and 1975. I've read a lot about Coach Wooden's life, and his philosophy of winning. One of my favorite quotes, albeit simple, provides a great deal of insight about this humble man. "The team with the best players usually wins."
Coach Wooden retired many years ago, but still writes and coaches; he writes and coaches others on leadership, and other observations on personal development. He is not shy about admitting the type of talent he was fortunate enough to recruit and develop was second to none, and relates that to the type of people you recruit and develop for the companies you work for. Point well made.
In my life, I have coached 53 teams. In over 30 years of coaching I've only had two teams that did not have a winning record so perhaps you could define me as a successful coach too. However, I was not able to recruit my players. Instead, my task was to develop the players that were given to me. I was always given one or two very talented players, but all the other teams were given one or two talented players too. In the end, they cancelled each other out, and really did not contribute as much to our success as you would think. I'm no John Wooden, but here's a coaching quote from me. "The team that develops its mid-to- lower range players usually wins."
I've managed at a high level for Xerox Corporation, and my own staff for well over twenty years now and my philosophy has not wavered. Each team I've managed has had a couple of very talented people who did not require a lot of support from me. My success or failure was tied to my mid-to-lower range employees, and the better the job I did to developing them, the more successful we have been as a company.
For decades corporations have adapted to their version of inclusive growth which they've referred to as affirmative action. The intent of these programs has been to provide advantages to minority groups who are seen to have traditionally been discriminated against, with the aim of creating a more equal society.
Now, let's move away from the world of coaching, and the world of management, and move into the world itself. Every country has wealth. Sometimes it's earned, and sometimes it's not, but one thing is for sure; it's not these fortunate few who determine the success of the countries they belong to. It's the mid-to-lower range that drives the economy and the country's success, and when a country can develop this portion of its population, it usually wins.
So that brings us to the idea of inclusive growth, a concept that tells that the way for nations to reduce poverty and succeed is to include all in its economic development. The moral of the moment is to remind ourselves that inclusive growth is not a new idea. Companies and coaches figured it out long ago. It's time for countries to jump on board as well. This isn't just a humanitarian concept - it's a fiscally intelligent concept as well.
Rob Jolles is the founder and president of Jolles Associates, Inc. He is one of the most sought-after speakers in the US. Author of two best-selling books, Rob inspires and demonstrates proven repeatable and predictable methods to improving sales-oriented businesses. A 15-year professional speaking veteran, it's not hard to tell why Rob's personal client list reads like a "Who's-Who" of Fortune 500 Companies. Rob provides valuable, experience-based sales training to his clients, in an informative, and enjoyable fashion
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INTERVIEW
Our Second Life campus is intended to enhance and extend our current programs by offering alternative options for virtual collaboration and learning. We do not imagine that it would ever replace our face-to-face interactions, which are key to the success of our programs, together with our virtual solutions.
• Recently there was an article in Outlook Business, which highlighted the growing popularity of virtual space and the virtual campus set up by Insead in Second Life. So, what is this virtual campus all about?
Inspired by Miklos Sarvary, Professor of Marketing, Dean of Executive Education, and Director of the Learning Innovation Center at INSEAD, our virtual campus in Second Life was created in 2006 as an initiative of the Center, whose goal is to increase the impact of programs across the school by exploring new technologies and innovations in program design.
• Why did Insead build a virtual campus? What prompted the institute to create a virtual campus in Second Life? What are the challenges that you faced in setting up this campus?
We built the virtual campus in Second Life in order to experiment with new tools for teaching, research and networking, and to extend the learning opportunities. It helps to reinforce our global links and provide cost-effective opportunities for our alumni to stay connected to the school. As a business school, we also wanted to be in the best position to see how the digital market place was being used by corporations and how this phenomenon would evolve for real and virtual businesses.
The challenges are similar to those faced when introducing any new technology: there is often a lag between what we would like to do and the adoption rate by others! The technology has evolved quickly but there are still barriers such as corporate firewall issues and lack of adequate graphic drivers that some of our participants face. For faculty, there is a need to invest some additional time to become familiar with the new medium and to adapt their teaching approach, especially in terms of managing classroom interaction.
• How much did it cost Insead for building and maintaining the Second Life virtual campus?
The cost of the virtual campus is relatively low (about $1000 to buy the virtual island) followed by monthly maintenance costs (paid to Linden Lab) of about $150 or so. Besides that, there has been some small investment to design and develop the virtual campus and to make incremental improvements, but the overhead costs of managing online events are really very low.
• What are the benefits offered to participants in Second Life campus? How different is virtual campus from the online distance learning offered by Insead? Does it offer the same value proposition to its customers/students as that of its distance learning or real-life campus?
Our Second Life campus is intended to enhance and extend our current programs by offering alternative options for virtual collaboration and learning. We do not imagine that it would ever replace our face-to-face interactions which are key to the success of our programs, together with our virtual solutions. Likewise, the 3D digital environment is very different from the short online course modules and other web-based tools that we offer. They do not compete with each other, but are part of the rich portfolio of options that we offer. Our aim is to propose the most appropriate and compelling tools, taking into account both the desired pedagogical outcome and client preferences.
• How does Insead's virtual campus work in Second Life? What is the process involved for an aspiring participant to enroll for an MBA program? Could you please elaborate on the operating and business models of your virtual campus?
Our approach has been to experiment with different uses of the virtual environment to see what works best. Some benefits became immediately evident. For example, we regularly hold MBA information sessions in Second Life so that prospective candidates can find out more and ask questions without necessarily having to travel to one of our three campuses. In parallel, of course we continue to hold real information sessions across the globe, but it is difficult for us to visit every region as frequently as we would wish, so this is a way for us to remain accessible, especially for some of the more remote geographic locations.
This medium is also an excellent way to open up discussions about marketing in the digital arena, because participants can actually experience the environment instead of just hearing about it. As part of our MBA curriculum, we regularly offer marketing classes in Second Life where participants have to create an avatar and meet in the virtual classroom.
It is also a convenient way to keep our alumni connected to the school. Through live video-streaming we can transmit real events that are taking place and invite virtual participants to join from anywhere in the world! Our alumni can benefit from continued learning and stay networked with their peers at a very low cost.
Research is another area which has proved fruitful in Second Life. Our faculty can set up the conditions they require to monitor consumer behavior patterns and social norms, and run projects in conjunction with our behavioral lab in Paris. These are just some of the ways that we have been using the virtual campus so far, but new ideas are continually being hatched!
• In what way does the virtual campus generate revenue for Insead? What are the gateways for the inflow and outflow of revenue for Insead's virtual campus?
The virtual campus is one solution amongst many that we propose to clients and program directors when designing a pedagogical experience, if appropriate. It is factored into our revenue model on the basis of project management and faculty time, as many of our other components. It also serves to raise awareness by keeping INSEAD on the digital map as one of the most innovative business schools in the world! Our virtual campus is a low-cost solution with high impact!
• How do you compare the environment of a virtual campus with that of a physical calssroom for both the faculty and the participants?
The Second Life environment requires an initial time investment for users to create an account, adjust their avatar and get used to moving about, but once this is done, it is fully immersive and very engaging! Communication can be on three levels, by voice, text chat and IM, so participants usually enjoy the whole experience of adopting a persona and interacting with each other in a physical 3D environment. There is a virtual bar and many open spaces, where participants can meet up before or after the class session to network, just like in real life!
For faculty, the challenge is to manage the interaction without seeing real faces and to minimize the initial distractions when participants are flying around the classroom!
• How do you rate the performance of the virtual campus? Would you categorize it as a successful venture as of now or one that would be successful in the near future?
As one of the first business schools to create a virtual campus, INSEAD has received some very positive media attention for being an early adopter of these new technologies. Given our long history of designing internet-based business simulations and other online tools, this is not very surprising, but our Second Life campus has generated a positive buzz that we hope to sustain! It has provided us with an alternative tool for extending our services and keeping our stakeholders connected, at relatively low cost, and at the same time, allowed us to gain a better understanding of the digital marketplace through research and teaching. In that sense the success of our Second Life campus has so far exceeded the initial investment, and we hope to continue with more positive outcomes!
• What do you think would be the enabling factors for the success of this virtual campus?
We have not finished exploring or discovering all the opportunities provided by this environment. As participants and faculty become more familiar with virtual worlds, we hope that the traffic, usage, and frequency of events on our virtual campus will increase.
• What potential barriers do you feel are holding the growth of virtual campus? Also tell us something about your competitors in this area?
Ideally, the technology needs to continue evolving so that it is easier for people to install and access Second Life. The technology requirements are not currently standard to all computers and corporate firewalls still pose a problem. As more organizations adopt virtual worlds, accessibility should improve, as it did for the Internet and the other standard office applications. Until that happens, there is a natural reluctance on the part of some professors to take on the risks involved. Other business schools and universities are actively exploring virtual worlds, but very few have created a virtual campus that is regularly used for teaching and research. Organizations are certainly using it for vocational training. For example, this environment lends itself particularly well to situational or scenario-based training, within industrial, military and medical sectors.
• For the next five years, how do you see the future of Second Life virtual campus? Would it be more successful than the distance learning/ real life campus?
Experts predict that virtual worlds will continue to be a fast growing trend over the next five years at least, so as more people create an avatar and become familiar with virtual worlds, hopefully it will become easier to connect up. For some of our alumni, virtual worlds are still a rather strange and futuristic concept but this is already changing quite quickly! On the other hand, for many MBA applicants, meeting up in Second Life makes perfect sense. Online learners are increasingly demanding and expect to have fun while learning! Virtual worlds are certainly more compelling than traditional distance learning, because you can interact in real time with others in a shared space, and there are more opportunities for informal learning. However, for optimum results, we consider all our virtual tools as complementary to the real life experiences that we propose.
• How do you feel about the rising popularity of the virtual worlds like Second Life and what impacts would it have on the society? Will these virtual worlds continue to be the next big thing in the near future or will they soon be passe?
Apparently our cognitive processes respond better in a 3D environment and we are more likely to remember what we learnt if we can anchor that knowledge to the memory of a physical landmark or face (whether virtual or real). Programmers are writing scripts to enhance avatars' facial expressions and mimic real body language, and others are working on the interoperability of virtual worlds so that we can pass from one world to another with the same avatar. Many are working on how to integrate 2D and 3D applications and project 3D data. As these functionalities are refined and new ones introduced, I imagine that virtual worlds will be more readily used in many spheres of life. Virtual worlds have the capacity to level out differences, reduce inhibitions, challenge perceptions and create opportunities in a way that real life cannot.
Businesses are making real money in the virtual world and the market for virtual goods is still growing, especially in Asia. Therefore, it seems likely that virtual worlds will continue to progress and could become as commonplace and user-friendly as webpages are today. There may be future applications of virtual worlds that we can hardly imagine right now, but hopefully INSEAD will be well positioned to try them out when the time comes!
Miklos Sarvary is Professor of Marketing and Dean of Executive Education at INSEAD, France. He has worked closely with the school's Executive Development for several years in his function as the Director of INSEAD's Learning Innovation Center, a research outlet with the mission to develop innovative teaching formats for executive programs. Before joining INSEAD, Sarvary was a faculty member at the Harvard Business School and the Graduate School of Business at Stanford University. He studied Physics in Hungary's Eotvos Lorand University, earned an MS in Statistics from Ecole Nationale Supérieure des Mines de Paris and a PhD in Management from INSEAD. Prior to becoming an academic, he worked for IBM, selling integrated IT solutions to large financial institutions.
Sarvary's most recent research focuses on social networks and new media (metaverses) and how these technologies transform marketing. His recent papers study media competition, online advertising, the structure of the Internet and techniques related to `community management'. Previously, he did work on dynamic R&D strategies, information marketing, the worldwide pricing of cellular telephone services and the global diffusion of telecommunications products. He is an Associate Editor of Marketing Science and Quantitative Marketing and Economics, and member of the Editorial Boards of International Journal of Research in Marketing and Journal of Interactive Marketing. He has taught executive courses and consulted in various parts of the world for large corporations, including Degussa, Danisco, IBM, INTEL, Nokia, Alcatel, Samsung, Pearson, McKinsey & Co., Dun & Bradstreet and PwC.
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The interview was conducted by
Syed Abdul Samad (TL) and Fareeda (Sr. RA)
IBS CDC, www.ibscdc.org
Syed Abdul Samad (TL) and Fareeda (Sr. RA)
IBS CDC, www.ibscdc.org
INTERVIEW
The customer has traditionally been viewed as a "target to be had". That may seem difficult to accept today, and that's the point. Customers were seen as passive pockets of demand for the goods and services that the company could sell. This still holds, i.e., selling goods and services, but what has changed is that the informed, connected, and empowered customer have different expectations today.
• Professor, it's been almost 10 years since you (along with CK Prahalad) published that path-breaking article, "Co-Opting Customer Competence", in HBR January-February 2000. You followed this up with the same theme in Sloan Management Review's article (Summer 2003) "The New Frontier of Experience Innovation" and The Future of Competition: Co-Creating Unique Value with Customers (HBS Press) in 2004. What were the factors that triggered this new dimension of corporate strategy? What specific business happenings motivated you to embark on a collaborative research with CK Prahalad on co-creation? Can you take us through how the concept of co-creation evolved, was interpreted and embraced through those three distinct publications?
Sure. After the initial dot-com boom and then bust, it became evident that businesses had missed the fundamental shift beneath the Web. They were focused on exploiting it in traditional ways at the time. You will recall phrases like "eyeballs", "last mile" etc. All these reflect the one-way firm-centric mindset of value creation: from the firm to the customer. Meanwhile, customers were exploiting the Web for themselves, getting more informed and connected. So, we asked ourselves a simple question: What would happen if a billion people became networked in this fashion? How would it change the dynamics of value creation? For starters, customers were forming communities on their own, independent of the firm. They were extracting away value in the system. So, the next question on the supply side was: could customers become a source of competence to firms? That led to the HBR article "Co-opting Customer Competence". Then came the next issue: Customers have always derived value based on their experiences. That's not new. But what was new was for companies to start thinking about innovation in terms of experiences. Hence, we coined the term "experience innovation", which has become popular today. These two shifts - of customers as a source of competence and experiences, not just goods and services as the basis of value and innovation _were expanded upon in my book The Future of Competition, with Professor C K Prahalad. We have discussed several examples there of these emerging practices at that time.
• How did the relationship between the customer and the company change over decades and what did this change mean for business practices? What specific trends do you think are warranting companies to look beyond the traditional value creation and embrace co-creation as the new competitive platform?
The customer has traditionally been viewed as a "target to be had". That may seem difficult to accept today, and that's the point. Customers were seen as passive pockets of demand for the goods and services that the company could sell. This still holds, i.e., selling goods and services, but what has changed is that the informed, connected, and empowered customer have different expectations today. They want to have a say, their voice heard. They want to influence what companies sell to them. What companies were not realizing was that this was good for them. Now with the Great Recession, and even prior to that, companies were realizing the limits to the traditional cost-based and product-/service-centric view of value. But with the advent of social media, the ground swell grew and companies began to feel the pressure from the customer end. At the same time, globalization and fragmentation of the value chain began to commoditize companies on the supply side. Companies had to partner and become part of complex business networks. After The Future of Competition was published, I continued my personal journey, exploring with managers and companies around the world what these shifts meant to them. I discovered many companies who had begun to grasp the significance of these shifts. I saw companies innovating what I call "engagement platforms" - ways of engaging customers to create value together. These engagement platforms revolved around the offering itself (e.g., Nike+); websites (Starbucks and Dell engaging their customers in generating new ideas); physical stores (e.g., Apple Store and its Genius Bar and Caja Navarra's bank branches in Spain); call centers; private and public community spaces (e.g., Sunsilk Gang of Girls); and even live meetings (e.g., Club Tourism in Japan). All of this and much more is discussed in my new book forthcoming this year, The Alchemy of Co-Creation, co-authored with Francis Gouillart (Simon & Schuster's Free Press, 2010).
• What is the purport of this next book The Alchemy of Co-Creation? What new dimensions and arguments have been added?
Actually, it's more than just adding new dimensions and arguments. First, I have expanded how we think about co-creation: it is about all individuals engaged in a process of mutual value creation, whether as customers, employees, or any other stakeholder. The core principle is using engagement platforms with an experience mindset to create mutual value together. That may not seem different at first. But as we show "experiences" are not just at the end of the value chain, but everywhere in the system, of anybody in the system. Further, co-creation is not about just personalization. It is as much about "learning" from customer experiences through dialogue with them. So, co-creation can also be applied with standardized offerings. In this view, co-creation also implies a transformation of management processes inside the company, together with employees. It is difficult for companies to co-create with customers, if they can't co-create with their employees. We have lots of examples in the book, which are hard to describe here.
• Many argue that co-creation can at best work in B2C companies. Do you think co-creation can work equally well in B2B businesses? And moreover, how can co-creation be adopted in such industries as steel, petroleum, airlines, pharmaceuticals, electronics, etc., where the industries are either stable (from the viewpoint of their value propositions) or their primary job is to preempt any latent customer need?
In the new expanded view of co-creation expounded in my new book, wherever there is "interaction" there is an opportunity for co-creation. This is important. Interactions are the new focus of value. And interactions are everywhere in the system, isn't it? So, B2C, B2B or the public sector or whatever, once you think of interactions as the driver of experiences, then it becomes obvious that firms need to change how people "interact" with their processes and offerings, and thereby create mutual value. Again, I have several examples in my new book. Once the book is out, I will be happy to discuss any of these examples further.
• One of the critical success factors for co-creation is networking capabilities of companies? How do you think these networking capabilities can be built, and what are the other critical success factors of co-creation? What kind of organizational capabilities must be built up before embracing co-creation as a new way of doing business?
These are good questions. In fact, "becoming a co-creative enterprise" is the title of the first chapter of my new book. Half the book is dedicated to the "transformation" of the management processes of companies. In my experience, change the management processes, and the rest will flow. Capabilities cannot be talked about in a vacuum, because in the new view, every organization is different, and the capabilities that are required are a direct function of the nature of innovation, which is often a function of the management processes and culture of the organization. So, change should begin in the bowels of the company. And this is a key point: those that are affected by change must be involved in it. The way to get to co-creation is through co-creation. In other words, co-creation is both the means and the end. A huge critical success factor is to recognize co-creation as a journey and the need to pay constant attention to keeping platforms alive through a focus on experiences.
• What is the role of leadership in preparing organizations to embrace the new value-driven philosophy of co-creation?
Leadership is even more critical, and at all levels. The transformation to a co-creative enterprise can however be bottom up, middle out, or guided top down. In the new book, we discuss a diverse set of examples from Intuit, La Poste _ the French Post Office, and HCL to Cisco and ERM, a professional services organization.
• Did you observe any co-creation attempts from emerging economies' companies? Do you suggest companies from emerging economies should also look at co-creation as their next frontier?
Yes, we actually found a greater interest in emerging economies, as they have less to forget. But co-creation is equally applicable to whether the economy is emerging or developed, and regardless of industry as I mentioned earlier.
• What would innovation mean in the light of co-creation attempts? What changes do you foresee on companies' innovation efforts?
In the new book, we discuss how innovation must be co-created. This goes beyond crowd sourcing and mass collaboration. It is about focusing on the innovation experiences of all stakeholders participating in the innovation process. Co-creation is agnostic to the type of innovation, whether it is operational, product-/service- oriented or a new business model. Within each of these innovation approaches, co-creation can reduce risk and make the innovation much more effective and efficient. Co-creation is not about building it and they will come. It is about building it WITH them; they are already there. Engage and innovate in co-creative fashion. That's the key.
Venkat Ramaswamy is Professor of Marketing and Hallman Fellow of Electronic Business at Ross School of Business, University of Michigan. He is also Director of Executive Education, Global Co-Creation Community Founder, and Chief Mentor, Experience Co-Creation Partnership. He is a prolific author of numerous articles including the co-authored (with C K Prahalad) highly acclaimed Harvard Business Review article "Coopting Customer Competence" and the 2004 MIT-Price WaterhouseCoopers award-winner "The New Frontier of Experience Innovation", published in the Sloan Management Review. He also co-authored with CK Prahalad the acclaimed book The Future of Competition: Co-creating Unique Value with Customers (Harvard Business School Press, 2004), selected as one of the Top 10 Business books of 2004 by BusinessWeek and Strategy & Business as one of the best strategy books of 2004.
His latest book (co-authored with Francis Gouillart) is Co-Creating the Future: The Power to Ignite Sustainable Growth. Venkat's eclectic interests span innovation, marketing, customer experiences, operations, IT, HR, and strategy. His current research focuses on exploring the "next practices" in value creation through co-creation, innovating engagement platforms and experience environments around interactions, customer communities and nodal company networks, and developing management systems for organizations to compete through co-creation.
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The interview was conducted by Dr. Nagendra V Chowdary,
Consulting Editor, Effective Executive
Dean, IBS CDC, www.ibscdc.org
Consulting Editor, Effective Executive
Dean, IBS CDC, www.ibscdc.org
INTERVIEW
Steve Jobs doesn't use focus groups. Instead, he inspires his team to create products they would like to use. He once said that he and Wozniak built the Apple II for themselves and their peers. Jobs asks himself, What is it about a design experience that I would enjoy?
• What does Steve Jobs mean to you? What does the brand `Steve Jobs' stand for?
Steve Jobs is the world's most captivating storyteller. For more than three decades, he has turned product launches into an art form. His presentations, like his products, are simple, elegant and yes, beautifully compelling.
• Many describe Steve Jobs as the greatest marketer ever. What are your impressions about Steve Jobs as a marketer? What is your assessment of Apple's and i-series' (iPod, iTunes, iPhone, etc) marketing strategies? How is it that, for all these years, one of the top-rated brands never had any brand ambassador?
Steve Jobs is a great marketer because he starts with the customer in mind. He begins by asking questions like: what will make their lives better? What tools can we create to make their lives better? You see, it's hard to market products that are created by engineers for engineers. Jobs' marketing genius starts with the products themselves. They solve real problems.
• In one of the widely watched and read speeches (Commencement address at Stanford, in 2005), Steve Jobs observed, " Your work is going to fill a large part of your life and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do". What specific qualities make Steve Jobs stand out as a unique and enigmatic leader? Was it his love for what he was doing or was it his love for what he created?
I thought the 2005 Stanford Commencement Speech was one of the greatest speeches I've ever heard _ and I've heard many. People look at Steve Jobs and ask themselves, what is the secret to his success? He gave it to you. Do what you love. Jobs, and his friend, Steve Wozniak, loved electronics. They enjoyed meeting at a local hobbyist club, The Homebrew Club, to talk about computers, electronics, and about how technology could improve people's lives. Jobs loves designs. He once spent two weeks researching a washer/dryer for his family's house, comparing European and American designs. These are the things that guided his life _ computers, technology and design. If that's not your calling, don't expect to be the next Steve Jobs. But maybe you can be the Steve Jobs of your industry. Think about your dreams and, like Jobs said, follow your heart. It somehow already knows where it belongs.
• It has been 32 long years since Steve Jobs and Steve Woznaik began selling the Apple II, the first commercially successful mass-produced microcomputer. How do you look at all these years of Steve Jobs? What does this mean for the world of business?
Even if you don't own a Mac (and I just recently bought my first Macbook), you owe Steve Jobs a lot. He changed your life. He made the PC approachable and affordable. He introduced the first computer with windows icons, graphics, calligraphy and a mouse! He reinvented the way we enjoy our music. He reinvented telecommunications. He reinvented animation with Pixar. And he's on his way to opening an entire new class of computers with the iPad. His technology has touched all of us.
• What distinguishes Steve Jobs 1, the young man who started Apple, and Steve Jobs 2, the guy who came back to Apple and turned it around?
Steve Jobs has said that being "fired" was the best thing that could have happened to him. It forced him to have a "beginner's mind" again. He returned to the most creative period in his life. Some people buckle in the face of adversity; Jobs thrived. He used the setback as a learning opportunity and came back stronger, more focused and committed to the customer.
• While Randall E Stross (the author of Steve Jobs & The NeXt Big Thing)described Steve Jobs as, "arrogantly oblivious", "unmerciful", and an "unapologetic snob" who is "imprisoned…by his selected historical memory", others describe him as "the perfectionist", "sets expectations for quality, challenging the status quo.. and never accepts no for an answer", "too good a human being" and "unparalleled institutional builder", etc. Who is the true Steve Jobs?
Stross comments seem harsh. I'd like to ask Stross, what was Jobs oblivious to? He knows what consumers will want well before the consumers themselves. He has revolutionized numerous industries _ computers, telecom, music, and movies. I've heard stories about Jobs in his youth and I don't think I would have wanted to work for him when he was in twenties. But I also know people who have partnered with him in the last few years and found him to be very generous.
• Commenting on Steve Jobs, Andy Grove said, "There's no other company in technology that's started with a strong core business and developed another very strong one. The rest of us are lucky, or good (if we're) right once". How could Steve Jobs be right more than once? Was it his predictive abilities or iconoclastic arrogance that helped him become successful more than once?
Steve Jobs doesn't use focus groups. Instead, he inspires his team to create products they would like to use. He once said that he and Wozniak built the Apple II for themselves and their peers. Jobs asks himself, What is it about a design experience that I would enjoy?" For example, Apple introduced the touchscreen for mobile phones in 2007 with the iPhone. He challenged his design team by asking what they wanted in a Smart Phone experience. Nobody liked using a stylus. Instead, they wanted to use a stylus that they were born with — their fingers. Jobs then hires the best people in the world to help his vision come to life.
• Many argue that Jobs is reclusive and secretive and end up describing his leadership as a secretive one and quote Phil Knight, Ratan Tata, etc., as examples of similar kind of leadership. Is there any such thing as a secret leadership? What would be the impact of such a leadership on the organization in the short and long run?
There's actually an entire body of work in the area of neuroscience which has found that keeping some things as "secrets" stimulates curiosity. So the fact that Apple waited six months before the introduction of the iPhone and its actual on-sale date did indeed do something to entice consumers. But it's a complicated field of study. I happen to believe in the model of open and transparent communications. I think these days employees – young people especially – want to feel as though they are involved in decision and the growth of the company. Apple is in a unique place. If Steve Jobs asks you to work for him, most people would jump at the opportunity. But if you're not Steve Jobs and you act like Steve Jobs, you're toast.
• In November 2009, Fortune named Steve Jobs as the CEO of the Decade. In the accompanying cover story (The Decade of Steve: How Apple's imperious, brilliant CEO transformed American business), Adam Lashinsky, Fortune's editor-at-large observed, "Remaking any one business is a career-defining achievement; four (movies (Pixar), Music (iPod), Mobile (iPhone) and Computers) is unheard of." How could he redefine the competitive landscape of four different industries, singlehandedly? What do you think were the critical success factors in such a pronounced victory?
Steve Jobs has been driving by the following principles:
• He does what he loves
• He articulates a big, bold vision
• He puts the customer experience first
• He inspires evangelists
• He tells a magnificent story.
• He has confidence in himself and never gives up on his vision.
Few leaders live by these principles.
• Do you think brand `Steve Jobs' has come to overshadow brand `Apple'?
Apple is one of those rare companies where the founder is more legendary than the brand. The other is Virgin's Richard Branson. But by most accounts, the Steve Jobs ethos is built into the company at this point and people like Tim Cook, Phil Schiller and Jonathan Ive reflect the best of Jobs.
• One of the often quoted themes of Steve Jobs has been, `what next'. Now the question on every one's mind is what's next for Apple, after Steve Jobs? What would be Apple Minus Steve Jobs?
Well, let's not get ahead of ourselves. Steve Jobs might be in charge for a long, long time. When you're driven by your passion, you don't "retire." As long as his ethos becomes part of the company legacy, it should be fine for decades. Henry Ford hasn't been at the company he founded for sixty five years. The last time I checked, it was among the most admired car companies in the world.
• What according to you, would be the impending challenges for Steve Jobs' successor? Can he manage the mandate?
The mandate is simple – make technology that's simple to use, convenient, affordable and enjoyable.
• How should the business world remember Steve Jobs' legacy? What according to you is the most befitting way to celebrate Steve Jobs' indomitable spirit?
The best way I can phrase it: He saw craziness in their genius. Jobs didn't see customers as "consumers." He saw people who were going to change the world and he made tools for those people.
Carmine Gallo is a communications coach for the world's most admired brands. He works directly with executives to help them communicate the value of their brands to employees and customers. Gallo writes a weekly column for businessweek.com on the topic of leadership and communications. He is the author of several books, including Fire Them Up: 7 Simple Secrets of Inspiring Leaders and The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience. Gallo is a former CNN business journalist. In addition to his BusinessWeek columns, Gallo hosts weekly podcasts for the CBS Interactive websites. Visit him at www.carminegallo.com
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The interview was conducted by Dr. Nagendra V Chowdary,
Consulting Editor, Effective Executive
Dean, IBS CDC, www.ibscdc.org
Consulting Editor, Effective Executive
Dean, IBS CDC, www.ibscdc.org
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