Innovation "Culture": Execution is more Important than Aspirations

Innovation Culture: we all want to be like Apple, or IDEO, Google, or W.L. Gore. As if it were that easy! No one wants to be slow, customer-indifferent, or uncreative, but the sad truth is that too many are! Why? How can it be that we all want something so badly, and yet so few achieve it?

My belief is that the problem starts with the very word "culture." It rolls off the tongue so easily, in nearly any language. When you use the word "culture", especially in relation to innovation, everyone nods in agreement -- it's an "easy sell," the universal panacea. Yet, the real problem is that the word "culture"means everything to everyone. It is so mysterious that none of us have any idea of what the other really means when they use the term, but we don't really care. We are all under the spell of becoming Apple, without questioning what it takes to get there.

For this reason, I truly hate the word "culture", and try to forbid its use in my classes. My former Driving Strategic Innovation program colleague Harvard Professor Rebecca Henderson once called "culture: an excuse for thinking." I agree! Instead, I believe that the word "culture" should describe "how we do things around here," or essentially typical group behavior. If that is true, then I also believe that such behavior is the outcome of managerial choices made within five realms:

1. the articulation of strategic vision (which should be both precise & liberating)


2. the talent & skills that are necessary to achieve this vision


3. the best way to organize our talent & skills to achieve our vision


4. the processes that we can employ to give our talent a higher probability of success, and


5. the values, measures & rewards by which we inspire, evaluate and compensate our talent.

Almost all managerial choice involves one of these five realms and together they determine how our people behave --i.e, they determine our "culture." The model was first proposed by my former IMD-colleague, Jay Galbraith, and is best represented by his star model (shown above). I think of the star as a sort of "steering" device. By "tuning" any of the five "levers" I can activate motion in my organization in one direction or another. To really steer the organization in the direction that I wish, I need to consider "tuning" all of them, and in such a way (and at the same time) -- alignment -- that the organization moves in the direction, and at the speed, that we aspire. This is what culture should be about. The conscious and thoughtful result of managerial choices; not mystery!

What's the Big Idea?

Who amongst us works in an innovative position? I would hope all of us! In fact, however, when I ask that question of the executives I work with, normally only about 1/3 think of themselves as "innovators." That's really too bad! Why shouldn't everyone dream of what they could do better, and then have the license to pursue those dreams?

I recently had the chance to work with 30 or so mostly Marketing executives at a European-based, globally-well-known, fast moving consumer goods company, and I asked them "What have been the big ideas over the past decade that have either changed your industry, or the work that you do?" The responses that I received were quite surprising, and I think promising as well.

From the six teams we had assembled for this discussion, we received nine "big idea" nominations. What was so interesting was that they were all different, and represented interesting innovations across the business. Not surprisingly, since this is a product-selling organization, four of the idea nominations were about product changes [each different, in an industry that traditionally stereotypes itself as being "non-innovative"!], but two were about the reinvention of a global supply chain, one was about moving from local to global brands, another was about the rise of Corporate Social Responsiblity as a way of thinking within the industry, and the final one was an apparent industry-wide desire to engender "transformational leadership."

It was, admittedly, a very small and casual sample. Despite this, I was very happy, and quite surprised, to see these results! What they said to me was that: 1. even in a "slow-moving" industry, there are lots of big changes; 2. these big changes -- innovations! -- actually take place in nearly every part of the business: R&D, Supply-Chain, Marketing, HR, and even within the very definition of what it means to be a "leader"; and 3. these innovations, no matter where they occur, are recognized and appreciated by executives across the business. My interpretation is that perhaps sometimes even we, who are steeped in innovation interests, fail to recognize that innovation is alive and well in many parts of a business and that it is often more visible than we suspect.

The accompanying image is of Le Cirque Invisible, and features Victoria Chaplin and Jean-Baptiste Thierrée.

Marvels of Modern Management: Apple & the Lost Tablet Tribes

"Apple isn't likely to keep its 90% share of the booming tablet market..." 90%? That's unheard of in nearly any market! Can you imagine such a comment regarding a market as competitive as tablet computers? Yet, that's what Walt Mossberg, the technology columnist for the The Wall Street Journal observed just last week.

In fact, 400,000-600,000 iPad 2s sold in the first three days that they were available, according to The Wall Street Journal's estimates, and that's also amazing when you consider that the iPad 1 took a week to reach that number, and that most of last week's purchasers were first-time buyers of an iPad. By any account, this is an extraordinary accomplishment. In fact, an analyst from Piper Jeffrey & Co., quoted in the same article, admitted as much: "We didn't expect anything close to this." Apparently, neither did the other players in the pc industry!

That is what makes this a marvel of modern management: the absolute lead that Apple has achieved over well-known, highly thought-of, competitors who appear to be paralyzed. As one R&D Director in the industry said to me recently: "We saw tablets coming. We recognized their potential. We saw them as they passed us by, and, now, we are watching them move on; and all the while we find ourselves unable to take action!" Ok, some -- Samsung, in particular -- have moved to challenge Apple, but while most of the big competitors are still to announce their version 1; Apple is well-into version 2. Where are the others? How could this be happening? What are they waiting for?

How do you explain this? It has to be regarded as a Marvel of Modern Management!

My sense is that we live in a time of unprecedented complexity. Technologies,
globalization, emerging markets, etc. have resulted in everything being
"bigger," "faster," more "profound," more "risky." As a direct result, I think
that we can also argue that this is the most demanding leadership era, as well.
As we move forward into this uncharted managerial wilderness, it's not
surprising to catch glimpses, along the way, of extraordinary managerial
accomplishments or shocking confusion/delusion, that merit some attention and
reflection if we are to be more thoughtful about the craft of leadership. This
has prompted me to begin to explore a series of "sketches" regarding what I've
chosen to refer to as "Marvels of Modern Management." The term is a both an
expression of admiration, but it can also be a bit satirical, and comes from a
book that I had as a child which was entitled J.R. Crossland's Modern [1938!]
Marvels Encyclopedia, and which chronicled (according to some scheme I never did
understand) “marvels” of contemporary life. It also, of course, could be taken
to refer to “Captain Marvel,” who assumed “super-hero” form as the result of his
alter-persona Billy Batson's repeating the magic mantra: Shazam, which stood
for: the wisdom of Solomon, the strength of Hercules, the stamina of Atlas, the
power of Zeus, the courage of Achilles, and the speed of Mercury. Not a bad
combination of attributes to be desired in the 21st century CEO!

The image accompanying this post is a terra-cotta figure of an Etruscan actor from the 2nd century BC, said to be from Canino, Italy, and presently in the British museum. The character is holding a bag of money and I chose this image to represent the awarding of a prize for an impressive accomplishment.

The Wrong Toyota Way

Toyota has long been an icon in manufacturing circles, and I think that their recent troubles are both unfortunate and that it's unfair to "pile-on" while they are attempting to recover. They remain not only a great company, but also a great benchmark for manufacturing achievement -- you cannot be "best of class" for several decades without doing a lot of things right. I recently wrote about Toyota's problems for Forbes.com and several other publications. Here is the version that ran on Forbes.com on February 10, 2010:

For at least two decades Toyota has been the benchmark of manufacturing quality. Not only for automobiles but throughout the manufacturing world, the "Totota way" has been a model. The company's attention to detail and unrelenting expectation of perfect quality, its promise to the buyer that a car will be trouble-free and its building of an organizational culture that delivered on these promises over and over again--those have all been areas in which Toyota did better than anyone else on the planet.

Now, with the revelation that many Toyota automobiles are not as impeccably well-built or as safe as we had all assumed, the image is tarnished. Toyota has started to look like a lot of organizations that promise things they can't deliver and sell brands with little substance behind them.

In fact, if we reflect soberly, we realize that given the sorry state of the world's automobile industry, Toyota remains the benchmark. Despite its recent recalls of several million vehicles, apparently the largest recalls in history, Toyota still stands out for making cars that work and for innovating in ways that are likely to shape the future. However, while pursuing growth the company has failed by neglecting to pay attention to things it already knew as an organization.

One of the things that Toyota knew and yet forgot was that one must, in the words of Paul Ingrassia, the author of Crash Course, a new book on the auto industry, "never build … a new product in a new factory with a new workforce." Those "three nevers" are opportunity for trouble, because organizations must always combine knowing with growing if they are to succeed in a global marketplace. As we move into a knowledge-intensive era, knowing things will become as important as, if not more important than, making things. Knowing what to make, how to make it and who to make it for will be the key to success. The organizations that come out ahead will be the ones that know more than other organizations and have figured out how to know more. In other words, they will be smarter organizations. Toyota has always been among the world's smartest organizations, yet here, in its pursuit of ever greater global growth, it wasn't so smart after all.

The Toyota situation has been deftly analyzed by two IMD professors, Bala Chakravarthy and Peter Lorange, in their book Profit or Growth; Why You Don't Have to Choose. They argue that companies that are intent on growing, as opposed to protecting and defending their market positions, can expand either by opening new markets or by offering new competencies--but they cannot do both at the same time. Another way to put this is that global growth is based on building on what you know while selectively learning new things. Abandoning everything you know, be it about markets, technology, customers, offerings or anything else, is to proceed knowing very little at all.

One reason for the truth of the "three nevers" is the power of tacit knowledge. According to Ikujiro Nonaka, a scholar at Berkeley and at Hitotsubashi University in Japan and one of the founders of the field of knowledge management, knowledge can exist in a hard or formal form, such as in documents, books or memorandums, or it can be "tacit," such as when it's knowhow in the heads of people familiar with particular work arrangements. Formal knowledge is relatively easy to transfer, through documents; tacit knowledge only moves from one person to another with personal interaction.

We may not even realize we possess tacit knowledge until a conversation with a colleague crystallizes a thought and we recognize how much we know. The problem with violating the three nevers rule is that when we do it we lose all hope of tacit knowledge transfer. When we move into new product areas in new geographic markets and with new factories, we have no hope for a head start, for an advantage based on the strength of our existing knowledge.

Successful globalization is much too difficult to achieve without any knowledge that gives your organization a basis for advantage. You might use your prior knowledge by drawing on existing product offerings in new markets, or by making new products in existing factories with experienced workforces or maybe by using a seasoned team of veteran managers and workers to tackle a new problem in an existing market. But you must always keep some of the familiar while embarking on something new. To do otherwise is to risk following in Toyota's recent path.

Disengaged but Happy

A new study of 90,000 workers in 18 countries, styled as representing the "Global Workforce," was announced yesterday by the consulting firm Towers Perrin. Although I have not yet seen the actual study, what is fascinating about the press release is that the study finds that "only 21 percent of employees are engaged in their work, while 38 percent are disenchanted or disengaged. [The study defined "engagement" as being willing to do more than is required to help their employers succeed and measured it by their responses to questions about their feelings about work, as well as their behavior.]"

Somewhat reassuredly, we're told that the study found that the engagement of an organization's workforce and their financial performance are positively correlated, but on a surprising note, the Associated Press reports: "Despite the high level of disengagement, many workers say they are happy in their employment situations, with 86 percent reporting that they like or love their jobs and 84 percent saying they enjoy challenging work." Senior leaders, rather than direct supervisors, were spotlighted as being particulary important for shaping these feelings of engagement or disengagement.

While this is not particularly surprising, given some findings that I've reported elsewhere on talent utilization, what is disturbing is that workers can be both disengaged and happy, at the same time. We'll have to wait until we can see the actual report before drawing too many conclusions, however.

Irresponsibly Outsourcing Managerial Responsibility

Call me old fashioned, but in the wake of the Mattel mess, I sort of miss the old Japanese-style "I'm sorry! We let you down! I resign!" type of CEO apology. Not for me, this "he did, we did, a little bit doesn't matter anyway," type of merry-go-round that Mattel treated us to last week. For the rest of this opinion, please go to the Sunday Column section at www.cbiz.cn: http://www.cbiz.cn/news/showarticle.asp?id=2489

The Sounds of Silence

I'm frequently in situations to observe senior corporate leaders, across a wide variety of industries and cultures, interact with their (often senior) employees, and the all-too familar one-way nature of these interactions always amazes and depresses me. Frequently, in fact, I'm embarassed by the profound silence which inevitably greets any effort to elicit a conversation with those assembled. Surely, no one in the audience wants to receive yet another "broadside" of corporate jargon, yet given the opportunity to ask questions, or raise issues, those gathered all too often remain mute.
What is it about the persistance of rank in the 21st century that leads to such situations? What must the senior executive be thinking of colleagues who have so little ingenuity/energy/interest that they cannot think of good questions; any questions? Why do we not realize, and here I'm speaking of both sides in these fractured convesations, that opinions matter, that ideas count, that we can only make our organizations better through the sharing of conflicting points of view? This is as much a failure of leadership as it is a failure of imagination. Confronted by silent colleagues, the leader has an obligation to resist the all-too comfortable retreat into shop-worn phrases, and, instead, to go after those who are silent and demand that they become contributors to the conversation. Both sides are failing here, and the silence is damning.