What makes businesses vulnerable to disruptive change?
There are 2 main messages in my book.
First, that while we think the world is changing rapidly, in fact, we continue to rely on a platform that arose from the invention of 3 general purpose technologies in the 1870’s: the internal combustion engine, the light bulb, and the telephone. Even with the computer and the Internet, we have spent decades boxing in this amazing new technology to fit our paradigm need for a faster, smaller, cheaper phone. So, while we think we are in the midst of rapid change, the western world is in fact obsessed with ensuring we stick with the old world and reward refinements of tired mature ways of doing things. When real change comes, will business leaders be prepared? I don’t think so.
One of the reasons why we won’t respond well when real change comes is that while ideas are abundant, small start-up ventures lack the resources – people, money, physical assets — to launch these ideas. They also lack the credibility, networks, access to customers, suppliers, government officials, etc. This limits their ability to move these ideas forward, no matter how great they may be. At the same time, existing companies are flush with people, money, networks, customers, and, most important, credibility and brand value. But what they lack is an entrepreneurial mindset. To move forward, companies need to resist the rhetoric of finding and sticking to a narrow form of sustainable competitive advantage, and instead adopt a model of strategic entrepreneurship that promotes transformational growth and longevity.
The fundamental impact of disruptive change is that our organizations are not built to manage change very well. Through principles such as sustainable competitive advantage, we tend to use fixed mindsets that build a sort of impenetrable armor around the firm’s processes and procedures, instead of being flexible and adaptable. When disruptive technologies or business models present an alternative, firms resist. Indeed, even customers often resist, as we remain stuck in our paradigms formed as noted above. However, in time, customers adapt because they do not have the level of sunk investment in the old ways that companies often do. Time and again, rigid non-entrepreneurial firms fall by the wayside.
There are many very extreme examples of this phenomenon. Think of Kodak, which is a firm that actually pioneered digital photography, but in the end was unable to adapt to this powerful disruptive technology.
“Progress is a nice word we like to use. But change is its motivator. And change has its enemies.” –Robert Kennedy
How can large organizations embrace a spirit of entrepreneurship?
I emphasize the importance of adopting three points:
Recognize that opportunities are developed at all levels of the organization.
Build a culture that embraces and supports entrepreneurship.
Consciously develop support for entrepreneurial initiatives through effectual processes or bricolage.
The key is leadership, not only in words, but in action. It is imperative that the CEO endorse an entrepreneurial culture by example – championing new ideas. In fact, a failure or two is good because it demonstrates that even the CEO recognizes that not every entrepreneurial idea is destined for success, and it is important to manage your investment and ensure that no one new venture will take down the ship.
“Culture eats strategy for breakfast.” –Peter Drucker
What are the elements of a good corporate culture?
There are many theories on this question, and I included quite a few in my book. In the end, the key elements are:
Provide open opportunities for opportunity development – these include group time (because we know that mixing people with diverse expertise and background can lead to innovative solutions), plus unstructured open thinking time (such as 3M’s famous “tinkering” time).
Adopt a learning culture – growth mindsets are essential, pursuing what could be as opposed to why this won’t work.
Accept failure, and the importance of learning from failure.
Adopt bricolage (known outcomes, with unknown ways of getting there), or effectuation (building on invention, experiment, and science) as frameworks for pursuing each entrepreneurial initiative (purposefully).
“The only sustainable competitive advantage is an organization’s ability to learn faster than the competition.” –Peter Senge
How do leaders encourage creativity at all levels of the organization?
The first thing I would say is that leaders must recognize that organizations need time to change. This is not an overnight process and will require considerable and repetitive actions and wins to change. And failure is a key component – an organization can move far closer to being creative and adopting entrepreneurial thinking by showing that a person with a great idea that failed in implementation is celebrated as thinking outside the box, rather than penalized for failing.
Researchers have studied the importance of story-telling in organizations, and how a lasting culture can be built around well-known, maybe even legendary, stories that come from the history of the organization. The dimensions of story-telling I describe in my book include equality (versus inequality), security (versus insecurity), and control (versus lack of control). Through story-telling of actual events that happened in the organization’s history, employees are able to gauge whether the organization will endorse or shun creativity at all levels.
“Successful innovators are..not risk-focused; they are opportunity focused.” –Peter Drucker
The most inspiring leaders of the world tap into the innermost part of the brain, where we think in images rather than words. Gut feelings aren’t actually from the gut, but from the core of our brain.
Simon’s examples make his concept come alive. For example, other people tried to fly before the Wright Brothers. Some were well funded, educated and well connected. They wanted to become rich and famous. But the Wright Brothers, who had little education or money, were successful because they believed they could change the course of the world. The “why” behind their actions was the power that inspired the world.
Similarly, Simon explains why Apple is uniquely positioned. Apple marketed themselves and their computers with the belief that the brand was changing the status quo and the world. Apple’s message was, “We believe in thinking differently, and, oh yeah, we make computers.” Apple competitors may be equally qualified, but it is Apple who has led the way in sales.
“What you do simply serves as the proof of what you believe.” -Simon Sinek
As you look at your life, your career, your purpose, think about Simon’s powerful message. What’s the why behind your actions. If you’re working simply for a paycheck, you aren’t tapping into your potential. It’s the why that matters. The why pushes you forward. The why drives commitment when things are tough. If you aspire to be a great leader, it’s not the product or the company. It’s your why. That’s what distinguishes the most influential leaders.
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Millennials and Leadership: What They Really Think
Studies on generations often end up in generalizations. Baby boomers think this. Generation X thinks that. My mind usually goes to the exceptions and challenges the assumptions.
Millennials will be 50% of the global workforce by 2020.
Still, I’m fascinated by the research because I want to connect with people of all generations. No doubt that the Millennial generation is up and coming. They will make up 50% of the workforce by 2020. How they will impact and lead us into the future is exciting.
Survey: Millennials value well-being the most at 37%.
In Leaders Ready Now: Accelerating Growth in a Faster World, authors Matthew Paese, Ph.D., Audrey B. Smith, Ph.D., and William C. Byham, Ph.D. share their collective wisdom about talent and leadership. All three authors are employed by DDI helping organizations grow their own leaders.
I recently spoke with Matt about the new book and the extensive research on talent and growing leaders in organizations.
Study: Leadership readiness is stagnant even among companies with leadership programs.
What’s working and not working with today’s talent management systems?
What’s working is that we know how to build processes, tools, and technology to help leaders learn. What’s not working is that all this “stuff” fails to generate the energy that fuels real growth. In fact, more often than not, the initiatives that are put in place to accelerate the growth of talent drain energy instead of creating it.
The learning experiences that leaders describe as the most beneficial are not necessarily the ones that we design for them. They tend to be the ones that happen on the fly. So we have to find ways to make the tools, technology and learning experiences that we design more useful and powerful on a day-to-day basis.
Potential is not performance. Potential is not readiness.
With the increasing pressure to deliver immediate financial results, some leaders may discount leadership development. How do you make it a top business priority and keep it there where it belongs even in tough times?
There is a simple answer to this one: keep score or don’t play. But you can’t just keep score of anything. When we say ‘keep score,’ we mean something very specific. Frankly, this is where many companies get it wrong. It’s important to remember that most organizations invest in development so that they can create more capability, and they need it now, but they don’t keep score that way. It’s routine to see organizations declare growth-focused objectives while they only keep score of learning activity, engagement, or retention. It’s like scoring a basketball game by keeping track of how many players are on the court. It’s just not the right metric. Eventually people lose interest and frustration sets in, so programs become difficult to sustain.
A classic example of keeping score of the wrong thing is tracking how many people have development plans or how many people were satisfied with a learning initiative. Those may be interesting metrics, but they don’t say much about what happened to leadership capability as a result of the effort.
“Each time you give up on a leader, you drain energy from your acceleration system.”
A measure of growth tracks the application of what has been learned or may keep track of changes in leadership readiness. For example, some organizations have begun scoring ‘conversions,’ which involve converting a leader from ‘not ready’ to ‘ready now.’ If you set targets against conversions (instead of learning activity or engagement) and establish clear accountability for who is responsible for generating them, the dynamics of a leadership acceleration system change dramatically, and management becomes much more competitive (in a good way) about growing talent.
Accelerating Talent Growth
1: Commit: adopt acceleration as a business priority.
2: Aim: define leadership success for your business context.
3: Identify: make efficient, accurate decisions about whom to accelerate.
4: Assess: accurately evaluate readiness gaps and give great feedback.
5: Grow: make the right development happen.
6: Sustain: aggressively manufacture the energy for growth.
Talk about leadership context and why it matters to leadership development.
In today’s environment, business context means constant change. This means that development needs to move at the speed of change. Learning content, and the tools, support, and technology that leaders need to apply it, must be directly applicable to their most pressing challenges. They simply don’t have time or mindshare to engage in the sort of extracurricular development that traditionally characterized leadership development.
If formal learning is to make a positive business difference, it must be supported by readily available and easy-to-use tools, job aids, technology, networks, and management support. Organizing these assets isn’t rocket science, but when it’s done right, the results show it. Decades of experience and research have generated big data that now shows convincingly that a handful of the right principles and practices make a profound difference in the outcomes of leadership development that is built to be context-specific.