Innovation - Program or Culture?

Innovation is critical to success of enterprises in current world. However, many companies struggle with Innovation. Why? Should Innovation be driven as a program or culture? How do we make it happen?

Companies always used to position themselves to be extremely good in one of the areas of Cost, Product or Customer Experience; and be on parity on the other two. However, the world has changed dramatically over the last 4 years (after the collapse of 2007/2008). Today, Companies have mastered the art of Cost effectiveness. It is no more an option but a need. Companies across the board are tending to achieve the position of cost leadership. Companies are increasingly valuing the importance of customer experience in the current world. Hence, across the board, they are implementing programs to quickly move up the customer experience value. Some of the companies are taking advantage of technology to leapfrog on the customer experience. As for Product, the amount of time it takes for a competitor to emulate a function/feature is shortening dramatically (Patenting used to be a way for companies to protect revenues but companies have mastered the art of working around patenting. A regulation whose aim is to protect the interests of a company that innovated has failed to meet its objective in the way it is being administered – more on this at a different time).

Given the above scenario, the only way a company can stay ahead of the game is through Innovation. It has to innovate across all the dimensions of Cost, Customer Experience and Product to lead in the market and for that fact, even to survive.

How can a company be successful at Innovation? Unfortunately, in most Organizations, Innovation is run as a program. We usually assign a Leader who is responsible for Innovation in the organization and they roll out programs after programs, launch communications, and announce rewards to encourage Innovation. This kind of approach usually leads to failure. The only way Innovation can be successful is if we are able to imbibe it in the culture. Innovation cannot be owned by a group or a leader but has to permeate across the organization where every employee takes responsibility for it (not by goals but through ownership). I am not de-riding the importance of Leaders on Innovation – we definitely need Leaders to actively participate in Innovation (and this would happen once it is part of culture). We also need dedicated Leaders who can support the Innovation process by incubating ideas and helping to bring them to fruition by assigning necessary resources (this is a big need in large organizations). However, Innovation cannot be just owned as a program by a leader. That will not work.

Before we proceed, let us look at few examples of companies that are successful at Innovation. Some of the world-class companies like 3M, P&G, Apple, Samsung, Google, IBM, Amazon have made Innovation as culture and have been successful for many years.

Following are few examples of Indian companies that have exhibited Innovation:

Narayana Hrudayalaya: Dr. Shetty of Narayana Hrudayala is bringing Walmart approach to healthcare. His model of taking advantage of economies of scale to keep the surgery costs low is making the hospital profitable while doing social good by delivering quality healthcare at lower costs to patients. Dr. Shetty achieved this, not by product innovation but through process innovation. He changed the model of compensation of doctors (by paying fixed compensation as against per-surgery compensation – still being market competitive but getting doctors to do more number of surgeries per day and excluding non-surgical activities from doctors’ responsibilities). Dr. Shetty offers concessional rates to extreme poor by charging relatively higher rates to people who can afford them. They do a daily P&L that gives them a view of the profitability per surgery and overall profitability on a daily basis. Narayana Hrudayala is now expanding across India to provide high quality low cost healthcare to patients across India.

RedBus: Red Bus has originated with personal experience of its founder Phanindra Sharma who had to run across multiple operators to catch a bus home. He thought of creating an integrated platform that could bring together all bus operators on a single platform that helps passengers track seat availability in real time from multiple operators, purchase tickets and post ratings. In order to achieve this vision, they had to work through the challenges of working closely with bus operators (many, who are illiterate) to use computers and keep costs extremely low so that they can make a margin on Rs. 500 ticket. To get operators onto the platform, they conceived the business model of standard commissions as against the prevalent commissions per ticket (counter-intuitive). To keep costs low, they used open source technology for call center and moved all their IT to cloud computing and saved 40% of costs. This has helped RedBus organize an unorganized sector and bring better customer experience to passengers while increasing profitability to both operators and to themselves. Now, they are planning to expand at a national level and potentially look at going global.

Tata Nano: Tata Nano car is conceived by Ratan Tata. He wanted his company, Tata Motors to create car under Rs. 1 lakh cost that would help lower middle class to buy a car and travel comfortably with their family. This vision of their Chairman has galvanized Tata Motors organization and they partnered with suppliers, manufacturing and distribution channels to keep costs low so that they could hit the Rs. 1 lakh target. This has led to significant innovation in many parts of the car to build a quality product at lower cost. Many a times, we have seen how a vision of the leader galvanizes an organization and lead to Innovation. Another example of similar nature is how a country (USA) could be galvanized on Innovation to make the wish (command) of the President (JFK) when he proclaimed that they would land a man on the moon by end of the decade.

How do we permeate this innovation across Organizations? How can we imbibe it as culture? In next set of articles, we will discuss how Design Thinking can be leveraged as a model to imbibe innovation in the organization. We will also discuss what we can do to instill creativity into Organization that can fuel ideas.

Meanwhile, what stories of innovation have you seen successful? What attributes of organization are supporting the Innovation? If you are CEO and need to instill innovation as a culture, what would you do?

P.S.: My writing has become erratic due to my travel and work schedules. I feel bad that it took me more than a month to get back to my blog. I plan to get back on schedule (once every 2 weeks) immediately.

Tomorrows Leader - Part 2

VUCA (Volatile, Uncertainty, Complex and Ambiguous) world is fast emerging and we can already see many indications of it in the present. We need to address the VUCA world through our own VUCA – Vision, Understanding, Clarity and Agility. Bob Johansen’s 10 Leadership skills for a Leader to be successful in VUCA world are as follows: Maker Instinct, Clarity, Dilemma flipping, Immersive Learning ability, Bio-Empathy, Constructive Depolarizing, Quiet Transparency, Rapid Prototyping, Smart Mob Organizing, and Commons Creating.

We covered the first five of these Leadership skills in the last article. Let us dive into the remaining five Leadership skills. These points are covered at a high level due to paucity of space. However, I am available in person, for any detailed discussions.

Constructive Depolarizing: The VUCA world will be a polarized world. Many people will be so confused by the VUCA world that they will demand simple solutions – even when there is no simplicity and no solution. Constructive Depolarizing is the ability to calm tense situations where differences dominate and communication has broken down – bringing people from divergent cultures toward constructive engagement. Polarization could lead to conflict between groups, as there is no right way and it is difficult to convince people on data, as data would not exist (or too much data to make any sense). In such situations, it is imperative for Leaders to calm the situation (addressing the tense environment and conflict). They should ensure that they do not take any sides, empathize with people involved and slowly work with these groups to build a constructive dialogue that could move things forward. This is very different than the way a Leader operates today where he/she could take positions and convince people on the rationale. In a Volatile, Uncertain, Complex and Ambiguous world, such rationale may not work. Leaders who are gifted with skill for constructive depolarizing are able to look beyond differences and identify the qualities that bring communities together.

Quite Transparency: Quiet transparency is the ability to be open and authentic about what matters to you – without advertising yourself. We are coming to the end of rock-star leadership, where leaders are self-advertising and self-centered. In VUCA world, we need leaders who are strong and confident but do not crave for celebrity status. We need Leaders who do the right things, be transparent about it and yet do not self-advertise. In today’s world of social media, people will learn about you even if you do not advertise yourself. Tomorrows preferred Leadership style would be a strong, confident yet humble leader.

Rapid Prototyping: Ability to create quickly early versions of innovations              , with the expectation that later success will require early failures. Rapid prototyping is the ability to fail early, fail often, and fail cheaply. With the uncertainty of the VUCA world, the only way to make the future is rapid prototype your way toward it. When you start on a new project, learn to build prototypes on first day. Future designs will be based on prototypes (Design thinking propagates rapid prototyping – a concept that I’ll cover in a future blog). And as we progress on the project and with discussions from various communities, the design/prototype will evolve to emerge into a better product/outcome. If we follow the traditional approach, failure rate would be high and such failures would be costly to organizations.

Smart mob organizing: Ability to exploit your inner drive to build and grow things, as well as connect with others in the making. The idea of aggregating groups of people for a cause, change or movement and aggregating through social media or multiple media is called Smart Mob organizing. In VUCA world, Leader should be able to tap into the potential of the larger number of people by leveraging them through social media towards a common goal. We already see many examples of the role of social media in smart mob organizing. Few examples are Arab uprising and Occupy Wallstreet – both have drawn significant attention across the world and the former having a significant impact on the governments across Middle East. Key aspect is the speed at which both the information and movement spread across geographies – enabling to build the momentum and spreading the message/updates.

Commons Creating: Commons Creating is the ultimate leadership skill in VUCA world. Where Smart Mobs tend to be ad-hoc, Commons are sustainable over a period of time. It is the ability of Leader to bring disparate people/groups/communities to work together to create a shared asset that is profitable, productive and socially constructive. Few examples of Commons Creating are Eric Whitacre’s virtual choir, Innovation through crowdsourcing and buying power through GroupOn. Let us examine these a little more:

Eric Whitacre is an American Grammy award winning composer and conductor. One day, he received a link from his friend that has a YouTube video. This video was recorded by a fan of Eric Whitacre, singing a composition of his and dedicating the song/video to him. This threw up a light bulb for Eric and he decided to have a virtual choir sing his composition. He uploaded a silent (and subsequently with piano music) and asked people across the world to upload their videos, singing to his orchestration. With the number of videos that have been submitted, he could create a virtual choir with 185 singers featuring 12 countries. He got ambitious and moved on to virtual choir 2.0 project and this time, it featured 2000+ voices from 58 countries; and recently released virtual choir 3.0 (in April 2012) featured 2945 people from 73 different countries. This virtual choir has enabled people from different countries/races/age groups/religions come together to sing as one single group and provided them an opportunity to connect with each other. This platform also has given rise to the hopes of many people who wanted to be a singer but could not get an opportunity. You could watch Choir 3.0 – ‘Water Night’ on YouTube at this link: http://www.youtube.com/watch?v=V3rRaL-Czxw

Groupon is a deal-of-the-day website that features discounted gift certificates usable at local or national companies in United States, Europe, Asia and South America. It was launched in 2008 with first market in Chicago. Groupon leverages the power of web to bring together disparate consumers to amalgamate into a buying power that could negotiate with vendors. The business model creates a win-win-win situation – win for the buyer as they are able to get the deal at a great discount; win for the vendor as it guarantees the quantum of customers before the deal becomes active (and hence saving on upfront marketing costs) and finally to Groupon who makes money in the process. This would not have been possible without the power of web. Once again, a classic example of Commons Creating, - bringing together disparate parties towards a profitable/productive motive.

It is important for Leaders to build on these Leadership skills to be successful in VUCA world. However, what does it take to build these skills? What changes in the mindset have to be made? How would you negotiate this journey?

Tomorrows Leader - Part 1

In the last article, we have seen that, to be successful in VUCA (Volatile, Uncertainty, Complex and Ambiguous) world, we need to bring in our own VUCA – Vision, Understanding, Clarity and Agility. In this article, we will look at 10 Leadership skills that would be required in the Leaders of tomorrow, as defined by Bob Johansen from Institute for the Future. In the next article, we will cover how to develop these leadership skills.

Bob Johansen describes the 10 leadership skills, moving from basic, Maker Instinct (tapping into creativity of each individual) to the higher order, Commons Creating (not just to win for yourself but to win for others, ability to create social assets and shared assets). It would be difficult to cover each of the Leadership skill at greater detail (due to constraint of real estate). I’ll cover the broad aspects of the Leadership skills out here and will be available in person to discuss any specific skill at greater detail.

Bob Johansen’s 10 Leadership skills are as follows: Maker Instinct, Clarity, Dilemma Flipping, Immersive Learning ability, Bio-Empathy, Constructive Depolarizing, Quiet Transparency, Rapid Prototyping, Smart Mob Organizing, and Commons Creating. These skills are very different from typical Leadership skills that we are exposed to. I will cover how we can develop these skills in a future article.

In view of the space, these skills will be addressed in two parts. Part 1 will cover the first five leadership skills and part 2 (to be published next week) will cover the next five leadership skills.

Let us dive into these skills:

Maker Instinct: Ability to exploit your inner drive to build and grow things, as well as connect with others in the making. Each one of us has an inner instinct of a maker, creator that we were not able to tap into. However, in the future world, the new media will allow the maker/creator instinct to flourish. The word ‘consumer’ would be lost as everyone would like to personalize the products/services that are available in the market. Hence, Leader of tomorrow needs to not only nurture her maker instinct but also that of others around her and of customers. She needs to be able to bring together the community of maker instincts (source of Innovation) to create a larger change in the world.

Clarity: Ability to see through messes and contradictions to a future that others cannot yet see. Clarity has always been important for Leaders but has never been as difficult as in VUCA world. Having clarity in VUCA world means that being clear about where you are going but very flexible on how you get there (This is called Commander’s intent in military). It is different from certainty. Certainty is brittle in VUCA world as we need to deal with unexpected events all the time. Clarity is about knowing what you do not know. It is about taking a leap of faith and being flexible. Clarity is about being able to communicate your intent/direction in a simplistic manner (without being simple) while allowing your team the flexibility to get there.

Dilemma Flipping: Ability to turn a dilemma – which unlike problems, cannot be solved – into advantages and opportunities. VUCA world will be loaded with dilemmas – problems that cannot be solved and that will not go away. Leaders must be able to engage with dilemmas and learn how to win – even if they cannot solve. They should be able to turn dilemmas into opportunity to win. Best Leaders usually delegate problem-solving to others but save dilemmas for themselves. They must learn to thrive in the space between judging too soon (classic mistake of a problem-solver) and deciding too late (classis mistake of the academic).

We can understand dilemma flipping through the following example better. Up to one third of Bangladesh is flooded annually in the worst of monsoon seasons, and environmental reports are projecting that water levels will only keep rising in many parts of the country. Rising water levels prevent many children from attending school – resulting in increased dropout rates. Dilemma is about how to increase the attendance to schools thus increasing the education level of the children. Problem of flooding is not going to go away in Bangladesh. Hence, Architect Mohammed Rizwan flipped the dilemma into an opportunity and decided that if children cannot go to schools during the floods, school would come to them. Working with local boat builders, he modified the boats to incorporate social panels, electricity, and flexible spaces. The first school set afloat in 2002, and today, there are over 50 floating schools that operate and serve 90,000 families. A classic example of how to look at a situation, assess it and turn on its head to create an opportunity.

Immersive Learning Ability: Ability to immerse yourself in unfamiliar environments, to learn from them in a first-person way. Gaming and Immersive Learning would be the new learning pedagogy of the VUCA world. Leaders cannot learn through the regular approaches of class room training. They need to immerse themselves in new situations/simulations; they need to engage with VUCA world to learn from it. This could be done through gaming or by real life experience of traveling, living abroad or getting into situations that would make them real uncomfortable and learning from such experiences in a first-person way. Incidentally, younger generation is an expert in immersive learning ability because of the large amount of time spent by them playing games (in virtual world). According to Dr. Jane McGonigal, world-renowned game designer, average person would have spent 10,000 hours playing video games by the time they are 21 years old. Hence, their ability to adapt to a new environment or rapid changes is much better than us.

Bio-Empathy: Ability to see from nature’s point of view; to understand, respect and learn from nature’s patterns. To be successful in VUCA world, it is important to learn and understand from nature and apply them to our leadership skills. In VUCA world, teams’ achievement trumps individual achievement. A Leader has to take holistic approach of her team by focusing on health, wellness and well-being of the team. Typical metaphors used in Leadership today are ‘foundation’, ‘pillars’, ‘levers’ – all derived from engineering. However, future metaphors (that will be successful in VUCA world) would need to be about ‘seeding’, ‘nurturing’, ‘ecology’ – all coming from nature and Biology. Last few decades have been ruled by Engineers. Future would be heavily influenced by Biology and Life Sciences. As a Leader in VUCA world, it is important to understand that bio-empathy is at the core of sound decision making. Leaders with strong sense of bio-empathy are self-aware and conscious of the decisions they are making. They are able to succeed by aligning the internal purpose and motivations of their team members with the larger objective that need to be achieved.

We will continue the next five skills in Part 2. Imagine the world getting more volatile, uncertain, complex and ambiguous – what skills do you think you need to be successful in such a world?

The World of Tomorrow

Future – People are always intrigued by it and would love to know more about it. This can be seen by the demand for horoscopes in newspapers or at the tarot card reader counter at a fair. In our entire endeavor to know more about future, we always bank upon others to tell us about it. We are more interested in a tarot reader predicting how our health or career would be in the future, than determining it ourselves. Can we make our own future?

I have been doing my own research about how future world would be and what Leadership skills are required to be successful in the future. As part of my research, I came across a company, “Institute for the Future” that creates 10 year forecasts on how the world will be. Dr. Bob Johansen, Distinguished Fellow at the Institute for the Future, along with John Ryan, President of CCL (Creative Center of Leadership)  has written a book “Leaders make the Future” and discussed the Leadership skills that are required in tomorrow’s Leaders. I’d like to share my learning with you. I’ll present this in 3 part series. This blog focuses on the nature of the world that we live in (inspired by the work done by Dr. Bob Johansen). Part 2 would focus on sharing 10 leadership skills for the future as listed by Dr. Bob Johansen. Part 3 would be my perspectives on what we should be doing today to equip ourselves to scale up to these leadership skills.

We are living in a VUCA world. VUCA is a term coined at the US Army War College, which is a graduate school for Generals-to-be in Carlisle, Pennsylvania. VUCA stands for Volatility, Uncertainty, Complexity and Ambiguous and this is how the US army college describes the current world for which it must prepare the military leaders. It is no different for Organizations and Leaders. Let us look at these a little more in detail:

·         Volatility – We are living in a world that is changing at a rapid pace. Nature and dynamics of these changes along with the speed of change is creating volatility in the world.

·         Uncertainty – There is lack of predictability and high possibility for surprise. There is limited sense of awareness and understanding of issues and events happening around us. We are operating in a world where we are unclear about present situation and future outcomes.

·         Complexity – With multiple forces at play, there is constant chaos and confusion that surround an organization. A Leader is faced with multiplicity of decision factors. Due to the rapid change in the world, there are an increasing number of forces that are outside the control of the Leader that are influencing his/her world.

·         Ambiguous – There is lack of clarity about meaning of an event. With constant change, there is confusion about the reality. What is real today may not be tomorrow. There is high potential for misreading of the situations. It is very difficult to predict cause-and-effect relationship as with so much change, cause and effect could always be confusing.

Rapid technological changes, increasing global interconnections, climate change, population growth, global age and income disparities are combining to create a highly volatile and unpredictable terrain. In the VUCA world, one has to be prepared to respond to low-probability but high-impact events caused by extreme weather conditions (example – ash clouds disrupting aviation sector in Europe, Tsunami significantly impacting Japanese economy and supply chain of the world), rapid political shifts (example – Stalemate in Indian political scenario and lack of progress on reforms; constant change in stance of Samajwadi party on FDI in retail; Recent elections in Greece and threatening impact on European economy), or major infrastructure failures. Organizations and Leaders must accept uncertainty as inevitable.

We are moving from a world of problems (which demanded speed, analysis and elimination of uncertainty to solve) to a world of dilemmas (which demand patience, sense-making and an engagement with uncertainty). We are faced with dilemmas that are unsolvable, complex and often messy, threatening, confusing and laden with puzzling choices. These require different leadership attributes to address them. Leaders must learn to thrive in the space between judging too soon (classic mistake of the problem-solver) and deciding too late (classic mistake of the academic).

However, I’d agree with Bob Johansen that VUCA is a state of mind. While a Leader could be confused with the Volatility, Uncertainty, Complexity and Ambiguous, another Leader could make the future by seeing a new VUCA (Vision, Understanding, Clarity and Agility). Let us look at these in more particular:

·         Vision – From Volatility around us, a Leader could create a vision. It is an intent that seeks to CREATE the future. The Leader is not following the directions of the forecast but is willing to create his/her own future. She has a clear intent, clear direction for her actions.

·         Understanding – Leader has to stop, look and listen. In the face of uncertainty, listening and understanding can help Leader discover new ways of thinking and acting.

·         Clarity – Leader has to make sense of the chaos. The VUCA world rewards clarity because people are so confused that they grasp anything that helps them make sense out of chaos.

·         Agility – With rapid change around us, Leaders cannot make multi-year plan and rest. With changing world, Leader has to be agile. She has to leverage her networks to be able to get things done quickly as against depending upon hierarchies. VUCA world severely punishes the rigidity and brittleness of hierarchies.

Hence, while VUCA (Volatility, Uncertainty, Complexity and Ambiguous) world could be threatening, at the same time, it gives Leaders opportunities to thrive in it through the new VUCA (Vision, Understanding, Clarity and Agility). Leaders cannot predict the future but they must make sense of it in order to thrive. That’s the ultimate paradox of Leaders.

As a Leader, you have the ability to make your own world of tomorrow. The question is not how capable you are to the task, as given the orientation is towards the future, all of us are equally capable. The question is how willing are you to the task? How willing are you to make your own future? As Alvin Toffler said “The illiterate of 21^st century will not be those who cannot read & write, but those who cannot learn, unlearn and relearn”

Reboot the Manager

The world has changed dramatically over last many decades. However, the role of the manager has remained constant since the industrial revolution. What should be the role of the manager in the new world? Do we need a manager in the first place? What value does a manager bring to the team?

Role, managers are playing today predates back to the command and control mode (primarily derived from Military). In that model, Officer makes all the decisions and gives command to his troops. When that model was brought into the Organizations, Managers made the requisite decisions as they had better understanding of the underlying work. All associates performed similar work. While people were part of the teams, machines (during manufacturing era) were the critical resources. Manager was critical for information flow. He ensured that the requisite information flowed in all directions (from top to down and vice versa). Managers job was primarily as a control – ensure that all the rules were followed; no risks were taken and all procedures complied with. He directed the associates on allocation of work (deciding who does what). He derived significant power because of his position (as he is the primary face of the company to the associates) and expertise (as he knows more about work than any of the associates – atleast deemed that way).

Today, the world has changed. We are in service economy and people (not machines) are the critical resources. Knowledge of the people is critical for the success of the Organizations. Today, associates know more about their work than their managers and hence are the best people to make decisions. The work is so diverse in nature that there cannot be standard procedures to comply with. Today, there is abundance of information (as against lack of it) and for all practical purposes, a CEO can directly email an associate on the floor with a question and get response within minutes. We have sophisticated workflow and MIS (Management Information Systems) that provides an immediate update on the status of work.

However, the role of the Manager has not evolved. Unfortunately, many still tend to operate in the command and control model though the underlying reality has changed. They tend to draw power from their position (without the underlying expertise) and try to exert control on the associates using the power. Associates tend to resist such power usage and this leads to unhealthy conflict amongst the teams and loss of respect for the Manager.

A recent Wall Street Journal article talks about example of an organization that is operating without bosses (http://online.wsj.com/article/SB10001424052702303379204577474953586383604.html) - very radical approach. I think the idea has merit and could be tried in few areas. However, it may not be possible to do so in all spheres of work (and is radical enough that there would be resistance to even accepting such a way is possible). However, I think time has come to question the traditional role of the manager and re-look at what is expected out of her today. In my mind, role of the manager has to dramatically change on the following dimensions:

Control to Facilitator:  Managers should come to terms with the fact that they are not the most knowledgeable people on the team. The associates who perform the work are more aware of the situations and have the necessary expertise to address them. Hence, Manager should move to the role of a Facilitator who facilitates the decisions as against the one making them.

Adherence to Disruptive: In the earlier days, compliance to rules and adherence to procedures is gold standard. However, with the constant change, focus is shifting to disruptive innovation. This would mean that a Manager has to encourage associates to go out of comfort zone and experiment. They should break the rules (try out new approaches). She should encourage associates to take risks and reward them for it (even if that action results in failure). She should be comfortable in dealing with ambiguity (as she may have to support initiatives/plans/actions that may not have a determined outcome but just a possibility). Manager also has to keep connecting the larger organizational context to the work done by the associates so that they can channelize their innovation efforts in the right direction.

Short term to Long Term: Managers in today’s world cannot operate just by focusing on short term. They should be able to balance both short term and long term objectives. Hence, while today’s results are being achieved, they should constantly focus on the implications of the long term (given the changing nature of the world). In order to do so, they should keep abreast of what is changing in the external world and how it impacts their operations.

Manage to Coach: Managers have to transform themselves as coaches. Today, associates do not like to be directed. They like to be engaged and constantly challenged. The peanut butter approach also does not work. They should focus on each of the individuals on the team. Hence, as a Coach, she has to understand the strengths of each of her team members and see how she can leverage these strengths for success of the team. She should also channelize the efforts/energy of the associate to further build on their strengths. As a Coach, she should also understand that the motives/drivers of each of the associate can be different and has to adapt her approach accordingly.

In my mind, a Manager has to first change on these four dimensions to evolve her role to the needs of the modern world. This requires a significant change in her mindset. Her value to the team does not come from her expertise or position but how she could facilitate the team for better success. Do I think we need Managers in today’s world? Yes but in the role of Coaches as against pure managers. What do you think? How do you think Managers have to change to adapt to the new world?

Death of an Expert?

In this fast paced, ever changing world, who would make a good Leader? What is valued most? Is experience in a specific field (that we call Expertise) relevant? What traits would position a Leader to be successful in the future?

World is changing at a very rapid pace. Gone are the days when the changes were cyclical in nature. Today, we are faced with structural changes most of the time. There was a time when an average product life cycle was five years and a business model used to be relevant for atleast 18-20 years. Today, a product is outdated as soon as it hits production and a business model needs to be reinvented every three to five years (or maybe sooner depending on the nature of business). To stay ahead in the race, every company is looking to cannibalize their own products (Example being Samsung with a clearly focused tagline – “What’s Next?”. This tagline has driven the innovation in the company with Samsung launching new models even before the current ones completely percolate into all the markets).

Today, we are seeing three major trends in the world:

Transcending industries: Boundaries between industries are being erased. A company is transcending multiple industries and is foraying into multiple products by leveraging their core strengths. Example being Apple - In which industry do we say Apple is operating in? They are a hardware company, software (within Software, they have an Operating system, Office software, Apple maps, apps), Cloud computing, Music distribution, Telecommunications, Consumer electronics and are foraying into Television with soon to be launched Apple TV (beyond the current version that they have). Another way to think about it is to ask who is a competitor for Apple? We would end up listing multiple companies across multiple industries.

Surprise competition: Competition could be coming in from anywhere and any source. It is not always from a direct competitor. Did camera companies ever expect to see competition from mobile companies? Today, many people opt for camera phones as against buying a separate camera resulting in severe pressure on revenues of camera companies. Similarly, Google search is coming under pressure from Apple’s Siri voice based search; Call center companies are under pressure because of advent of social media that is redefining customer contact/experience; most recently, within India, many of the major bookstores are facing stiff competition from Flipkart (similar to Amazon story); movie industry coming under pressure from television/digital cable; single screens from multiplexes and so on. Could Airtel Money be a competitor for credit cards? (Going back to the previous point of transcending industries – is Airtel a mobile company or a financial company?)

Globalization: Globalization led to huge number of opportunities and challenges at the same time. While it had introduced many new markets and multiple cost bases, it brought in challenges like complexity of dealing with multiple currencies (foreign exchange risk), multiple regulations & regulators, multiple cultures & dealing with different talent/global teams; different customer tastes etc.

In such a scenario, who would be best to lead, say, a telecom company? A Leader with thirty years of experience in the telecommunications industry or one who has traits to be successful in a changing environment? What value is experience, when today telecommunications companies have more revenue from data based services as against voice calls? Average age of the consumer much lower and consumer preferences changing at a very rapid pace?

I believe following traits would be critical for a leader to be successful in the future:

Learning ability: It is critical for Leader to continuously learn from diverse areas and fields. As the opportunities are spread across businesses/industries, Leader has to be constantly open to learning – about new markets; new technologies; business models; cultures; languages (if required); impact of regulations/political changes; new risks etc. Learning could occur from different sources – Reading, Networking, Social media; Videos (Youtube is a great source); Podcasts etc.

Adaptability: With so much of change, Leaders have to constantly adapt and embrace change. Gone are the days, where a Leader puts together 5 year plan and sticks to it. Today, even a yearly plan has to be adapted to changing environment. Hence, embracing change becomes critical to the success of the Leader. This requires the Leader to be willing to change and then to lead the rest of the organization through change management.

Business Savvy: Every Leader has to understand the underlying business model of her business thoroughly and be able to assess the impact of changes occurring in external environment to her business. Keeping the financial goals in mind, she should be able to identify the requisite capabilities she has to build in the Organization. Most important aspect though is in identifying the impact based on external changes. More often than not, this gets missed until very late.

Develop Talent: Biggest differentiator for companies today is the talent they have in the Organization. With innovation happening at a rapid pace, any other value differentiator gets lost very quickly. However, the talent within the organization could make a difference to the success or failure of the company. Hence, Leader who is genuinely interested in the development of people; puts together coaching programs and builds the requisite capabilities would lead her organization to success.

Risk taking: Leader cannot wait for the right opportunity to push forward his business. He has to take risks and create opportunities. While some risks may pay off, others may not. That’s ok. A Leader who takes risks has higher probability of success than a Leader who does not.

I strongly believe that the above traits are more critical for the Leader to be successful than experience in a specific field. It is always great if we can get an individual who has immense experience and has the requisite traits. But if we have to choose one, I choose the required Leadership traits over relevant experience/expertise. What do you think?

Thinking Big - Final Chapter

This is the final article in the series of Thinking Big. In order to understand a concept, it is not just important to know what it is but also to know what it is NOT. While the first two articles explored the facets and examples of Thinking Big, today, we will explore what is NOT Thinking Big. That’s the tricky part. How could we explain what is not thinking Big? While I raked my brain on how to do that, I thought I’d look at missed opportunities as they could have turned things around for the company or would have made it BIG. There is a difference between missed opportunity and failure. Failure is where you have taken risk but it has not paid off. In my mind, that’s good - there is intent of risk that has been exhibited and even if the result is not in line with the expectation, there are enough lessons from that experience that could be leveraged to move forward. However, missed opportunity is where a company has let go of an opportunity without betting on it. I’d like to acknowledge here that we are all smart hindsight but making that decision would have been difficult for the constituents. Having said that, there is always ‘What if’ associated here. Examples of missed opportunities:

Yahoo: Yahoo is currently struggling as a company with multiple changes of CEOs and of strategic directions. However, it had multiple opportunities it missed as a company to make it big. I’d like to highlight two of them. First one is about the opportunity for Yahoo to buy Google.  Having passed over the opportunity of taking over Google search engine when it was initially offered by Larry Page and Sergey Bin, Yahoo tried another bid in summer of 2002. Google was not listed at that time and its revenue was $240 million. Terry Semel, Yahoo CEO at that time approached Larry Page and Sergey Bin to take over Google. Larry and Serge stated their price as $3 billion but mentioned they were not interested to sell. Terry’s team indicated that Google was worth $5 billion and they should push hard. However, Terry Semel disagreed and moved over to Plan B to acquire their own search engine and search-advertising technology to compete for search based ads. Well, we all know the result. Google subsequently went public and is currently operating with a market cap in excess of $180 billion. Similarly, Yahoo made efforts to buy Youtube but could not push forward on it. Eventually, Google bought Youtube and successfully integrated it into its fold.

Second big opportunity it missed was in 2006 when Yahoo sought to buy Facebook. Yahoo CEO Terry Semel almost shook hands with Mark Zuckerberg to buy Facebook for $1 Billion (this was when Facebook was smaller than Myspace – another social portal that went into oblivion). However, Yahoo underperformed on earnings in 2006 and Semel reduced the price offering to Facebook to $800 million. Zuckerberg turned it down. In a subsequent interview, Terry Semel lamented the missed opportunity and felt that Yahoo should have pushed forward with the deal.

We will never know what would have been the present if only Yahoo leveraged these two opportunities. In both the cases, Yahoo was convinced they were good buys but failed to take the necessary risk to pursue the deal. WHAT IF??

India Story: While talking about missed opportunities, I could not resist myself writing about huge number of missed opportunities by India to really make it big. India shining story has always been that of a great future but of a weak present. Even during early years of this century, we talked about India will be a great destination ten years from now, and after ten years, we still say India will be a great destination ten years from now. Inorder to have a strong growth, it was required for the government to make bold decisions and push for strong reforms, but the government backtracked multiple times to appease political interests. That has stalled India story and today, it is being seen as a potential fallen angel of BRIC countries. WHAT IF we have taken risk and pushed for strong reforms and provided good governance? WHAT IF??

Contrast the above examples with that of James Cameroon. He always thought big and made movies in a large scale. He went to Fox studios and pitched to make Romeo and Juliet story on a sinking ship for $150 million. Fox was skeptical but yet gave in to the demands of James Cameroon since they wanted to build a relationship with him. Result was Titanic that earned more than $2 billion. He came back to Fox in 1996 to pitch for the idea of Avatar with a potential release date in 1999. However, he was not happy with the technology that was available and worked on pre-production and production of this film for a decade, with the film eventually hitting the screens in 2009. It instantly turned into a blockbuster and brought in another $2 billion. Imagine spending more than 10 years of your life in pursuit of a goal. You need to be able to dream big, take risks and have great passion. That’s THINKING BIG.

What does all this mean to you? Are you willing to THINK BIG about your life? Are you willing to bet on yourself and take the required risks? THINKING BIG cannot happen if you are not willing to dream big, take risks and have strong self-belief. This world provides a huge number of opportunities to think and make big however, the number of people who capitalize on such opportunities are very few. Are you one of them?