Turning Ideas into Extraordinary Value
To be an effective business leader these days takes more than the usual business skills. What has become necessary is developing “soft skills”. The CEO’s position now demands the skill set of a symphony orchestra conductor. That means having a deep love not only for the company but also for all its stakeholders. While no one seems to put it this way, the healthiest organizations run best when the CEOs romance their people. That deep caring is critical when balancing and harmonizing the many dynamics in the organization. Orchestrating that special music throughout the company is what innovation is really all about. When the corporate citizenry feel valued and important, they become more disciplined, more intense and more creative. Not every CEO has the courage to be a romantic or an innovative pacesetter.
Who really wants to innovate? Who wants to take small, manageable risks in order to achieve a blockbuster success? Who is deliberate in planning a breakthrough?
Stuck in the Status Quo
According to Keith McFarland (author of The Breakthrough Company, a five year study of 7000 growth firms) only 14% of CEOs want to transform their companies. The truth is the other 86% really just want to preserve their status quo; they want their future to be an extension of the present… as if going from “here” to “there” is some type of linear, predictable process. Managing the present with (1) performance excellence and (2) continuous improvement amidst (3) astonishing complexity and (4) hyper competitiveness, all this seems to be more than enough for them. Who would want to do more than just navigate “the numbers” for the next quarter or two? “Get lean. Stay lean. Push marketing for another 5%, somehow.” These three (lean, lean, push) items often top the CEO’s wish list.
The uneasy feeling comes from (1) risk aversion, (2) discomfort from uncertainty, (3) the unwillingness to cannibalize faltering business units, and (4) the inability to do more than project the future from past success. In a fast changing world filled with technological and social change, treading water is a scary thought. The reality is driving the numbers from current operations is the lifeblood and sustenance of any company: it will provide the cash flow for future growth. The current “performance engine” must fund future performance engines, whatever those engines turn out to be.
Risky Business
Innovation is thought to be a very risky business (and it can be if not well managed) but the risk of staying the same is also be fraught with peril. The gnawing feelings are too often not acted upon as the tyranny of the urgent tends to offer a salve to both conscious and unconscious concerns.
Still some of the 14% of CEOs manage to be proactive, balancing the needs of the present with the need to invent their future. Condemning the dying parts of the past is always painful. Judging what to keep and what to throw away compounds the pain but making such decisions eventually makes everything easier. Realizing that risk really can’t be avoided, and that doing nothing is in itself is a very real (and possibly an even greater) risk, adopting a well-thought-out proactive plan of change is perhaps one of the best ways to achieve a more peaceful business life. Uncertainty tends to no longer matter as soon as commitment is made to create a new future.
Innovation Ambition
Authors Chris Trimble and Vijay Govindarajan (T & G) of the Tuck School of Business say “innovation begins with ambition” as leaders go beyond the realm of the “mere” possible. They take on smaller, bite sized problems, within their capabilities that they deem “worthy” of their corporate resources. They decide to build new capabilities and deepen learning in their core skills. Building new skills not only tends to ensure the long-term viability of their company as a whole, but it also satisfies the itch to seek out new opportunities.
Unfortunately, the moment a commitment is made to innovate the future, “ongoing operations” (the current performance engine) naturally goes into a resource competition with those responsible for developing that future. That political battle is the nature of the beast. It’s why innovation is frustrating and difficult. It’s why CEOs need to act as romantic symphony conductors.
Resistance
It falls to the CEO to anticipate the specific organizational dynamics that will confront any real effort to innovate. Organizations need to be organic and evolving; “homeostasis” is the watchword for counteracting growth and becoming sterile. To overcome this resistance to change a CEO must be the chief driver of the innovation initiative(s) – – it’s a job that can never be delegated. The CEO is the only position with the knowledge and power to balance the competing demands for scarce resources of the current performance engine with the need to create new performance engines. This can only be done with CEO leadership power and romance.
Ironically, innovation runs into even stiffer resistance after it begins to demonstrate a show of success and promise. T & G state “innovation and ongoing operations are always and inevitably in conflict” because “organizations are not designed for innovation but for ongoing operations to deliver consistent and reliable performance”. That’s why power from the top is critical; innovation champions and heroic inventors on their own will always be crushed on the wheel of predictable earnings. That’s why the CEO must balance all parts of the orchestra.