The CEO’s position now demands the skill set of a symphony orchestra conductor. Chris Trimble and Vijay Govindarajan (T & G) of the Tuck School of Business state “innovation and ongoing operations are always and inevitably in conflict”. That’s why the CEO must balance all parts of the orchestra.
Understanding Harmony & Collaboration
The unlikeliest partnership can be made to work powerfully when natural competitors become collaborators. According to T & G, the CEO achieves the resource balance (between ongoing operations and the commissioned innovators) by taking six specific steps:
1. Divide the Labor
2. Assemble the Dedicated Team
3. Manage the Partnership
4. Formalize the Experiment
5. Breakdown the Hypothesis
6. Seek the Truth
Dividing the Labor
Work on the innovation initiative can be shared between (a) staff in day to day operations and (b)those charged with developing the approved big idea. In that way, the assets and resources of the current performance engine can be leveraged for maximum benefit. Basically this means having the people in ongoing operations solving problems in the way they usually do, at their normal pace, under their same managers, at their own workstations. Work outside of the usual routine must be given to those on the creative team. The symphony conductor needs to feature the soloists in harmony with the orchestra.
Assembling the Dedicated Team
This team consists of the best people available both within the company and those that can be hired or contracted from without. These “go to” people form a talent pool that needs to be organized as if it was a new firm being developed from scratch. In smaller companies, the people involved will not be totally dedicated, working on the initiative only on a part-time basis. This is fine; the point is about their special skills, devotion and uncommon focus.
The goal is to create an organization (within an organization) that is qualitatively different than the core company with its tried and trusted business routines. That’s why having outsiders, youngsters and even corporate mavericks with fresh perspectives are so important. Every process is considered: incentives & rewards, metrics, titles & structure, job descriptions, interaction methods, cultural norms, supervisory power, and forces that shape behavior. Not everyone is comfortable in this environment, insiders team members, who find themselves uncomfortable should have an “out” to go back to ongoing operations. The “conductor” knows where to locate each instrument.
Manage the Partnership
The core company or current performance engine seeks to make every task, process and activity as repeatable and predictable as possible. The innovation team trying to create new performance engines is by nature the exact opposite: it lives in an uncertain, non-traditional, exceptional world of disrupting routine, status quo and assumption. Polar opposites can be synergized but only by anticipating and mitigating the inherent and inevitable strains and conflicts. Left unto itself tensions and rivalries will develop and may even escalate hostility or all-out war or perhaps, more dangerous, guerilla tactics.
Thus the senior leaders, led by the CEO, must constantly build and reinforce a relationship of mutual respect. Both functions must be seen as doing good work that is vital to each other’s future. Conflicts must be addressed from high places and quickly resolved. Rewarding shared staff from ongoing operations with incentives and targets is very helpful in keeping the collaboration “well oiled” and energized. There is a tendency for the innovators to get all the glory so building mutuality in success with the small things is very important. Hiring contract labor to help the shared staff with their routine tasks will help everyone put more heart and energy into their “big idea” initiative. Communication and alignment about the need for both the conventional and the innovative is the key to developing peaceful co-existence and harmony. Creative brilliance must be supported by the whole orchestra.
Formalize the Experiment
Each big idea pursued must be separated into its own project with its own distinct custom plan, unique forms of metrics and cost categories. Assumptions must be identified and then tested for their truth. Metrics need to be ranked and then turned into a scorecard that measures progress and success. The numbers are all about learning. Learning is a process of turning speculative predictions (or assumptions) about the big idea into reliable predictions; in other words, learning is about converting assumptions into knowledge. Experimenting is about writing down the plan and the prediction – - the “hypothesis” of what is expected to happen and why – - and then analyzing the differences between the expectation and the reality. Learning comes from the analysis and understanding the disparity between prediction and outcome. The discipline of openly discussing the data and results leads to the better understanding of what will work. In this manner failure can yield corporate learning and enable different approaches for the future. This progression minimizes the cost of failure and maximizes the probability of success. A brilliant symphony comes from extreme work in the details.
Breakdown the Hypothesis
Both diagnosis and learning from the unexpected happen more quickly when there is a clear hypothesis or predictive statement of cause and effect. In the early stages of the experiment, sketching out diagrams of cause (and potential) effect on large pieces of paper or whiteboards is far more helpful than a bunch of data on a spreadsheet. The sketch represents a set of conjectures about relationships, causal actions, possible outcomes as well as subsequent outcomes. The sketch creates a cause-and-effect map that creates a mind-map of the unknowns as well as linkages and assumptions. After best guesses are made, then relationship predictions can be tested with score-carding dashboards. Eventually the most critical unknowns will be identified. The whole orchestra needs to know and understand what is going to delight the audience.
Seek the Truth
As learning takes place, it is critical to be aware of emotions, attitudes and biases that will distort the interpretation of the data or results. Our human trait of being able to filter out data that does not reinforce our own pet theory can be lethal. Pre-existing beliefs make it hard to see straight and rationally. A cross-disciplinary business perspective from very different people on the team will help with the discovery process. Further, setting up “accountability” for (1) customizing planning processes, (2) results testing, (3) learning and new action in the uncertainty – - in a fair, disciplined and motivational way – - is a key responsibility for the CEO. This means creating a right mix of incentives and modestly positive rewards when initiatives fail despite good leadership. Motivational accountability greatly reduces risk and paves the path for a more certain and lucrative reward. Only the true learners will achieve breakthrough innovation. Emotional maturity, self-awareness, personal sacrifice and working for the whole orchestra’s greater good is where the harmony lies.
Keeping both ongoing operations and the creative team closely engaged in a rigorous learning process has the potential for unprecedented growth in the company. Humility, respect and visionary leadership on the part of the CEO can achieve this. Jim Collins in his groundbreaking Harvard Business Review article Level 5 Leadership points out that the most effective chief executives avoid the limelight in order to bring to the surface the very best in the people throughout the organization. It’s as if they establish a “collective will” to bring about the mission and vision of the company. Above all they love their people beyond any romance. Acting as a collective in harmony brings about the best of innovation. Innovation is a symphony of its own.
What to do now
T & G suggest forward-looking CEOs must do three things to reinvent their companies to meet the challenges of their rapidly changing marketplaces:
1. Keep Managing the Present
2. Selectively Forget the Past
3. Create a New Future
Most business leaders work under the assumption that their industry is relatively stable and static; however, these are the ones that realize – - too late – - that changing the direction of their company actually takes years while their business environment is evolving and shifting far more rapidly than their expectations. Critical change actually takes place in a nonlinear quantum leap fashion.
This is the theory, so what can you do right now? If you are supported by senior people invite them to join you in completing this useful exercise that will help the CEO balance the demands of both managing the present and creating future:
Write down all the important initiatives underway (or contemplated) in the company. Put them on 3 x 5 cards and separate them into the three categories above. Now might be time to leave them on a wall overnight and then revisit them the next day to be sure all the initiatives are covered and in place. Put business performance improvement ideas into pile one. Put obsolescent or underperforming products and services into the second pile. Ideas for the far future, several years out, into the third pile. Then rank order the ideas in each pile. Consider the values, dreams and vision of the stakeholders, founders and other people who energize the company. Finally balance or harmonize what can be done now, over the course of the next 24 months. Use this analysis to develop a top 10 with at least two cards from each category. Have one card from each category to work on during the coming quarter. In order for there to be a future, the present needs to be well managed. Parts of the past need to be abandoned. Then go catch up with the future.