Dialogue Q1 2019

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Q1 2019


Entrepreneurs, Inc The business of kyudo ANNE-VALERIE OHLSSON DIALOGUEREVIEW.COM


The innovation equation

How to build the agile company







Set in stone

Align the future

In the fast lane

Small data

Fine China

The manager as a mason

Beyond the day-to-day

Global productivity champions

Success from micro insights

Winning Eastern style

BEYOND THE WRITTEN WORD AUTHORS WHO ARE EXPERTS LID Speakers are proven leaders in current business thinking. Our experienced authors will help you create an engaging and thought-provoking event.

A speakers bureau that is backed up by the expertise of an established business book publisher.



Digest 14 FOCUS



Strategic ability


Constructive conflict


Hotbeds of enterprise


Exploitation and exploration


Acceptable failure



My edit

News nation

Ben Walker on ambidexterity

Poland – the new growth nation


Spark What you need to know


Great minds Michael Chavez considers the authenticity trap


Reviews Books recommended for you




Michael Canning on leadership on the court

Jerome Chouchan, business martial artist

Karina Robinson on living languages


The big interview

Last word

Q1 2019 Dialogue

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Kate Cooper: The leadership column Set in stone

Vivek Wadhwa: The innovation column Fads don’t work

Integrators wanted

How to create the future





Phil Young: The finance column

Giles Lury: The marketing column



The case for corporate social impact

The brand blueprint



Life in the fast lane

The Lego man



Patrick Woodman: The strategy column


Relearn the art of expertise


Agility, Chinese style

Q1 2019 Dialogue





Dorie Clark is an adjunct professor at Duke University’s Fuqua School of Business and the author of Entrepreneurial You, Reinventing You and Stand Out. Described by the New York Times as an “expert at self-reinvention and helping others make changes in their lives”, Clark is a former presidential campaign spokeswoman, award-winning journalist and documentary filmmaker.


Faithe Hart is an experienced change accelerator with degrees in psychology and counselling. A former consultant with Deloitte and vice-president of business process reengineering at Carquest Auto Parts, Hart is currently head of global talent management at Align Technology, where she manages staff from both research teams and core functions working on projects such as dental disruptors Invisalign and iTero in a dozen locations around the globe. Dialogue Q1 2019


Joe Perfetti is an expert in corporate finance and strategy. He has delivered training over the past 21 years to leading corporations, including McKinsey & Co, Morgan Stanley, Santander, BBVA, Royal Bank of Scotland and Citibank. He is a lecturer for the department of finance at the Robert H Smith School of Business at the University of Maryland, College Park, and teaches equity analysis at MBA and undergraduate level.


Antonio Nieto-Rodriguez is a leading champion of project management and strategy implementation. He is the creator of concepts such as the Hierarchy of Purpose, or the Project Manifesto; which argues that projects are the lingua franca of the business and personal worlds. Nieto-Rodriguez has recently been awarded the title of ‘Thinker of the Month’ by the prestigious Thinkers50, as well as receiving their 2017 Ideas Into Practice Award.


Holding international marketing roles at Pfizer and the International Olympic Committee before entering into consultancy and change management at the Boston Consulting Group and the US National Intelligence Council, Anne-Valerie Ohlsson now teaches at the Centre for Management Practice at Singapore Management University, which she co-founded. Ohlsson has also co-authored numerous books.


Dr Camelia Ram has helped clients in the energy, utilities and financial service sectors develop initiatives to adapt to environmental challenges driven by regulation and resource scarcity. Her project management expertise spans a diverse set of projects, including defining organizational capabilities to position a global bank for growth, and the development of a global in-house academy to support skills development. She holds a PhD in operational research.



My edit

Imagine the organization as a typical human being with two hands. Ambidextrous organizations use one hand – let’s say their right – to go about day-to-day ‘exploitation’. These are the products, programmes and projects that continue business-as-usual; the normal practice that drives revenue, helps leaders achieve short-term targets, and keeps people employed. Their left hand is used for exploration: for creating the environment for ideas, discovering new products – and becoming a disruptor before the company is itself disrupted by others. Many companies have two hands, but use just their right. The left lies, for much of the time, almost idle. Our cover story, written by a star-studded cast comprising Professor Joe Perfetti, Professor Tony O’Driscoll, Michael Canning and Scott Koerwer, demonstrates the dynamics of the agile company (page 16). I was struck by how Perfetti et al imagined the human, the organization, and the market, as everspinning cogs. Leaders must therefore act ‘at the core’ (business of today), as well as ‘at the edge’ (the business of tomorrow). The ambidexterity Focus theme is picked up by Jeff and Staney DeGraff (page 20). The DeGraffs argue that creative conflict is crucial to ambidexterity. Their cognitive map is one to keep in your reference library: get the chemistry right between opposites and the conflict creates the generative power. Dialogue welcomes back Dorie Clark this quarter (page 24) for her wonderful examination of the exemplar company – we’ve called it Entrepreneurs, Inc – where ideas and positive disruption can emerge from all parts of the business. Among other ideas, Clark picks up on the modern trend of the side-hustle: the businessoutside-the-business adopted by a growing number of Millennials, who choose to work as employees from

nine-to-five, then on their own projects from five-tonine. Far from perceiving this as a conflict of interest, companies should encourage it, urges Clark. Your most entrepreneurial employees are likely to be your most valuable employees. Looking for disruptors? You might already have them – embrace their skills and build your organization around them. At the heart of ambidexterity is creating a climate where the entrepreneurial and the innovative can thrive alongside the day-to-day. Dive deep into our Innovation section to find a brilliant piece by AnneValerie Ohlsson (page 48), who strikes out against the fads that got companies where they are but won’t get them to where they want to be. Ohlsson provides a framework for reinventing organizations so they focus on ideas, giving themselves a fighting chance in an uncertain, volatile future. Certainly, moving away from obsession with the numbers worked for Jerome Chouchan (page 34). The president of Godiva Japan began his adult life with an interest in Zen, moved from his native France to pursue it, and ended up finding his peace through an ancient form of archery called kyudo. He translated his learnings into his business life – that if you become obsessed with hitting your target, you will miss it. By instead striving for excellence, and creating an environment where your ideas happen in moments of serendipity, you will naturally achieve your goals. Chouchan was handed an annual target of 2-3% growth and consistently made 15%. Exploring – freeing up your people so your organization might become ambidextrous – is at the heart of leading for what’s next. Enjoy the issue. Ben Walker is editor of Dialogue

Q1 2019 Dialogue




Make better choices Thriving in this competitive world is the talk of the Thinkers50 European Business Forum Hosted in the city of Odense, Denmark, the home of Hans Christian Andersen, Europe’s most influential business leaders gathered earlier this year for the Thinkers50 European Business Forum. Widely recognized as being the ‘Davos of management’, the two-day event featured presentations from globally recognized thought-leader Roger Martin; connection consultant Erica Dhawan; and consumer expert Martin Lindstrøm. Interspersed between speakers and panels on topics ranging from the future of consumer insights to social innovation through digital transformation, discussion reigned. “What makes the European Business Forum unique is the level of interaction between the speakers and the delegates,” Thinkers50 cofounder Des Dearlove said before the event. “Attendees don’t just listen, they

co-create; you don’t just attend, you participate.” As testament to the forum’s emphasis on participation, delegates were encouraged to join a RoboTour of some of Europe’s leading robotics centres, discovering the insights, failures and successes of technology that will influence management decisions for decades to come. INSEAD strategy professor Andrew Shipilov noted: “If we hang around with new partners, we will learn something.” Renowned governance academic Johanna Mair added: “If you do not know how to learn, do not innovate.” — Check out page 68 for the full interview with Thinkers50 European Business Forum 2018 keynote speaker, marketing expert and bestselling author Martin Lindstrøm — Dialogue is the media partner of Thinkers50 European Business Forum 2018

Freedom of expression is basis of democracy Expand freedom and unleash human potential, urge attendees of the 2018 Oslo Freedom Forum “‘Stick to dribbling the ball,’they said… I’m trying to be a voice for all those people who don’t have a voice,” said professional NBA basketball player Enes Kanter, speaking out against Turkey’s oppressive regime, the crackdown on free speech and the #ErdoganOut movement, which has left him stateless and too scared to return home. Kanter’s story was just one of many heard by the human rights advocates, artists, tech entrepreneurs and world leaders who gathered at the Human Rights Foundation’s Oslo Freedom Forum in New York to discuss resilience, oppression, forgiveness, and the impact of freedom and democracy on people and states around the globe. Dialogue Q1 2019

One particularly moving story came from Afghanistan’s all-girl high-school robotics team, who attracted global attention in 2017 when its members were initially denied access to the US – and, when finally permitted into the States, received a medal for courageous achievement. Addressing the audience via a translator, team captain Fatemah Qaderyan spoke of her love of learning,

Nearly half of all Afghan children are out of school. Only 17% of women can read

a love that was “dangerous and unacceptable for women” under the Taliban. On returning to Afghanistan, Qaderyan’s biggest supporter, her father, was killed in an Isis bomb. To this day, it is believed the attack was a targeted response to Qaderyan’s ambitions. Decades of conflict have seriously limited opportunities for Afghan people, Qaderyan explained. Nearly half of all the children are out of school, and only 17% of Afghan women can read. “For those of us who live in freedom,” concluded Human Rights Foundation chief executive Thor Halvorssen, “it is incumbent upon us to help these people.”



Companies must avoid the authenticity trap

YOU LEARNT TO L I K E FA K E NEWS People fall for fake news to avoid anxiety Psychologists at the Massachusetts Institute of Technology and University of Regina have concluded that people fall for fake news stories due to thought processes developed as a child to protect against anxiety in an uncertain world. Another factor, say the study’s authors Gordon Pennycook and David Rand, is the ‘effort’ it takes for people to think analytically. Psychologists commenting on the research suggest three key strategies for inoculating yourself against fake news:

Thinkers50 / Shutterstock

1 When you read the news, open your mind and avoid confirmation bias 2 Consider fake news through a humorous lens, such as late-night comedy or political satire, to help reduce any associated stress and anxiety 3 Channel your negative feelings into something positive, such as volunteering for a cause 4 Develop and encourage healthy skepticism in all those around you The original research was published in the journal Cognition, and involved three studies featuring a total of 3,446 participants.

Purpose perishes with perfection Sometimes Great Minds become distracted. The fast-food chain Chipotle, beloved of Mexican food fans, has a new chief executive after its visionary founder Steve Ells departed. Ex-Taco Bell chief Brian Niccol stepped in – with the unenviable task of restoring Chipotle’s reputation. Why? Chipotle incurred a 40% depletion in shareholder value in 2017 following a series of food safety scares and admissions by senior management that essential procedural standards had been neglected. It was all going so well. The chain’s ad campaign ‘Cultivating a Better World’ was one of the most memorable in recent US history. Featuring folk music legend Willie Nelson singing the haunting chords of Coldplay’s ‘The Scientist’, it conveyed the dismal consequences – economic, environmental and social – of industrialized, processed food. The message was clear: Chipotle will buck the trend. Fast food need not be bad food. There is another way. Yet the campaign and its messages buckled under the weight of their own contradictions when the food safety scandals hit. Chipotle’s stated purpose and its reality were at odds. Had Ells – a true innovator – allowed his Great Mind to wander? The disconnect was palpable. For all its attempts to command the moral high ground, Chipotle found itself picking itself up from the bottom. The advertising campaign represented an aspirational view of what Chipotle could become and how it could contribute to the world, not reality. The dream that Chipotle could change the fast-food industry itself was exactly that – an imaginative journey, not a realistic medium-term goal. The Chipotle saga speaks to a core question: should your company’s stated purpose be aspirational? The answer is, only up to a point. Sure, your purpose should reach higher than your existing status, but it cannot be too lofty. It has

to be realizable within a reasonable timeframe, practically observable, and within the bounds of your business framework. Traps lie ahead if it is stretched to the point of being disconnected from your fundamental business drivers. Defining purpose is as much about knowing your constraints as quantifying your aspirations. Chipotle’s travails reminded me of the sage advice of another Great Mind, Deborah Wahl. Readers of this column will remember how Wahl, when head of US marketing for McDonald’s, reshaped its purpose. It was formerly ‘honest food’: an aspirational purpose similar to that of Chipotle, which attempted to channel public concerns about the provenance of its ingredients and healthy eating. “We pivoted away from it and readopted the corporate purpose which works much better: ‘making delicious, feel-good moments easy for everyone’,” Wahl said. “Purpose should help you get back to your core, not away from it.” This sort of realism will help companies avoid what I term the ‘authenticity trap’ – having a purpose that is sufficiently removed from the day-to-day reality as to be counterproductive. My colleague Dr Sudhanshu Palsule and I have been researching organizational purpose. Until recently, the research was revealing the moral and aspirational imperative behind purpose – something about ‘making the world a better place’ – without uncovering much in the way of warnings. This is concerning. The last thing business needs is for purpose to become another fad or entry into the dictionary of meaningless business jargon. Great Minds are, by their nature, also realists. They take care to avoid the perfect becoming the enemy of the good. — Michael Chavez is chief executive of Duke Corporate Education — A version of this article originally appeared on Forbes.com Q1 2019 Dialogue


To win in today’s world, filling knowledge gaps is no longer enough. Yesterday’s wisdom won’t help leaders prepare for what lies ahead: more volatility and less predictability. Leaders must do more than simply learn. To be able to grapple with the unknown, they have to reorient and rewire. As our challenges become more global, social and complex, leadership is becoming more and more critical to business success. Duke Corporate Education is the premier global provider of custom solutions that enable leaders at all levels to adapt and move the organization forward. With delivery in over 75 countries, we work together with clients to understand their context and craft the right educational solution for any level of leadership — executives, high potentials, directors or managers. We’re here to help leaders get ready for what’s next.


We are a team of architects, designers and creative thinkers

East Studio, Riverside Walk Sea Containers 18 Upper Ground London, SE1 9PD T +44 (0)20 7559 7400 www.bdg-a-d.com info@bdg.com Photography credit: Maris Mezulis




Talent-led industries can learn from sports

Leadership, from the court Michael Canning is global head of new businesses at Duke Corporate Education

When time is tight, it is even more important to understand and connect with your key people

I’m wary about applying the micro-lessons of achieving high performance on the sports field to business. Most are not translatable – because they are based on the extraordinary talents of individuals. However, as big and visible businesses, the sports entertainment industry can offer valuable insights for leaders in other sectors on macro-issues, such as competition, technology-disruption and talent. I recently had the opportunity to work with Sanyin Siang, executive director of Duke University’s Fuqua/Coach K Center on Leadership & Ethics, and a coach to sports and tech industry executives. Siang shared insights from a recent global sports conference. First on her slate was the changing nature of competition. In the past, you worried about losing fans to competing teams, or other sports. Today, instead of emulating their sports heroes on the ball field, the next generation is playing Fortnite – a multiplayer survival video game that has accrued more than 125 million users since it launched 14 months ago. Technology is fueling a new e-sports sector, set to become a billion-dollar industry in 2018. Ohio State University, well-known for its sports programmes, just launched an e-sports management programme complete with a state-of-the-art e-arena. As Siang points out, “Like every industry, new technology and unexpected competition is changing the game. You can’t apply the same rules you’ve used before to win. You need to actively scan the environment and stay closer to your customers to understand and adapt to their new realities.” This, coupled with the ability to reimagine how the sport – or your product – might be consumed in the future, is key. The longstanding tradition in professional sports was for players to be drafted and remain team property. The teams commanded sufficient power to assure a stable and predictable labour market. But the advent of free agency changed everything. Today, the best

players switch teams more frequently and dictate where they will play. This may be most visible in the US National Basketball Association (NBA), which has become a star-driven league. The most successful coaches work with the new reality. Boston Celtics’ coach Brad Stevens does what so many coaches refuse to do – coach and design a system to his players’ strengths. Stevens is flexible. His understanding of his players and how to maximize their talents has proved a winning formula in this new era. College basketball players cannot sign with the NBA until they are 19 years old, a regulation that results in many superstar youngsters playing for college teams for just one year. This creates a coaching challenge. How do college coaches get the maximum from their one-year wonders? “With more than 1,000 victories, Duke University’s basketball coach Mike Krzyzewski spends time learning what motivates each of his players and their learning style — auditory, visual, kinesthetic,” says Siang. “He then conveys his messages and lessons in a way that is most responsive, so the player can truly own the lesson.” Businesses operating in fluid labour markets can learn from coach Krzyzewski. It may be counterintuitive, but when time is tight, it is even more important to understand and connect with your key people. They might not be with you for long, but your job as a leader is to help them grow and succeed, and change your company for the better in the process. Siang believes that organizations need to rethink the paradigm of control. “As talent is more important to an organization’s success, and they have more choices, the leader-follower relationship matters more,” she says. While the rules on the court may endure, the rules guiding the business of sports will continue to change rapidly. It reinforces the need we all have today to actively challenge long-held assumptions about competition; and about how to lead in this technology-enabled, talentdriven era. Q1 2019 Dialogue






The ambidextrous organization Competing with one hand tied behind your back is never easy. Yet too many organizations focus on the day-to-day, with little investment in innovating for future success. How do companies strike a balance between the exploitation of what they already have and exploring what they could have in future? Freeing your organization from its bonds must come from the top. Fear of failure will extinguish imagination. The innovation within your walls will leave, if untended. Ambidexterity is achievable. Learn to unleash the power of both hands.



Agility architects

Exploitation and exploration


The creative power of constructive conflict


The failure gateway

Discovery path Learn more‌ About creating your ambidextrous organization


Entrepreneurs, Inc.




Agility architects In today’s volatile, fast-changing business world, leaders must learn to become modern-day architects, designing more agility into their organizations


Professor Joe Perfetti, Professor Tony O’Driscoll, Michael Canning & Scott Koerwer ILLUSTRATION

Neil Stevens

Jack Welch predicted the conditions of his own company’s demise. “We’ve long believed that when the rate of change on the inside becomes slower than the rate of change outside, the end is in sight,” he said in General Electric’s (GE) 2000 annual report. Today, GE – once one of the most valuable and greatly admired companies in the world – is a shell of its former self. Since 2000, its market value has declined almost $500 billion. But GE is not alone: just over half of the Fortune 500 have disappeared since then. To understand the agility imperative, leaders must understand the ‘spin rate’, or speed at which the markets, organizations and their people change and evolve. Challenges occur when these systems move at different speeds. In the case of GE, the market is spinning faster than the company can keep up.

Linear to exponential change

If the keyword for the 20th century was ‘speed’, the keyword for the 21st century is ‘agility’, as organizations struggle to learn how to play an ever-evolving game of business on an increasingly accelerating and shifting playing field where speed alone is insufficient to ensure success. Change is not new: we’ve been dealing with it for as long as commerce has existed. But the velocity and scope of change today is very different. We can look to mathematics for insight. In calculus, the first derivative of distance is velocity and the second is acceleration. Today’s market environment is experiencing what mathematicians call the third derivative: the rate of the increase in acceleration, or ‘jerk’. According to Visual Capitalist, television ownership took 22 years to reach 50 million customers. Facebook took a mere three to reach the same milestone. Pokémon Go reached 50 Dialogue Q1 2019

million people in 19 days. If the pace of change was recorded by a metronome, its needle would have broken. The flow of goods, information and capital flow around the world is rapidly accelerating. This, coupled with the explosion of new technologies disrupting every industry requires us to move from managing a linear notion of change to an exponential one. Managing at this accelerated speed of business is the first challenge organizations and their leaders must address.

Complicated to complex

As the former chief executive of Google, Eric Schmidt, notes: “Every two days we create as much information as we had available to us in 2003. More to scan, know, learn. But the real challenge is getting to insights that matter more efficiently.” A simple way to think about complexity in this context is that it increases exponentially as you increase the number of variables and connections between the variables in a system. Less than two decades after the introduction of the Mosaic browser, a projected 6.4 billion digitally connected things are in use worldwide, with millions more connecting daily. As people and things become even more interconnected, the complexity will continue to increase at mind-boggling rates.

New strategic paradigm

Plotting strategy is no longer a game of chess. In a linear world, strategy was more straightforward. Companies could predict what might happen in the environment, mobilize resources and respond to the market. If the 20th-century definition of competitive advantage was defined by Michael Porter, the 21st-century


definition is now influenced by Rita McGrath. In her book The End of Competitive Advantage, McGrath argues that competitive advantage is transient. It is both ironic and prophetic that previous strategy guru Michael Porter’s consulting firm Monitor went bankrupt. Today, maintaining competitive advantage is like riding a wave. The strategic question is no longer whether you can create sustainable advantage by riding a single-value wave, but how long you can catch and ride a wave before it crashes while positioning yourself to catch the next value wave without being crushed by it. Strategic bets are still important. But in an uncertain environment, the odds of winning go up by making more smaller bets, more frequently. Organizations must view these bets as learning options and turn them into experiments conducted at speed where people can learn fast and adapt. In Google’s office they have a sign on the wall that reads


“Fail Well”. It is not just failing fast, but learning and adapting from each failure. Google’s first foray into mobile phones did not end well financially with its acquisition of Motorola. But the experience was invaluable in its next iteration launching the successful Pixel smartphone.

The agility architecture

In simple terms, agility means having a quick, resourceful and adaptive character. Building an agile organization starts with understanding and managing the interactions across three interdependent and evolving systems:

Today, maintaining competitive advantage is like riding a wave

The market The organization The human

Since 2000, GE has faced a market moving much faster than the company or its people, and its next chief executive Jeff Immelt failed to keep GE moving at the same rate. Today, Elon Musk has a different challenge with Tesla. He is future-forward and changing the market. But his companies and people cannot execute as they lack stability for the speed at which he wants them to move. Hospital systems today face two challenges. The market is moving at a much faster rate than the hospitals. But even the more advanced hospitals are changing faster than the medical professionals they employ can spin. Companies find themselves in different places and may have different problems within a single enterprise. The trick to creating more agility within an organization is for leaders to synchronize Q1 2019 Dialogue





O R G A N I Z AT I O N S Y S T E M HUMAN SYSTEM Exponential Change


Edge Culture


Degree of complexity



Rate of change



Flexible Teams

within and across these three systems. This is how we think of the agility architecture, and leaders as its architects. Great architects create structures that fit with the environment, function well and are safe and sustainable. In the same way leaders have to synchronize three systems: the market, the organization and the human.

Market This digitally intermediated age has given rise to much better informed and connected customers, continually shifting and elevating their expectations. Technology is making the seemingly impossible possible with more choices than ever before. Scale and efficiency as the central driver of value, give way to small batches and customization. And, as it does, organizations need to be intensely customer-focused and rethink how they can create value for their customers across the entire experience, reimagining their partners to deliver. This speed and endless sense of possibility means that the opportunity for organizations to secure positions of competitive advantage for sustained periods becomes untenable. Warren Buffet and others referred to the moat theory of advantage. The key question is: what is a company’s ability to withstand attacks on its markets and customers? Does it have a defensible position? But the question today has changed. What if nobody wants to invade your castle? Such was the case faced by Nokia when Apple and Google changed the mobile phone market forever with iOS Dialogue Q1 2019

and Android. It is now the challenge that Apple faces as the touch interface company is being challenged by the voice interfaces of tomorrow. In the past, leaders would analyse the markets with a degree of predictability and then create capabilities to deliver and capture the value. A pharma company such as Merck could predict with relative certainty the sales of a drug under patent protection. Today, with multiple competing drugs and biosimilar

Leaders have to synchronize three systems: the market, the organization and human competition, as well as the rise of the prescription benefit manager and the formulary of covered drugs, forecasts are anything but certain. Large batch process manufacturing to drive economies of scale no longer works. AG Lafley, the former chief executive of Proctor & Gamble, thought of himself as the chief external officer. “I have a dozen executives who run multibilliondollar global businesses, and I am unlikely to help them improve their performance,” he once said. “My job is to understand what is happening outside of this company and to make judgments as to when we should move to make changes inside to respond to external realities.” According to Dave Snowden’s


Cynefin framework, when faced with a normal or complicated environment, leaders must first sense, analyse, categorize and then respond. But when the world moves to complex and chaotic environments, the script flips. Companies must first probe or act, then analyse and adjust. Today, organizations cannot predict the rhythm and pattern of value waves with more analysis. Rather, leaders must get their organizations more comfortable looking out at an uncertain horizon and learning how to sense and act in real time. To adapt, companies must be much more externally focused, scanning and monitoring, and much closer to customers working backwards to meet their needs. Today leaders must work in what Russell Ackoff calls a constant state of design, which employs a futureback customer-centric frame on market decisions as well as flexible organization models.

Organization The challenge of architecting the organizational system involves managing two paradoxes. An agile company must simultaneously operate at the core (business of today) and the edge (business of tomorrow). It must also be simultaneously stable and flexible. These two paradoxes operate in an infinite loop. The consulting firm Bain says that your core (Engine 1) will eventually erode. They suggest leaders spend 30% of their time at the edge (Engine 2) – the businesses of tomorrow. As McGrath points out, the core business of today


will deteriorate and be replaced by the edge business of tomorrow. Many organizations struggle with the balance between the two. Today GE has a deteriorating core, but no longer works effectively at the edge to win the markets of tomorrow. Tesla is an edge business that is struggling to make its model become a scalable core. When Toyota engineers discuss the vaunted Toyota Production system to plant managers, they preach stability. Only through stable process can they achieve the customizations at high levels of quality from their manufacturing lines. Flexibility without stability leads to chaos. This is the hard lesson learned by Tesla as it struggles to scale from craft production to mass production. In addition, edge business must stabilize to become future cores. It is great to be a start-up, but companies must work to replicate processes to scale. Many smaller businesses fail because they can do work for a few clients, but not thousands. We believe leaders are essentially compelled to run two distinct businesses which must interact. Leaders must continuously seek opportunities for growth at the edge, while simultaneously ensuring they are not squandering value within the core. The challenge of knowing when to power up which engine, and for how long, becomes critical to the sustainability of the enterprise. In this new exponential era, the ‘S-curve’ theory of a lifecycle of a product or business doesn’t hold any more. The disruptions come faster and from non-traditional competition. To navigate this challenge, leaders must recognize when the core (business) is threatened due to a market shift or competitive threat, and inject the flexibility required to position the organization towards the edge. Similarly, leaders must recognize when to impose the stability required to migrate the organization back towards an evolving core once a significant opportunity for growth has been identified at the edge. Leaders need to continually architect the right structures, processes, and work flows to ensure this new type of agility.


Today, when speed counts, slowing down decisions is riskier than moving quicker designed. Command and control systems are no longer efficient. As companies reorganize workflow and teams to speed up decision-making and organize around customer-driven process, we see organization charts morph from hierarchies to network maps. And as Heather McGowan suggests, leadership models have shifted from“I-shaped”leading and advancing through their technical skills, to “T-shaped”combining technical depth with crossfunctional knowledge and relationships, to “X-shaped” with multidisciplinary skills and networks. Our ability to absorb these changes and transform our organizations is directly tied to the rate at which leaders can effect changes in our talent, teams and culture. Two factors become critical to adapting in this exponential era: increasing the readiness and pace of decision-making and improving the quality of the decisions; and the ability to experiment, learn and adapt as part of the process. As the problems get harder and cut across more boundaries, our instinct is to slow down, gather more information and check-in with more stakeholders to de-risk decisions. But today, when speed




Organisation Human

Human We’re experiencing the challenges of stretching existing constructs of organization and leadership well beyond the machine world for which they were



counts, slowing down decisions is riskier than moving quicker and adapting. Increasingly, leaders must be comfortable with what General Colin Powell calls the 40/70 rule. You need 40% of the information to make a decision. Without some data, you are purely guessing. But you must be able to act at 70% rather than waiting for 90%. The extra time it takes to achieve that 20% greater level of certainty is increasingly putting the organization at a slower spin rate than the market. The second part of the problem is shifting where decisions get made. According to General Stanley McChrystal’s book Team of Teams, two elements are critical to pushing decision making downward: context and transparency. Leaders must provide the context for others to make good decisions rather than set up a system where they make all the decisions. In this environment, others should be able to make the same decisions consistently over 90% of the time. This, coupled with the decision-maker having access to the same information as the leader, the transparency, is critical.

Leaders as architects

Systems, particularly the organization and human systems, are slow and sometimes resistant to change. Yes, they will evolve, but we no longer have the luxury of time. Leaders can be the greatest leverage point, but only if they know how and where to intervene to better sync the market, organization and human systems. As the spin rate increases and organizations look more like biological structures rather than mechanical ones, leaders need new frames, tools and orientations to become modern-day ‘architects’- designing more agility into their businesses. Getting leaders ready to be agility architects may be the most important step in securing the survival and success of your organization. The implication for leadership development is profound, as building agility architects, not mere survivors, is a different task. — Professor Joe Perfetti is an expert in corporate finance and strategy; Tony O’Driscoll is professor at Duke University’s Fuqua School of Business; Michael Canning is global head of new businesses at Duke CE; Scott Koerwer is an entrepreneur in higher education and business — For more information, visit dukece.com Q1 2019 Dialogue



The creative power of constructive conflict Ambidextrous leaders embrace difference and disagreement, write Jeff & Staney DeGraff

Is ambidextrous leadership simply an updated version of the old catchphrase ‘a jack of all trades and a master of none’? In this age of specialization, is having an expanded range and repertoire more desirable than deep-domain expertise? Ambidexterity poses a fundamental challenge in the field of innovation where one size seldom fits all. It is doubtful that a master product designer of military aircraft would be equally as skilled at creating a fine-dining restaurant. What Dialogue Q1 2019

constitutes effective leadership skills is typically defined by the situation. A truly ambidextrous leader would be something akin to a polymath like Leonardo da Vinci or Benjamin Franklin. Alternatively, vague conceptions of the term as an attribute of effective leadership are of limited significance because they tell us little about how such skills specifically create results. Truly ambidextrous leaders are rare. Those that fit the bill are often mythologized, like


Steve Jobs. It might be more useful to consider ambidexterity as a mindset instead of a set of abilities. Thus, it will be within the reach of more leaders. The late professor of corporate strategy CK Prahalad coined the term ‘dominant logic’ to describe the culture and beliefs an organization espouses that inadvertently informs its strategy and development. Put another way, organizations have a limited worldview. This lack of awareness creates blind spots which bring unintended, and often unpleasant, consequences. So, how can we learn to see what is in our blind spots? The answer is that we must seek out conflict. But we must seek the right kind of conflict, and in the right way. We need to engage the loyal opposition to help us locate the limits of our thinking, and so adopt an ambidextrous mindset.

The creative power of constructive conflict

It might be more useful to consider ambidexterity as a mindset instead of a set of abilities

There are multiple types of interpersonal conflict relevant to ambidextrous leadership. To keep things positive, most methods of conflict management focus on three aspects of interactions. First, they cite the inevitability of conflict in all healthy human relationships. Passive aggressive behaviour, often taken as conformity, is viewed as a sign of a destructive environment. Second, they emphasize keeping the conflict centred on opinions and ideas; not personalities. Ad hominem attacks quickly escalate differences into negative actions. Third, team doctors like Patrick Lencioni suggest that conflict moves along a continuum between artificial harmony – such as groupthink – and divisive arguments that disguise deeper power issues. In short, the key is to create positive tension by challenging ideas, not people. The idea that constructive conflict produces innovative solutions, hybrids born from opposing ideas, is an old one. Ancient Chinese Daoist philosophy characterizes universal forces as yin and yang, seemingly antagonistic energies that are interconnected. Similarly, the eminent 18th-century German philosopher GWF Hegel saw history progressing as an ever-advancing dialectic of thesis and antithesis, ultimately resulting in a synthesis of something altogether new. In both Daoism and Hegelianism, constructive conflict is considered natural and inevitable. Often overlooked is the role the creative power of constructive conflict plays in theories of economics that still influence our thinking today: Adam Smith Conflict between competitors in the market produces better and cheaper goods and services Karl Marx Conflict between the ruling class and working class produces creative destruction leading to a more equitable social order


Joseph Schumpeter Conflict between incumbent and start-up institutions creates innovative new industries and destroys old ineffective ones

Although espousing a significantly different ethos and end game, each view posits conflict as the generative force that moves us forward. So, how is an ambidextrous leader, one focused on ideas and not personalities, to put the creative power of constructive conflict to work? First, they need a heuristic process – a cognitive map and mindset – to characterize differences in terms of recognizable types and associated conditions in which they typically excel or falter. Second, ambidextrous leaders need a process by which they can encounter, enlist and engage diverse and contrasting types.

The Innovation Genome

The Innovation Genome, an offspring of the Competing Values Framework, is a meta-model upon which a wide variation of leadership types can be compared and evaluated. The Innovation Genome has three levels and four types:



Situational The world at large imposing demands on the organization (e.g. recessions, conflicts, pandemics, shortages)


Organizational A community with a shared identity, values, and aspirations (e.g. company, not-for-profit, family, social media network)


Individual A person with abilities, skills and attitudes both naturally developed, as well as those derived from experiences and orientation (e.g. parenting, education, relationships, wellbeing)

These three levels are interrelated. Think of them like Russian nesting dolls. Each level is subsumed by the greater level. Whereas most leadership-type indicators assume that the situation in which leaders lead is neutral, the Innovation Genome does not. Just as some investors prosper in bull markets while others succeed in bear markets, what makes an effective leader is determined almost entirely by the strategic situation. Value propositions such as profitable growth are achieved when an organization develops the appropriate culture and competencies to produce them. In turn, the appropriate culture and competencies are developed by leaders. Essentially, scalable innovation competencies and culture are determined by how well leaders diagnose the situation and synchronize the organization to pursue and produce specific value propositions. Ironically, while there are clear connections between outcomes and the organizational culture and capability required to capture them, leaders Q1 2019 Dialogue








Individual Level





Attributes ∞ Examples

Creativity ∞ Aesthetic vision ∞ Artistic expression

Security ∞ Safety ∞ Savings

Vitality ∞ Physical health ∞ Emotional health

Capability ∞ Apprenticeship ∞ Continuing education

Discovery ∞ Psychological ∞ Spiritual exploration

Productivity ∞ Accomplishment ∞ Advancement

Prosperity ∞ Financial well-being ∞ Best in class

Community ∞ Family outings ∞ Service associations

Organizational Level





Value propositions ∞ Examples

Innovation ∞ Discovery strategy ∞ Radical experiments

Efficiency ∞ Lean manufacturing ∞ Supply chain innovation

Speed ∞ Mergers and acquisitions ∞ Rapid action problem solving teams

Community ∞ Communities of practice ∞ Culture development

Growth ∞ New market speculation ∞ Greenhouse funds

Quality ∞ Total quality control ∞ End to end IT system

Situational Level





Strategies ∞ Examples

Breakthrough ∞ Miracle drugs ∞ Visual prosthetics

Scale ∞ Airline logistics ∞ Heavy manufacturing

Aggressive ∞ Smart phones ∞ Snack foods

Beliefs ∞ Fair trade coffee ∞ Not for profit groups

Differentiation ∞ Craft beers ∞ Haute couture fashion

Cautious ∞ Surgical procedures ∞ Power generation

Demanding ∞ Financial services ∞ College football

Lifestyle ∞ Bicycle lanes ∞ Gaming

typically favour practices that closely resemble their own preferences and therefore actually may destroy growth. In other words, they prefer the tools, methods and people who are more like them over those that will help them innovate.

Types There are four fundamental creative forces that produce value by pulling us, our communities, the imperceptible zeitgeist and all the constituents in our situations in different directions (also see table above):


Create Artist Leader Control Engineer Leader Compete Athlete Leader Collaborate Sage Leader

These four creative forces drive or thwart growth in dyadic oppositions: Collaborate versus Compete Create versus Control Dialogue Q1 2019

Profit ∞ Revenue insight processes ∞ Market adjacencies

Knowledge ∞ Knowledge management ∞ Search and reapply

This constructive conflict between types produces the generative power. Leaders with an ambidextrous mindset, who can take a higher point of view, see their own strengths and weaknesses, and know when and how to enlist others with different skills, are essential for harnessing the creative power of constructive conflict. While no leader is just one type, they do gravitate toward a dominant logic. Think of it like being right- or left-handed. To understand a leader’s true type, pay attention to what they do when under duress. So, what steps can a leader with an ambidextrous mindset take to make innovation happen?

Process There are four steps to harnessing the creative power of constructive conflict:


Assemble a diversity of perspectives Diversity goes well beyond gender or ethnicity and includes aspects such as domain expertise, belief systems, and life experiences.


By focusing on shared vision and goals, the ambidextrous leader can redirect tension to more productive ends



Engage in the conflict Even in a diverse workspace or digital social media network, it’s easy to avoid or even ‘unfriend’ those whose worldviews we find disagreeable.


Establish a shared vision or goal Paradoxically, the result people want to achieve is often confused with the approach they take to achieving it. By focusing on the vision and goals they share, the ambidextrous leader can redirect these tensions to more productive ends.


Construct hybrid solutions Finally, the payout of harnessing these positive tensions is the creation of innovative hybrid solutions. This stage is typically iterative, and requires a great deal of ongoing adjustment.

Let’s explore the creative power of constructive conflict via a case study of an organization that needed to quickly reinvent itself by way of innovation. In the late 1990s, the international news agency and technology company Reuters found itself in financial trouble. It had operated largely as a British concern for over a century, with most of its executives coming from relatively similar backgrounds. The dot.com bust had put the firm in a perilous situation, and the board decided to make a change at the top. They appointed Tom Glocer chief executive, the first American to ever lead the venerable establishment.

Assemble a diversity of perspectives

Glocer started by having his own skills, attitudes, and disposition objectively evaluated to become more selfaware of his abilities and biases. Next, he asked his executive team to do the same and an in-depth report was created for each. A more global and technologically sophisticated mindset was needed. So, he adjusted his team to bring in this new and diverse set of skills.

Engage in the conflict

Glocer encouraged respectful disagreement, and the culture of quiet dissent started to give way to a more vocal form of constructive conflict. Was Reuters a news organization or an information technology development company? Though the real concerns of the company were now being discussed, Glocer was troubled that the new executive team was beginning to form factions. He therefore rearranged offices so that those with most contentious points of view were seated

near each other. This way they would have to routinely confront their differences every day.

Establish a shared vision or goal

Glocer added elements to both the board and executive team meetings that encouraged meaningful dissent in the strategic planning process. Meetings began to drag on into the night, but with an open mind, the team was finding the root cause of their challenges and discovering new market opportunities. A shared vision that they all owned began to emerge, but the strategy and timeline given to investors would need to be adjusted to allow the time they needed to achieve it. In an unprecedented move, Glocer went to the unforgiving financial community and made his case.

Construct hybrid solutions

Glocer had enlisted and engaged his executive team, board and investors. What he needed now was the company at large – their ideas, their support, and their ability to get it done. So, Glocer convened a massive innovation jumpstart in an old lorry warehouse in an industrial borough of London. More than 100 leaders from around the world, as well as their best and brightest minds, were invited to develop breakthrough new products and services, as well as radical solutions to emerging challenges. The warehouse looked like the floor of the stock exchange. Divergent regions, disciplines and factions began to converge as new hybrid ideas emerged. The usually understated chairman of the board proclaimed the output “astounding”. Reuters had the ability to innovate all along. It just needed to unleash its generative energy of constructive conflict. The story doesn’t end here. There were years of layoffs, product failures, and a wide array of disappointments. But, Reuters was saved by the aspirations of its leaders to use an ambidextrous approach to make innovation happen. Eventually, the firm was acquired by Thomson, and – in a highly unusual move – Glocer was made chief executive of the digital media giant before he stepped down years later. Ambidexterity may be more a desired state than an achievable goal. Few among us would qualify as a heroic übermensch leader. As with the performing arts, ambidexterity requires an ensemble. — Jeff and Staney DeGraff are coauthors of The Innovation Code: The Creative Power of Constructive Conflict. Jeff is professor at the Ross School of Business, University of Michigan, and adviser to Fortune 500 companies worldwide. Staney is chief executive of the Innovatrium Institute for Innovation Q1 2019 Dialogue



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Entrepreneurs, Inc. Well-led businesses can become hotbeds of enterprise



Blok Magnaye

A tidal wave of change is coming to the workplace. Globalization and digitization are already here, and the chief executive of Deutsche Bank has gone so far as to predict that robots could replace close to 50,000 of its employees. But in this future of robots, AI, virtual reality, and more, what will distinguish your company from its competitors is your ability to reinvent the level of service you can provide to your customers and dramatically enhance the user experience (much as Apple did in the world of retail). And to do that, you need to help your employees reinvent themselves and think more entrepreneurially about what’s possible, both for themselves and the company. Indeed, as Steven Rice – now chief human resources officer of the Bill and Melinda Gates Foundation – told me when I interviewed him for my book Reinventing You, reinvention is the foundational skill for the 21st century. The ability to learn and adapt makes everything else possible. It simply won’t work for employees to sit back and wait to be told what to do, or what a ‘normal’ career ladder would look like for them. There’s no such thing as normal any more, and they’re largely going to need to invent their own path. But, as a company leader, it’s your

job to create the environment in which they feel comfortable – and empowered – to do so. When done right, it brings powerful benefits both for their own career progression – employees have identified new opportunities that excite them – and the company, since they’re proactively finding new ways to add value. In my coaching and consulting work, for companies ranging from Fortune 500 industrial behemoths to multibillion-dollar tech startups, here are four ways I’ve identified that leaders can encourage employees to think more entrepreneurially about their career progression and the work they do for the company.


Advocate the future resume

An extremely useful exercise is to suggest that your team pre-write their resumes. This is an approach that I discovered in the course of consulting for a major New York City-based hospital system, and which I’ve written about for the Harvard Business Review. During my consulting engagement, I met a fast-rising executive named Lenny Achan, and asked him about his trajectory. The secret, he said, was ‘pre-writing his resume’. In short, like many people, he would update his resume every year. But instead of doing it the traditional way, the Q1 2019 Dialogue



Almost all employees want to develop and progress in their careers. If they don’t feel they can do it inside your organization, they’re going to leave

resume he would write was dated five years in the future – for instance, in 2018, he’d write a resume for 2023. He’d list the position he expected to hold then, as well as – most crucially – all the positions he’d have had in between now and the future date. That enabled him to identify not just a big-picture future goal, as many do, but also the specific trajectory he’d need to take in order to get there. That includes the skills he’d need to develop to become qualified for that position, whether it was taking on more managerial responsibilities, getting more overseas experience, improving his public speaking, and so forth. This exercise allows your employees to take ownership over both their future direction and the skills development they’ll need to undertake along the way.


Promote a test mindset

Another important way leaders can help their employees think more entrepreneurially is to adopt a ‘test-and-iterate’ mindset. In my book Entrepreneurial You, I profile Danny Iny, an entrepreneur who – after the disastrous launch of a product no-one wanted – landed on a brilliant strategy for ensuring he never again created something that wouldn’t sell. Instead, he now always runs an initial pilot test of his offerings, letting people enter at a lower price

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in exchange for providing feedback along the way. That enables him to determine if there’s any interest at all – because people are forced to pay upfront, before he creates the product – and to obtain fantastic market research with these beta testers, allowing him to develop high-quality materials that resonate with customers when the product officially launches. Any leader can benefit from adopting this test-and-iterate mindset, and encouraging it among your team. Iny doesn’t expect that his beta offerings will be perfect and, odds are, most of your initial products or services won’t be either. But this approach has three key benefits. First, customers feel they’re getting a good deal, with reduced ‘beta pricing’. Second, you’re also sharply limiting the downside of any given experiment, because you’re only undertaking a project if there’s initial interest; and, finally, the frequent and close interactions with customers during the creation phase ensures you’re meeting their needs.


Encourage side hustles

A third way leaders can help encourage their employees to think more entrepreneurially is to support – and even encourage – entrepreneurial side ventures. Historically, many companies have viewed moonlighting activities as a distraction at best, and possibly a serious threat to their employee’s attention and performance. But my research has shown that, especially in this increasingly fluid modern economy, many employees – who have absolutely no desire to leave the company and work on their own – are nonetheless interested in and drawn to entrepreneurial ventures as a form of skills-building and personal challenge. Bozi Dar, a senior leader in a life sciences company whom I profile in Entrepreneurial You, has experimented during his own ‘nights and weekends’ time with creating both an app and an online course. The former never took off, but the latter has been quite successful, bringing in six figures of income over the past several years. Dar has learned enormously from both experiences – knowledge that he brings to his work at the company every day. He thinks of himself as an ‘intrapreneur’ inside a Fortune 500 company, and says he has no desire to leave his



job. “In big companies,” he says, “when you [as a leader] have autonomy and budgets and teams, you can tackle big-level problems that are hard to do as an entrepreneur.” The opportunity to think entrepreneurially at his job every day is a challenge that excites him. Many employees – who may already be engaged in interesting entrepreneurial side projects, through which they’re learning valuable new skills – may be afraid to discuss them at work, for fear the company will disapprove. But forward-thinking organizations are ready to tap into this underappreciated resource. Indeed, Lenny Achan – the executive who developed the resume prewriting methodology – was promoted rapidly at his company on the strength of his own entrepreneurial side venture, which was creating smartphone apps. When his boss discovered Achan’s hidden talent, he promoted Achan to run social media for the hospital system, and eventually promoted him again to run the entire communications operation. Your employees may be developing valuable skills you don’t even know about, because so many organizations are afraid to ask – or have created a climate where employees are afraid to tell. Instead, if leaders hold up positive examples of employees who have taken the initiative to develop new skills or new ventures on their own time, you open up vast new possibilities. Instead of the ‘zero-sum’ mentality of the past, in which an employee’s professional development is a threat to the firm because it gives them more options, it’s embracing a win-win mindset. When an employee becomes more thoughtful, more skilled, and better trained, it helps both them and the company.


Supply a career ladder

Finally, we can encourage our employees to create their own personalized career ladders by identifying the opportunities – including cross-departmental ones – that most excite them. In my book Reinventing You, I noted

Boston chef Joanne Chang, who overcame her lack of formal culinary training to land a position with one of her city’s most prominent restaurateurs. How? Instead of waiting to see what job openings happened to get posted, Chang proactively created a list of her idols: the chefs she’d be honoured to train with. She wrote all of them personal letters, explaining her background and why she’d like to work with them. Her unique and thoughtful approach set her apart, and she was hired almost immediately, despite lacking the typical credentials. Almost all employees want to develop and progress in their careers. And if they don’t feel they can do it inside your organization, they’re going to leave. Why countenance that attrition, and all the wasted costs associated with employee churn, when we can instead redirect them to other internal opportunities? Encouraging employees to learn more about the workings of the company helps them identify a path forward uniquely meaningful to them, and in the process enables them to feel more connected to the company’s mission and learn more about its overall operation. That also gives them a broader understanding of their current role that’s likely to pay strategic and performance dividends. It’s clear that the status quo won’t hold up for long. The half-life of many skills is now estimated to be five years or less, meaning that to stay relevant (and actually be helpful to their companies), employees need to constantly reinvent themselves and adopt an entrepreneurial mentality. By following these strategies, leaders can help employees advance their own careers, and continue to provide valuable service to their companies over time. — Dorie Clark is adjunct professor at Duke University’s Fuqua School of Business and author of Entrepreneurial You, Reinventing You and Stand Out Q1 2019 Dialogue



Exploitation & exploration The best companies keep them in balance, writes Jens Maier

My book The Ambidextrous Organization – Exploring the New, While Exploiting the Now was published in 2015. How much progress have we made? Are leaders and organizations better at ambidexterity than they were four years ago, when I was writing? Ambidextrous organizations need ambidextrous leaders; that is, organizations need to build organizational capabilities (e.g. processes supporting exploration) and leaders need to develop their individual competencies to embrace exploration opportunities. Dialogue Q1 2019

In my experience, exploitation is not the challenging side of the equation. Most businesses are built around processes to get existing products and services out of the door and most leaders are rewarded for doing the same. But without balancing capabilities to create the new while conducting ‘business as usual’, businesses are destined to fail at some point. There are three important aspects that organizations trying to embrace ambidexterity need to address.


Aspect 1 Structure versus context This question is very much at the heart of the strategic debate about ambidexterity. Should we create a separate unit to address exploration, safe from the daily exigencies of exploitation, that is, a structural solution? Or should we follow a contextual solution? The contextual solution postulates that leaders in the organization are comfortable in leading with ‘both hands’. For example: in the morning, directing an exploitation project (e.g. Systems, Applications & Products implementation) with clear return on investment (ROI) targets and milestones for an 18-month period; and in the afternoon, sponsoring an exploration project, initially without any ROI, and with three to four months to decide on whether to ‘kill’ or ‘accelerate’ the project. This leads us to the second aspect – do ambidextrous leaders exist? In other words, how feasible is the contextual solution?

Aspect 2 Expand the bandwidth

HR could use the high-flyer programme to stage the debate that the C-suite knows it should be having

Bandwidth seems to go right to the heart of ambidexterity. How can we develop leaders who are confident and experienced in leading both exploitation and exploration projects, and with the individual competencies to tackle both successfully? This is about the importance of adaptability, knowing when to put the pen in the other hand. In my experience, the high-flyers from large organizations usually score very high on ‘conscientiousness’ in the Big Five personality test. This means that they are really well-suited to running exploitation projects but are challenged when it comes to dealing with the ambiguity inherent in exploration projects. Many also present with low scores on ‘openness to change’, again meaning they are happier with a steady state than with the new. Individual leaders need to expand their personal bandwidth and the first step is self-insight. But there is also a bandwidth challenge at the organizational level. As the late professor of corporate strategy CK Prahalad put it: “Capabilities stay when the competencies have gone home.” The organization needs to develop in parallel with its leaders, moving beyond product innovation to embrace business model innovation. Getting leaders from different industries together can kick-start important conversations here. Working on concrete exploration projects with internal project leaders and project sponsors provides the experiences necessary to further develop the organizational capabilities required (e.g. develop robust exploration processes). It simultaneously offers the potential for individuals (namely, project leaders and their sponsors) to get first-hand experiences with exploration projects (inherent ambiguity, ‘failing fast’ etc.).


This leads us to the third and final aspect – the different processes needed to support the different approaches.

Aspect 3 Separate processes Most organizations today still have no separate processes for exploitation and for exploration projects. For example, ROI is a suitable indicator for an exploitation project, which can follow the traditional funnel model: make the case for ROI, project stage gating to follow. ROI is useless at the very start of an exploration project. The project leaders at the start of an exploration simply do not know enough to calculate the ROI. A robust approach to addressing the ambiguity inherent in an exploration project is to allow for a short period (three to four months) to assess its feasibility. Every exploration project needs a senior leader in the role of sponsor, to run air-cover and stop the idea being quashed too early, to organize a (small) exploration budget and to give access to internal functional experts. The three months are used to examine the business case and to develop a prototype of the new business model. At the end of the three months a review should decide either to ‘kill’ or to ‘accelerate’ the project (the notion of ‘failing fast’). This avoids ‘undead projects’ and limits the risks for the organization and for the project leader and sponsor. Only at this stage should the question regarding ROI be answered.


So how much further ahead are we today? Ambidexterity has achieved most impact in the C-suite. Here, the members do not want to fall into the trap of companies like BlackBerry and Nokia in the early 2000s. The challenge is that the debate tends to get labelled with the latest strategic challenge (today it’s digitization) rather than being seen as an ongoing need to balance exploitation with exploration in the face of every new strategic challenge. The place where organizations could definitely do more is in HR. While the C-suite has its annual top 100, or top 150 meeting, this is often too busy with communications to allow for real debate about whether the organization has explorationexploitation in balance. Meanwhile, HR owns the top talent pool, often the 30-40 people from across the organization who are ideally placed to stage the debate, often under the auspices of a CEO project. While some HR leaders own the challenge of leading the debate, too many see themselves as business partners rather than agenda-setters. It’s a missed opportunity. HR could use the high-flyer programme to stage the debate that the C-suite knows it should be having. — Jens Maier works in the field of leadership and innovation as author, teacher (University of St Gallen), consultant and entrepreneur Q1 2019 Dialogue



The failure gateway Organizations should discover three ways to make failure acceptable in their culture, write Roger Hallowell, HervĂŠ Coyco, Randall White and Mary Logan

Dialogue Q1 2019


Failure is a popular topic these days. There are even courses on it in business schools. There is general agreement that if organizations are to innovate, failure will be inevitable as innovations are explored and most are discarded. This applies to multiple types of innovation, from incremental to disruptive innovations in value propositions, to modest or radical innovations in the business model itself. A great deal has been written on constructs such as learning to ‘fail fast, fail forward’, and these are important contributions to the literature on leadership, change and innovation.


However, when we are interacting with executives and the topic of failure is raised, the question that inevitably arises is, “How can we make failure acceptable in our culture?” We propose a three-part answer. PART 1

Basic questions a leader needs to ask

These questions are predicated on the notion that reasonable failure that furthers an organizational goal or strategy (e.g. customer centricity, cost leadership, technical mastery) is generally good. It is a source of learning. Failure that does not further an organizational goal is a waste of organizational time and energy. This implies that the company has formulated a highly relevant, inspiring and guiding vision, as well as clear strategic priorities, both of which are broadly understood. Note that this isn’t as widespread as is often assumed. But, as long as this prerequisite is met, then the first question leaders need to ask is: Is there learning that will come from this endeavour – which may fail – that is valuable to the goal? If the answer is yes, the leader asks the second question: Who bears the consequences of the failure, and is that acceptable?

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For example, does the organization bear the consequences (acceptable), or does its customer (usually unacceptable)? At times, the leader may be able to shape the answer, such as the case when an employee would bear the consequences of a failure. But the leader will protect the employee from blame. If the answer is acceptable, the leader asks the third question:

Don’t delve into the causes of a failure too soon – the people involved are likely to be feeling damaged

Is the cost/benefit trade-off of this failure acceptable? Earlier, we used the term “reasonable failure” intentionally. A failure that significantly harms a company’s reputation (such as Volkswagen, which in 2015 admitted cheating emissions tests in the US) or wipes out its entire cash and credit reserves (the Royal Bank of Scotland 2008 crash) is not reasonable. Leaders need to help their people to conduct a cost/benefit analysis to decide if the costs of failure are less than the benefits from the learning that will occur. This type of analysis should be conducted early in the risk-taking process, and repeated as new information becomes available. By asking all three of these questions, a leader can be sure that potential failures are (1) sources of strategically-relevant learning, (2) fair (in terms of risk vs reward), and (3) good investments. PART 2


Running toward opportunity, ambiguity and risk

Good leaders of innovative organizations are like action hero Indiana Jones. They run toward opportunity, ambiguity and risk. Consider the investments currently being made in autonomous driving by companies with no experience in the automotive sector, such as Google or Uber. The question is thus, “How do these leaders get their people to do the same?” While there are numerous things leaders do to encourage this behaviour, we argue that the most important is going into ‘learning leadership mode’. In this mode, a leader acknowledges that he or she does not have the answers, and needs the collective intelligence of the team in order to find them. The leader also expands the team in order to expand the collective intelligence. This is done by being inclusive and listening – another example of the power of emotional, or social, intelligence. Good leaders should also design their teams to be heterogeneous rather than homogeneous, to ensure a variety of perspectives and prevent conventional assumptions from dominating. A consequence of this leadership approach is that good leaders should have a strong dose of humility and never be fooled by the prestige of their hierarchical status. Another consequence is that leaders need to be highly resilient as collective intelligence Dialogue Q1 2019

requires patience and determination, and an ability to view the inevitable conflict that arises from different perspectives being voiced as a positive outcome. PART 3

Three key traits

We’ve observed a correlation between three traits and (1) the ability to ask the basic questions and (2) propel an organization toward opportunity, ambiguity and risk.


The ability to deal with ambiguity and uncertainty

Being comfortable with the things you are propelling your organization toward is helpful. Successful leaders of innovative organizations are generally at ease with a higher level of ambiguity and uncertainty than most individuals. Hervé Coyco, who transformed the passenger-tyre division of Michelin from a technology-driven organization into a technology- and customer loyalty-driven organization has said on more than one occasion, “I knew there was value to be unlocked in customer loyalty. I didn’t know how to unlock it or how much value there was, but I knew it was there.”



While other scholars have illustrated how positivity furthers change, we also see its role in getting others to run toward opportunity, ambiguity and risk. Positivity and its behavioural implications are critical to motivating employees to


be willing to live in environments where failure is embraced as learning. There are two best practices or behaviours that underpin positivity. The first is, don’t delve into the causes of a failure too soon. Soon after a failure, the people involved are likely to be feeling damaged, so wait until after they have recovered to learn from the failure (and ensure it doesn’t happen again). The second practice is to feel uncomfortable any time you have to say no. It is generally easier to say no, because often it means that you can play safe. However, a leader needs to understand the negative effect this can have on long-term employee motivation, and thus behaviour, and always feel uncomfortable saying no. Positivity can be observed in leaders’ approaches to encouraging others to run toward opportunity, ambiguity and risk. Consider Ingvar Kamprad, the late founder of Ikea, who renounced his greatest lifetime mistake of associating with the Swedish far-right in the 1940s. “Torbjorn Loof had spent days preparing his presentation for Ikea’s annual preview of new products. Back in the 1990s, product managers like himself would show off the latest ideas for flat-pack furniture and other accessories to Ingvar Kamprad, the company’s legendary founder. “But after just two minutes of the full-day meeting, Kamprad piped up. “I’m sorry to interrupt you, but I want to change the agenda completely,” he told Loof and others present. “I only want to talk about all the mistakes you have made — it’s only through mistakes that you learn”…[Loof noted] “He [Kamprad] wanted to know who had made the biggest mistakes in Ikea. Sometimes there were prizes for those who had made the biggest.” – Source: Financial Times

Many great leaders in history illustrate positivity urging their followers to accept hardship (the societal equivalent to failure) in the service of their optimistic visions of the future. Think about Churchill’s speeches during the darkest days of World War II; John F Kennedy’s during the Cold War; Martin Luther King Jr’s during the civil rights movement; Ronald Reagan’s when the US economy was stuck in stagflation and again, later, during the arms race with the Soviet Union. We would argue that positivity is essential for leaders of any type to lead through failure.


Self-awareness, including learning agility

Learning agility can be defined as “a practical intelligence that enables an individual to learn in real time and transfer the learning to another situation”. Leaders must be able to acknowledge when they have failed, and be able to learn from that failure – to find something good in


something bad. Failure is inevitable; what’s critical is the leader’s openness to it, willingness to fix what is broken and learn from the process. Leaders of innovative organizations are good at distilling the learning from failure – and success – into lessons for their people that both inform and motivate them. Randy White saw these traits again and again in his research for Breaking the Glass Ceiling and The Lessons of Experience.

A learning culture

A culture where the right kinds of failure are tolerated can also be called a learning culture. What does a learning culture look like? We have observed that it has five critical elements: 1 Open communication 2 Sincere trust 3 Care for individuals 4 Collective responsibility (“we’re in this together”) 5 Pride in being part of something bigger than yourself.

It works like this. If you’re not afraid of failure, then it’s okay to talk about it. Because we are open with each other, we build mutual trust and I know that you care for me as a human being, not simply as a work cog producing outputs. That means it feels safe to perform alongside and with you – no blame or finger pointing. And because we see we are building something bigger together than we could alone, we focus on collaborating to achieve this, rather than competing. Whether a high-performing sports team (e.g. the New England Patriots, British Cycling or the New Zealand All Blacks), a 1960s NASA team of scientists in the space race, or the management of an innovative organization in Silicon Valley, these characteristics are essential. The military discovered this many years ago and described it as ‘organizational effectiveness’. The role of the leader of an innovative organization must include helping people to learn and enabling them to take reasonable risks. They must help people to experiment. Innovation requires experimentation, which often ends in failure many times before success is achieved. When failure happens, the choice is whether to learn from it or to hide from it, covering up or laying the blame somewhere. If you can learn from failure, you’ll avoid making the same mistake twice, you’ll help others to avoid the mistake entirely, and you will be unafraid to continue to experiment. The real, pernicious failure is not the mistake, experiment or error itself – it’s when people and the organizations they work in do not learn. That’s why the example set by leadership is critical. — Hervé Coyco, Roger Hallowell and Randall White are adjunct professors at HEC Paris. Mary Logan is former assistant dean at TRIUM Q1 2019 Dialogue



Archery and the artist The president of Godiva Japan, Jerome Chouchan, reveals the business teachings behind the ancient art of kyudo



Martin Holtcamp

Dialogue Q1 2019

Focus on the target, or focus on your shooting? Most learner archers opt for the first option, and fail. “There is a saying in kyudo that the right shooting always results in a hit,” says Jerome Chouchan, president of luxury chocolatier Godiva in Japan, South Korea, Southeast Asia, India, Australia and New Zealand. “When you are in the archery hall, what you learn is that if your mind is taken by the target, the outcome, then your posture isn’t straight, your mind doesn’t flow, the energy doesn’t flow properly in your body, you become tense and – finally – you miss.” The problem, he says, is that by focusing on the target, your mind naturally turns to the space between your arrow and its goal. “The target is 28 metres away!” says Chouchan. “If you concentrate on where you are now, you will hit your target, which is at a distance. But if you are thinking about the distance, you will not perform properly – and you will not hit.” The teachings of kyudo translate emphatically into the business arena, says Chouchan. “If you focus on the needs of the consumer, then the financial pressure of your sales targets are away from your mind. So you do a much better job and, finally, you hit them.” At Godiva, Chouchan has drawn on his learnings to refocus the organization on four key areas, all of which are designed to reduce the ‘distance’ between the business and the consumer: better products (making the goods on offer of the highest quality); better

stores (finding the best locations and creating the most beautiful displays); better communication (advancing the most powerful advertising and marketing); better skills (better selling and welcoming from Godiva store staff). “We are very demanding of these four elements – relentless,” he says. The strategy has proved an unqualified success. In five years, Chouchan has doubled the size of the business, he says. Precisely by not focusing on his target (he was handed a goal of 2-3% growth a year), he has overseen growth of 15% annually. “In kyudo you aim for a state of ‘nonduality’,” says Chouchan. “You become at one with the target. And at that moment you release – and you hit. In business if you become like the consumer, you suddenly get good ideas and better products. There is no longer this distance – ‘I am here with a product I should push to you’ – instead I myself become the person who will buy my products. There is a state of unity. The distance between the company and the consumer becomes less and less, and that is where the hit happens.” Reducing this distance, focusing on your form in business rather than the target, becomes ever more critical the higher you climb the corporate ladder, says Chouchan. “Those distances become longer,” he tells Dialogue. “You talk to internal stakeholders, to your bosses, you become pulled by internal politics. There are many forces that prevent you from reconnecting, and you lose


touch. You have to fight against that, and again become the consumer yourself.” It was in a former role, when reaching the top of ceramics manufacturer Lladro, that Chouchan first began to blend his kyudo with his business practice. “The two began to merge when I first became a president,” he recalls. “Once you become a president, you have a budget to achieve which is completely on your shoulders. The process of looking at my yearly target and my archery target merged naturally. I discovered that I am the type of person that worries easily. I found out that, in my archery practice, I was thinking: ‘Will I hit? Will I shoot properly? Shall I release the arrow now to hit?’ “Yet I found that when I learned to focus on the right shooting, and not the target, that is how you will hit the best. I applied this in my business. Rather than be worried about the numbers, or pushing my team to make the numbers, I instead began to ask them: what is the right action, product, advertising campaign – and what will these bring to the consumer? This changed how I managed my teams.” Dialogue Q1 2019

The idea that monthly, quarterly and annual targets will look after themselves if companies focus on the consumer experience, rather than the numbers, should resonate with many Dialogue readers. Driving companies for purpose, for betterment of product and service, reaches directly to the core of cutting-edge business thinking. “The financial result is the reward – you did good shooting, you hit; you did a good business plan, you get the numbers – but it is not the purpose,” says Chouchan. “In kyudo the purpose is to build your character – not to hit a paper target. For example, at Godiva our purpose is to bring moments of happiness to our consumer. As a result, we get the numbers. But the numbers are not our purpose. You can look at business as a way of perfecting your character, of learning about yourself, and growing.” Chouchan, a Frenchman who lives and works in Japan, says the concept of self-improvement, of self-mastery, is quintessentially Japanese. “In this culture, people have been brought up on the importance of doing your job as well as you can. You could be a taxi driver, or someone who


You don’t reach a target if you are obsessed about hitting it. Shoot with the proper form and it will reach you

checks passports at immigration, just do it in a quest to be as perfect as you can, no matter what the outcome. There is a focus on the way things are done – that if you do the right thing, the results will come back to you. People will respect someone who cares about what we call ‘the proper form’. The proper form is as important as the result, which is why, in Japanese archery, you could hit the target, but if your form is bad you will not get the point. You will not pass the test.” Godiva’s amazing success under Chouchan comes precisely because form has taken precedence over the corporate targets, he says. “Some companies might give their people targets of 120 and think: ‘Maybe I will get 110 as a result.’ Here, it is the opposite. We give very reasonable targets and concentrate on our form. We completely over-deliver and grow 15%, then


another 15%. That’s where the mindset – the form – takes precedence over the corporate target.” This enlightened approach to business is perhaps partly a product of Chouchan’s youth, when he visited Japan to pursue an interest in Zen Buddhism. Around that time, there was a writing competition in a French magazine under which entrants were invited to propose a topic about Japan, and the winning proposal would be adopted as an investigative project. “I’d picked up – and found surprising – that some big companies, like Japan Airlines and Panasonic, were sending their new employees away to a temple of Zen to train them, and my chosen topic was: why were they doing that?” he recalls. “I happened to win the contest, so I was invited back to Japan to study this link between these new graduates studying in the temples of Zen. That created the moment for me to go back to Japan and work there.” Most striking, perhaps, is how his worldview – the Zen, the right-shooting, the form – shapes his whole life. Kyudo is not so much a technique he has learned, but a ‘way’, a prism by which Chouchan approaches everything he does. Many companies try to focus on innovation, on the outcomes of ideation, trying to manufacture solutions to future challenges. But Chouchan considers this a mistake – you can create the environment for ingenuity, but you can’t force its arrival, he insists. “In kyudo we call it natural release,” he says. “It is not something you can plan or control and say: ‘Now is the time for me to release the shot’ – you grow, you grow and then it happens. This reminds me of innovation. Innovation is a process where a moment of serendipity occurs. The natural release cannot be controlled, you can only control the moment up to release. And when I look at innovation or bestselling products that we could make, yes, there is a rigorous process where we talk to consumers. But there is a moment of serendipity, that happens when the proper form is enacted. The natural release cannot be planned or controlled: you do your best up to the moment of something happening.” With good form, with good practice, with good preparation we prepare ourselves and our companies so the moments of uncontrolled genius can present themselves. You can’t force the genius, the innovation, the ideas, you simply – by good form – allow those ideas to come. “Exactly, exactly!” says Chouchan. “You don’t reach a target if you are obsessed to get it. But if you do your best with the proper form, then the target reaches you.” — Ben Walker is editor of Dialogue — Jerome Chouchan’s new book, Target: Business wisdom from the ancient Japanese martial art of kyudo (LID Publishing) is out now Q1 2019 Dialogue



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Beware the Hawthorne Effect

Be careful what you measure Kate Cooper is head of research, policy and standards at the Institute of Leadership & Management

In the 1950s, social scientist Henry A narrowly – or even exclusively – on what is Landsberger knuckled down on one of the measurable and quantifiable. And you will most valued meta studies – or research of essentially get what you measure.The risk is research – ever carried out in the field of that you will base your decisions only upon work. Essentially, Landsberger carried out known quantities – while a host of often a forensic review of numerous industrial extremely interesting unknown ones will pass experiments that his forerunner George Elton by unnoticed. Mayo had conducted in the 1920s and 1930s. The key is to provide clarity around Staged at a Chicago factory called the what you expect from people. But, while Hawthorne Works, Mayo’s experiments the fulfilment of some of your expectations had aimed to discover the extent to which may be measurable, the meeting of others – workers’ performance was influenced particularly in the interpersonal realm – may by their immediate surroundings. So, not be so easy to pin down. Mayo’s team made a variety of tweaks to In the era of so-called ‘gig’ work, several the employees’ working conditions to see key aspects remain unknown. Managers of whether they would affect productivity such workers are often largely unaware of and, if so, how it would other demands on their be affected. time; how they like to When Landsberger manage their workload; The key is to cast his eyes over the and competing bids provide clarity findings, something from other clients for around what you expect stood out: it didn’t their attention. Leaders from people seem to matter whether might be able to specify Mayo’s tweaks involved the desired outputs in the amount of light a particular timeframe, beamed on to the factory floor, the layout but they have very little insight into the of the assembly lines, or the cleanliness of impact their requests might have on the the workstations… each difference seemed individual’s welfare or, indeed, the quality of to produce a result that was a) measurable, the work they are likely to produce for us. In but not significant, and b) decidedly shorta traditional office setting we gain a clearer term. Landsberger concluded that the results insight into ‘what else is going on’. Getting had stemmed largely from the workers’ similar insight for the more isolated gig awareness that they were being watched. It worker is far more challenging. was observation itself that had produced the Consideration of emerging ways of outcomes. That phenomenon came to be working draws attention to the limitations of known as the ‘Hawthorne Effect’. too much measuring of that we can measure. It makes sense that if you’re into It reminds us not to lose sight of the more measuring, and have lots of different metrics subjective ‘deliverables’. Paramount among for a whole range of workplace functions, these is the sustainability of good working then you will take advantage of those metrics relationships, whatever the employment and report to your senior leaders that you status of those working with us. use them. And, because you’ve decided There remains a role for measurement upon what you’re measuring, and you’re and monitoring in some areas. Leaders are focusing on that with particularly keen encouraged to assess people’s abilities to attention to detail, you will clearly see some complete specific tasks, and the time it takes improvements over time. them to do so. But beware the temptation to As the Hawthorne Effect demonstrates, diminish the importance of more challenging the problem with an overt attachment to metrics. Intangibles are often the most analytics is that it can lead you to focus very critical factors of all. Q1 2019 Dialogue



Leadership, set in stone Ancient stonemasonry holds the key to modern leadership, writes Joe DiVanna

Dialogue Q1 2019


Years ago, I took a stone-carving course. My instructor, an Italian stonemason with 50 years’ experience, started the first lesson by saying, “I am going to teach you the same technique that Michelangelo used to carve his work.” My expectations suddenly raced forward as I readied myself for centuries of masonic knowledge. He continued, “Carving is easy. Look at this block of stone: if you can see a horse in it, you simply chip away everything that doesn’t look like a horse.” My thoughts of artistic greatness were wrecked like a ship suddenly hitting a reef. But there, among the hours of chipping, was the key to leadership in the 21st century.


Leaders shape organizations

Leaders must ‘see the horse’ in a block of stone. That is the way they make organizations rise to their full capacity to deliver value to customers. The key is to understand three core components that stonemasons know: what you want to create (the vision); which chisel, rasp or hammer you choose to get the desired results (tools to derive the value proposition); and which technique to employ to use your time efficiently (skills and the quality of service). The vision, the value proposition and the skills of the people are the main drivers of most organizations today. In most organizations, these Q1 2019 Dialogue


three factors are amplified by some technological innovation that reinforces the value proposition. Technology provides the means to capitalize on the capabilities of the organization. What is fundamentally different in modern times is the process by which these mechanisms are utilized. To best understand this, we must start by looking at the fundamentals of organizational valueadded activities. Compared to their modern counterparts, medieval masons were more efficient and more conscious of cost controls. This is because funding was difficult to secure over long periods of time. Examine the building records of medieval construction projects, and you will see that work often stopped for many years as funds dried up: if you examine the work performed during funded periods, it was remarkably fast. Medieval masons had a distinct advantage over modern workforces as their productivity was based on possessing extensive process knowledge that is rare in today’s environment. To become a mason, you spent seven years as an apprentice, seven years as a journeyman, and roughly seven more years as a mason to finally become a master mason. Considering the life expectancy of 35 years, this was an enormous investment. To reach this career pinnacle, a mason had to be able to look at a hill and determine that it contained the right kind of stone. They had to know the complete process of how to quarry stone, shape it, ship it, carve it, finish it and install it. This was the cradle-to-grave knowledge of the mason’s craft.

Process knowledge reduces complexity

The Middle Ages craft guilds’ approach to continuous, lifelong learning and experimentation stands as a benchmark which modern society has yet to replicate Dialogue Q1 2019

In ancient Rome, concrete was a cheap durable material that enabled never-before-seen structures. As Rome fell, the knowledge of concrete was lost as civilization moved into the Dark Ages. Knowledge that was passed down from father to son was dissipated as the fabric of society changed and social priorities changed. The lack of formal structure to institutionalize knowledge, coupled with the change in appetite for construction projects, led to the knowledge of concrete simply fading over time. The material was rediscovered in the early 19th century through a process of trial and error. For 13 centuries the knowledge of one of the most usable technologies ever invented disappeared from the social consciousness. During the latter part of the 19th century and early part of the 20th century, the working environment also changed with the evolution of the assembly-line structure of production and management, a by-product of the industrial revolution. In this environment, work became compartmentalized: workers no longer needed to process knowledge, they needed enough knowledge to do discrete sets of tasks. This reduced the cost of a lifetime of learning to days or

weeks to be proficient enough to be put to work. The process of business comprises tasks that – when combined with skilled people – produce an added value to a product or service. The discrete tasks and the individuals performing them do not add value when viewed as isolated components. Rather, the entire process creates value by accumulating the value of each step of the process into a unit of value perceivable by the customer. Here again, today’s organization needs to unlearn the command-and-control structure that is the legacy of assembly-line thinking, and develop a process focus. However, adopting a process focus does come with a hidden price. Firstly, existing processes need to be examined and separated into their component parts; their value must be assessed as to the relevance to the entire process. Secondly, people need to adopt process-orientation and jettison the traditional hierarchical organization structure in favour of a process focus. This includes the creation of process owners who are ultimately responsible for the performance of the processes and their component steps. Thirdly, during the transition to a process orientation and the subsequent establishment of a normative process, the issues of maintaining product quality and the introduction of product alterations, such as change orders, must be addressed. Strangely, the new process-oriented business imperative is once again evocative of medieval craftsmen who, during the creation of these edifices, were process-focused because they themselves were the process. They possessed a uniquely proactive approach to maintaining a high degree of product quality. An examination of medieval arts and crafts reveals that they were much more representative of the whole community than our work outputs are now. The craftsman learnt not only the practical details of his trade, the way to use his tools, and to select materials, but was taught to design the work. All his fellows did the same, working together on much the same lines – all interested in doing good work, and in trying to find better methods and designs. All this accumulated knowledge was handed down from generation to generation, and formed what we call tradition. This resulted in the work being unique and creative. The people in the 14th century were not content to copy the work done in the 13th, but used their experience to continually improve on the product and process. In modern hierarchal organizations, accumulated knowledge is often codified, written down and developed into operational manuals. We turned the process of striving for higher quality into organizational bureaucracy.

How does quality become instinctive?

Medieval craftsmen employed a process of building in which quality and continual design




THE CHIEF EXECUTIVE STONEMASON Organizations are learning to address seven key areas in developing an operating philosophy for human capital: Adopt a process orientation Place the customer at the centre of the process Create an environment of continuous education Mentoring to improve product quality Measure process performance to identify opportunities for improvement Increase the level of communications to reduce the complexity of the business bureaucracy Understand how to leverage technology as an enabler of the differentiation of corporate value propositions

Roman concrete’s disappearance demonstrates how even simple knowledge can be lost over time as a product of poor communication

improvement were integral parts of the normal course of work. This is evident in the numerous castles and churches still standing throughout Europe. Contemporary archaeologists, architects and historians, using their knowledge of the medieval period, can look at a building and identify which parts were built when, based on the progression of techniques known to the masons of each era. An understanding of the medieval process thus provides a context for the problems that today’s companies face in moving towards a process-oriented organization. At the centre of the notion of ‘medieval process knowledge’ was the concept of ‘guilds’. Today, we call them centres of excellence, or core competencies. There were two distinct types of guilds in medieval society. ‘Merchant guilds’ were associations that brought together tradesmen to exercise control over trade; ‘craft guilds’, on the other hand, were composed of master craftsmen, journeymen and apprentices in various craft disciplines. As we can see, each type of guild has its modern equivalent. Merchant guilds are analogous to today’s market-makers and product aggregators, such as Amazon, eBay or Alibaba, where customers can buy goods that have been brought together into a consumer ecosystem. Our modern guild counterparts act in their own self-interest, contrary to the intention of the medieval merchant guilds. A medieval guild can be seen as a sort of early mutual benefit society, for it had a dual purpose: to obtain a fair deal for its members as well as to protect the public. The merchant guilds ensured fair prices, while the master of a craft guild had strict responsibilities towards his journeymen and apprentices. Today, these responsibilities have been assumed, to some extent, by government agencies and other regulatory groups. Craft guilds, on the other hand, resemble


organizations within modern firms, such as the emerging centres of excellence and core competency groups which now focus on products, processes and customers. For example: the master of a craft guild acted as business manager, planning and costing; deploying skilled labour (the journeymen); and looking to the future, training young men (his apprentices) into the profession. This is just a few words short of the job description of today’s manager.

Communication: intangible value, quantifiable results

In stark contrast to today’s business processes, quality was taken for granted in medieval times. This is not to say that there was lower quality; it was simply built into the fabric of the craftsman’s work. In the case of medieval masons, the finished product carried a mason’s mark indicating which craftsman had done the work, while simultaneously acting as a mechanism for payment. Only a minimal amount of specification was required while constructing a building because the master builder had intimate knowledge of the capabilities of each mason he employed. Yes, medieval structures did collapse on occasion, but not due to lack of quality in the individual components. If they fell down, it was because medieval master-builders were stretching the limits of their designs in an effort to maximize the use of materials, such as making the walls of a cathedral thinner and higher to maximise the surface area to be used for stained glass. The craft guilds of the Middle Ages were not without problems – today they would be equivalent to price-fixing and monopolistic behaviour. However, their approach to continuous, lifelong learning and experimentation within each craft, and their ability to incorporate new technological improvements into the course of construction without significant alterations to the workflow, stands as a benchmark which modern society has yet to replicate. The disappearance of Roman concrete and subsequent rediscovery demonstrates how knowledge – even simple knowledge – can be lost over time as a product of poor or nonexistent paths of communication. Corporations today must ensure that when adopting a process-centred approach, the communications infrastructure enables individuals within the firm to communicate both hierarchically and laterally to other individuals within a process, and to colleagues engaged in other processes. — Joe DiVanna is a member of the Duke Corporate Education educator network; a Møller By-Fellow of Churchill College, University of Cambridge; and author of Strategic Thinking in Tactical Times Q1 2019 Dialogue



Integrators wanted Those who can connect ideas and people are becoming indispensable, writes Camelia Ram

Historically, the expert would seek to prove that her choice was best under all circumstances. Today, it is common to find experts who help decision-makers understand the circumstances in which choices work best – and where they are most vulnerable. Consequently, experts are being drawn outside their area of deep expertise to learn more about the changing conditions in which their proposed solutions must sit. Integrators can facilitate and accelerate such learning by educating experts and their stakeholders on what they don’t know that they don’t know. They help foster growth based on a clear understanding of what is needed to drive value. They can simultaneously operate at strategic Dialogue Q1 2019

levels to be a credible business partner, and at operational levels to deliver results while paying attention to detail. Some roles naturally lend themselves as integrators. Take, for example, the ecosystem of people management, where the objective is to match organizational need with the supply of talent to have people in the right place at the right time. A cocktail of individual capability, personal motivation and organizational fit is required. The complexity of this mix means that no one knows in advance whether a hire will materialize or not. The HR business partner, the chief of staff and the recruiting agent are well-placed to connect ideas and people, creating the space for compelling



Integrators educate experts on what they don’t know that they don’t know

people-management solutions to be created and delivered.

The organizational integrator

In organizations with leading-edge people practices, HR business partners are trusted advisers to executives. They regularly provide key management information on recruitment and attrition, employee engagement, and learning and development initiatives. They make recommendations on organizational changes to enhance performance. They achieve this by partnering with their business stakeholders and centres of expertise in compensation, acquisition and talent to create relevant strategies to drive productivity, and to share and scale best practices. In so doing, HR business partners translate business requirements into people requirements, using insights on people to inform readiness to change and ways to bridge critical execution gaps.

The leadership integrator

The chief of staff is generally tasked with helping a leader identify business priorities. To achieve this, they must understand how to distil strategic priorities into everyday detail, but must also be flexible. Like HR business partners, they are in regular contact with leaders so are wellplaced to influence outcomes based on a unique understanding of the leader’s objectives, personal preferences and dynamics of their environment. They often build bridges across functions and regions to align stakeholders on why, what, how and when.

The talent integrator

Even though they lack a formal role inside the organization to influence people management, recruiting agents are constantly learning about what leaders in an organization and/or industry are buying, and not buying. As a result, they can build a rich, reliable picture of how a CV may be received. Agents can therefore provide advice to candidates on the extent to which they are likely to meet the requirements of an employer, helping target and prepare the application for submission to improve its likelihood of acceptance. Agents can then navigate the complexities of joining the new employer and negotiating an exit from their current one. They also have an intimate understanding of a candidate that the hiring manager does not. They can use this to advise

leaders on candidate attributes that may help or hinder organization objectives over time; highlight blind spots in what the organization may be looking for; and challenge assumptions about what is required. Similarly, hiring managers will build a profile of the type of CVs an agent is likely to submit. By acting as an advocate for the candidate, and a bridge between the candidate and hiring organization, the agent can deliver value to both parties.

Integrators for change

In an era where disruption is ubiquitous, these roles are understated in their importance to frame the transformation journey and steward the organization through change. Despite the threats posed by automation and self-service recruitment through, for example, LinkedIn, these integrator roles continue to stand the test of time and are being reshaped to provide more strategic advice alongside tactical delivery. Facilitators, literary agents, project leaders and production designers play similar integrator roles in their respective sectors. The skillsets embedded in integrator roles will be increasingly in demand as complexity and uncertainty increases. Integrators are mediators who open and improve dialogue, often translating requirements and finding common ground to help reach agreement on solutions that will work in different circumstances. They are coaches, listening to what others need and asking questions to help individuals uncover solutions themselves. At their core, they are comfortable with ambiguity and actively look for opportunities to learn – so they become more effective at connecting ideas and people. Those with deep expertise can develop these skills themselves so that their knowledge has a better chance of practically addressing challenges. However, this will come at a cost to developing specialist knowledge. They would instead do well to enlist the help of integrators to help position them effectively in an organization, to help them navigate stakeholder landscapes and ultimately raise the profile of their contribution. Building these relationships requires trust in the unique capabilities that each brings. This can be deepened by finding quick wins from partnerships, and working through obstacles together. Q1 2019 Dialogue




The sun-kissed South Asian giant can revive its economy with renewable energy

Power shift in sunny India Vivek Wadhwa is distinguished fellow at Carnegie Mellon University’s College of Engineering and author of Your Happiness Was Hacked

What wind did for Scotland, solar can do for the South Asian giant

Times are hard in India. The rupee is on a downward trajectory. The great nation’s budget deficit is widening. Quality of life is being compromised by oppressive levels of air pollution. Yet this great nation has an opportunity to reverse the negative spiral. Seminal advances in technology mean that renewable energy is an idea whose time has come. And nowhere is that more true than in the sun-kissed lands of South Asia. Solar energy once suffered from a critical flaw: its cost. The high prices associated with capturing, storing and conducting the energy meant that even in places like India, where the sunshine is strong and reliable, solar was uncompetitive with rival sources of power. But much has changed. Semiconductor technologies for computers have advanced greatly in recent years. Those same technologies are precisely those that convert the sun’s radiation into electricity. Solar panels are thinner, lighter, easier to transport and install. And we are much more efficient with our energy-use: just as electric vehicles can now go much faster and further than ten years ago, so too can we do a lot more with every watt of power the sun gives us. This sunny optimism is underpinned by hard science: places like India could boast almost-free power within a decade. Consider the mathematics. When Bell Labs built its first solar photovoltaic panel in 1954, it cost US $1,000 per watt of power it produced. By 2008, modules used in solar arrays cost $3.49 per watt; by 2018, the price per watt had fallen to less than 40 cents. That is a breathtaking fall. Now look at the supply: the amount of solar-generated power captured has doubled every two years for the past 40 years. We are only around five doublings from being able to meet 100% of today’s energy needs. Other renewables continue to follow the trend. Wind power’s price became competitive with coal around two years ago, and prices have continued to plummet. Battery technology, once the bane of

renewable energy, is falling into line. In 2008, the cost of industrial batteries was $1,000 per kWh of energy stored; by 2015, it had fallen to $268/kWh. In 2016, Tesla said that the cost of battery production at its Gigafactory was less than $190 per kWh. In June, Elon Musk said this could fall to $100/ kWh by the end of 2018. Even if Musk is proved overly optimistic, the trend is undeniable. The danger for India is not that it lacks the opportunities to become a renewables world leader, but that it fails to grasp it. Prime Minister Narendra Modi laid out ambitious plans to build 175 GW of renewable power generation by 2022, with the addition of 100 GW of solar, 60 GW of wind, 10 GW of biomass, and 5 GW of small hydro. But, with the tariffs that have been imposed on solar cells, and a lack of incentives, his goal is unlikely to be achieved. India should instead be cutting all red tape and taxes, offering subsidies, and doing whatever else it takes to transform most of its energy generation to solar and wind – by 2025 or sooner. Unlike fossil fuel subsidies, which only burn money, these investments will provide huge pay-offs in the short term. In nations where governments have made concerted efforts to embrace renewables, the results are stunning. In 2009, Scotland sourced just 27% of its energy from renewables. Just a decade later, that figure now stands at 70%, making it a world leader. The incredible boom follows a major programme by the Scottish Government to develop its onshore wind and hydroelectric capacity. By 2020, Scotland plans to have 100% supplied from renewable sources. It is true that India bears little obvious resemblance to a tiny, windswept country in the North Atlantic. Yet the comparison can and should be made. What wind did for Scotland, solar can do for the South Asian giant. It is said that there is nothing new under the sun. A resurgent, renewables-led India might soon beg to differ. Q1 2019 Dialogue



Dialogue Q1 2019



The innovation equation Fads don’t work, says Anne-Valerie Ohlsson

In the race for competitive advantage and efficiency, companies have subjected their organizations to a series of health and wellness fads. Consider, if you will, the ‘no-fat diet’ (hire consultants, cut the workforce, outsource); the ‘HIIT’ (high-intensity interval training) workout (centralize, decentralize, localize, globalize, repeat); the ‘mindfulness wave’ (à la Google, arguably less successfully). Companies are geared for efficiency, and the drive for this efficiency has long been the foremost concern of the senior management team. And yet, companies today can only thrive if they balance both sides of the ambidextrous organization – innovation and efficiency, exploration and productivity. As the world grows increasingly connected, globalized, digitized, companies need to adopt an innovation mindset. The need to think like a start-up is critical. But the solution is a great deal more complex than setting up an incubator, or providing employees with innovation time off, or – worse – an innovation bonus. In over 20 years of working with multinationals around the globe, I have learnt this much: only a structured, comprehensive, cohesive approach can help firms seed a sustainable, repeatable innovation and entrepreneurial mindset into their DNA.

The competition for share of mind and wallet is fierce

Challengers fuelled by technology and instant global footprints have blindsided incumbents and reinvented their industries. In most cases, they didn’t even belong to the industry in the first place. How does a Hilton or a Marriott

compete with Airbnb when the challenger doesn’t even own hotels? How to compete with a taxi company that owns no taxis and no drivers? And then there is fintech… and insurtech… and the latest… proptech. Legislation lags, regulations falter and the mouse overcomes the mammoth, not only moving his cheese, but eating it. In faithful incumbent style, the giants of the world are scrambling to catch up. Innovation hubs are flourishing around the globe, with varying degrees of success (read, mostly none). As incubators fail to deliver results, companies have ramped up their quest for the Holy Grail (venture boosters, corporate venture capital, partnerships with universities, research labs, global innovation competitions). And, as with any fad, the results have either failed to materialize or provide lasting results.

Building an innovation DNA

We actually need a three-pronged approach that brings together hardware (an innovation centre), software (a culture that supports innovation), and a series of tools and frameworks that help organizations challenge the existing status quo, assumptions and norms of their industry.


The hardware: the easy part

The innovation infrastructure is the easiest part of the equation. Companies launch innovation hubs with the following mandate: “What could wipe out a significant portion of our market share?” They hope that the diversified, cross-functional, global teams assembled will Q1 2019 Dialogue


answer questions such as: what happens if people no longer own cars? Which industry are cigarette companies really in? Why is the fintech (technology applied to financial services, e.g. cryptocurrency) industry still based on credit cards? Some companies have managed to take themselves out of their industry by playing on their strengths and transferring them to different, growing industries. Take the Kodak versus Fujifilm example. Why did Fujifilm not go the Kodak way? Because it was able to reassess its core capabilities. What does it take to make film? Collagen and light. What did Fujifilm go into? Medical technology devices and face cream. Light and collagen. The company’s mission is ‘value from innovation’, and its revenue keeps growing. While Kodak scrambled to contain the technology designed in its own labs by setting up printing booths in supermarkets and malls, Fuji recognized that the era of film and its significant profit margins was coming to an end. By building an innovation team, setting up an innovation centre with significant resources and making the conscious decision to look outside its own industry, Fujifilm was able to reinvent itself, rather than fight a losing battle against the consumer. The problem? To date, incubators and other forms of venture boosters have yielded little success and most of them have closed down or moved into R&D. Why? Because the culture doesn’t support experimentation, failure, chaos, all of which are intrinsic to exploration, or innovation. Embedding a Google, Netflix or IDEO-like culture is not easy: employees of a large consumer goods multinational recently confessed that while the management had installed a pool table, no-one used it, fearing they would be perceived as lazy or slacking off. Another client confided that only projects in line with current revenue generators were funded and were the only path to promotion, discouraging the development of wild ideas or the search for solutions to wicked problems.

For 15 years, Nespresso missed the idea that there was a consumer market for its product beyond the office segment Dialogue Q1 2019


The software: a culture of experimentation

Setting up an innovation infrastructure, whatever its shape or form, is a necessary first step: it sends the signal that the company is willing to invest resources. The real challenge is to create a repeatable, sustainable formula – a mindset of innovation

across the company, accepting a messy, chaotic process that goes against the drive for efficiency embedded in large companies. The willingness to experiment, the idea that failure is part of a learning process and not the end of a career. Companies need a culture that supports the explorative, uncertain, wasteful nature of innovation. It is about embracing a form of focused chaos, and it includes rethinking performance indicators, reward systems and promotion criteria. Some questions include: Values – What do we stand for in terms of innovation? Resources – How do we support our innovation efforts? Processes – How do we get innovation done? Behaviours – How do we think, approach and act in order to foster innovation? Success – How do we measure our innovation output?

Supporting creativity and experimentation through organizational design and human capital strategies is the most difficult aspect of the innovation equation. Painting a wall blue is easy. Accepting that employees work on their own projects, spending corporate resources while trying to work out if walls should exist in the future, is more challenging. A number of companies, such as 3M, or Virgin, encourage ‘dabble time’. Sir Richard Branson believes that CEO should stand for chief enabling officer, growing a generation of ‘intrapreneurs’ that will come up with the next big ideas.


Bridging hardware and software

Branson has a point – companies need to acquire the skills of a start-up, and employees should think like entrepreneurs in pursuit of innovation. There are many frameworks which aim at creating ambidextrous, agile organizations that harness the resources of a large multinational, with the nimble market approach of a start-up. To be truly innovative, a focus on customer pain-points through design-thinking requires companies to think beyond their existing frame of reference, reaching out to non-users, extreme users. This approach requires an understanding of how trends are converging in the real world. It is not about focus groups or close-ended survey questions. This is about observation, about gaining a different perspective. The question is always – does my product or service address the customer pain point? What is the opportunity? Where is the threat? What am I doing for my customer? Another technique is pivoting, a word out of Silicon Valley to describe a key business attribute possessed by some of the world’s most innovative companies. The tech entrepreneurs





to organizations helps them bridge the hard and soft aspects of the innovation equation by bringing together a space and a culture, creating an ecosystem in which innovation can thrive.

Sustainable innovation Hardware: Infrastructure Incubators

Software: Culture Diversity

Innovation hubs

KPIs & reward systems

Corporate venture capital


Bridge: Tools & frameworks Design thinking Lean Business model canvas Scrum

who started Instagram, for example, which sold to Facebook for $1 billion, began with an idea for an online check-in app and, when that failed, they worked through ideas until they came to a photo-sharing app. Starting something, determining it’s not working, and then leveraging aspects of that technology is powerful. And let’s not forget either lean methodology or Scrum, a framework for Agile software development (not an acronym, first used by Hirotaka Takeuchi and Ikujiro Nonaka in their ground-breaking 1986 paper The New New Product Development Game). While brainstorming, ideation or ethnographic market research help companies initiate the innovation journey. Nothing happens without execution. Exploring potential new markets through redefining the company’s value proposition and developing a business model canvas (a strategic management and lean startup template for developing new or documenting existing business models) helps companies think about the implications of a new product or service. It allows companies to answer questions such as: is the value proposition aligned to the customer segment? Think back to Nespresso and the fact that for its first 15 years, it missed the idea that there was a consumer market for their product beyond the office segment. Would Nike have made yoga shoes, had an employee not noticed that women were looking for a total look to walk to their studios in? The plethora of start-up tools accessible

A sustainable innovation strategy is about bringing together all three aspects of the innovation equation as an ecosystem in which companies learn to live with not knowing all the outcomes, being flexible, adaptive and agile, embracing multiple perspectives, and supporting boundaryless environments. WL Gore is an example, built on the values and entrepreneurial spirit of Bob Gore, who, in 1957, bought the Teflon patent from his employer DuPont. By 2011, the company had over 2,000 patents, including Gore-Tex. The company pursues innovation through a combination of design (flat, little bureaucracy, a great deal of autonomy, a tolerance for failure) and a willingness to experiment and give innovation a chance, as exemplified by the Teflon-coated guitar strings which they launched on the market after three years of experimentation. The strings cost four times that of the average string and the company gave artists over 20,000 free samples to convince them that this was a superior product. Today, they are the leading product on the market. Leaders at Gore can only lead if teams choose to follow them, and they need to explain themselves and their actions. Projects are selected if they respond to three questions: Is it real? Is it worth it? Can we win?

There is no formal organizational chart and every time a location grows to 250 employees, a new office is set up, so as to keep each location small. While the firm is still privately held, employees co-own 25% of the company, sharing in its success. The model is not easy to emulate, as it is based on a number of assumptions: trust that people will, when given the choice, do the right thing; comfort to operate without assumed authority or control. Supporting and developing an innovation DNA in organizations cannot be driven by fad. Solutions are complex and diverse, like the world we live in. The talk around disruptive innovation has driven fear into the heart of potential innovators, yet most innovations are incremental. Not every company will invent the gramophone or the Post-it Note, but companies such as 3M or Gore have turned innovation into a systematic, replicable approach. You could too. — Anne-Valerie Ohlsson is a best-selling business author and faculty member at Singapore Management University Q1 2019 Dialogue



How to create the future Align Technology is thinking well beyond the day-to-day, write Faithe Hart and Leah Houde

Dialogue Q1 2019


The Align Technology chief executive is well aware of the dangers of complacency. Joseph M Hogan joined Align in 2015. He formerly held chief executive roles at ABB and GE Healthcare: companies where continuous development is integral to business success. Hogan and his management team are thoughtful about the opportunities and challenges that Align is likely to face. Like many companies in this digitizing, interconnected world, they can see opportunities for collaboration and challenges of disintermediation. More than any specific challenge, however, is the generic danger of being so busy running and growing the business that they spend insufficient time thinking creatively about alternative futures. Not on Joe Hogan’s watch. Tony O’Driscoll, professor at Duke University’s Fuqua School of Business, Align’s chosen educational partner, says: “I have had the privilege of working around the globe with many companies on key strategic issues. My experience in working with Align was truly unique in that the senior leadership team recognized the need to delve deeply into a thicket of complex strategic issues, despite the


fact that they were the top performing company on the S&P 500 the prior year.” The executive team took a progressive approach. They decided to harness the brain power of their top talent. Ten senior leaders from around the world (about 20% of the total at this level) were taken out of the business for eight weeks to work on a strategic challenge facing the company. Not a day or a week here and there, but eight complete weeks as a team dedicated to understanding the challenge, analysing it, gathering data in the field, being educated in key helpful topics – such as scenario scoping and ethnographic research – and then presenting options for solutions to the executive team. The chosen ten needed to be good leaders. Their task was to reflect and think strategically. And their teams had to pick up the reins while they were out. The initiative was called, appropriately, Catalyst.


Raphael S Pascaud, chief marketing officer, and Simon Beard, senior vice-president (VP) & managing director EMEA, sponsored the initiative. Sponsorship meant being present or Q1 2019 Dialogue


Catalyst is a strategic business exercise: we took some great minds and let them loose on a core issue

Dialogue Q1 2019

available, guiding the process and reassuring the participants, who were a long way from their homes, their jobs and their comfort zones. Pascaud explains the reason behind Catalyst. “We felt we weren’t doing scenario planning well, yet our market is so dynamic but also immature – it’s a scary combination,” he says. “We need to prioritize because we can’t do everything, but we are also breaking new ground every day and have to try out new ideas. What we put in place with Catalyst was a disciplined process of external theories and examples from other businesses, combined with our leaders, tackling a real challenge facing our business. It’s a unique and powerful combination.” Beard agrees: “We have big strategic questions we need to ask ourselves, and they get lost in the hurly burly of daily activity – especially in Align, where we are all about action. We briefed the team to look at different options. My expectations of them were high, and they exceeded them with the quality, depth and breadth of their thinking. They thought of things that we as an executive team hadn’t. Or at least thought of things we had only contemplated as individuals, and took the thinking to a more granular level.” A key stakeholder in Catalyst is Stuart Hockridge, senior VP, global HR. He confirms that the aim is to build strategic capability for the business, with the primary goal of uncovering innovative solutions to a strategic opportunity. Personal development was a secondary consideration. “Catalyst is a strategic business exercise: we took some great minds and let them loose on a core strategic issue. I expected good analysis and sound recommendations. The surprise was how very effective the framework offered by Duke Corporate Education proved; better than I expected or had seen in other companies.”

Let’s get this done!

If there’s one aspect on which both sponsors and participants agree, it’s how the ten participants had to learn to slow down and reflect. They have the exploitation part of ambidexterity conquered. Learning how to explore was the challenge. Participant Casline Chu, managing director South Asia and Korea, laughs: “When I heard about the project I was sceptical. We run fast at Align, there’s a lot going on and I am caught up in day-to-day business, chasing results. Why work on something that may or may not happen? I argued with my boss and asked her to choose someone else to attend.” Lee Taylor, marketing VP EMEA and another of the ten participants, had similar concerns: “This is a fast-moving organization where daily business is so important. It was humbling – a privilege to be given time to immerse myself in thinking. The sponsors were very clear that there were to be no late-night calls back to the office. I was given the freedom to think.” The strategic question was provided to participants in advance and, in line with the can-do culture, many turned up with an answer ready-made. Pascaud describes the emotional rollercoaster: “The participants were delighted to have been chosen, but worried that the business would fall apart while they were away – a heady mixture of delight and panic. By day three of the first week, they had written the answer. The question most were asking was, why would it take eight weeks? By day five they had torn it up and started again, realizing that their first idea was wrong and very far from the truth.” Beard concurs: “There were lots of individual answers, it got narrow fast. My role as a sponsor was to encourage a different thinking process, to help them to look at different options. It could have gone either way: a bunch of egos, or growing as a team. They really appreciated each other and the team won out. I was excited for their journey and I learnt a lot myself in the process.” This wasn’t, as some had feared, a dog and pony show: going through the motions of strategic thinking with the outcomes filed away, or tinkered beyond recognition by the executive team. Taylor again: “We presented five recommendations to the executive team and all five are in play right now. In an organization with as many opportunities as we have, this is a great reflection on what we managed to achieve. At the final presentation, we were told that BCG or McKinsey would have offered half of our output. The respect the leadership team has given to us and our ideas is humbling.” Participant Mary Kumar, VP global enterprise & platform IT, adds: “The humility of the CEO and the sponsors was impressive – they didn’t claim they knew it all already, and they made an effort to include me and to get my point of





Align’s senior leadership team recognized the need to delve deeply into a thicket of complex strategic issues, despite the fact that they were the top performing company on the S&P 500 the prior year

view. I’ve done lots of programmes, but having Duke Corporate Education there to help us build the muscle, solving a real practical business imperative for Align, was way richer than going to Stanford for a case study.”

Collateral benefits Collaboration Many organizations need better collaboration, and Align is no exception. The sponsors were pleased to watch as the participants learned to listen to each other better, to understand more about the whole business (not just their domain), and to develop a growing desire to think and lead more strategically. The Catalyst legacy is a tight network of colleagues who naturally reach out to each other across the business for ideas and inspiration.

Personal development Although the main aim was building strategic capability, inevitably each individual also developed in different ways. Chu says: “Sometimes having the patience to take time to observe and look at things may be more productive and meaningful than going at speed. While I have the answer, I may not need to give it. My team tells me that I am more relaxed and not constantly taking decisions.” Knowing when to declare, and when to step back and wait, sounds like a big step forwards in leadership wisdom. “I feel valued, that my experience matters,” says Kumar. “I respect my colleagues, they are awesome people. And I really think that if we take and apply the new vernacular and methods we learned, then our new language could be the start of a culture change for Align.” Taylor adds: “The process we were taught quickly identified gaps in our thinking, and now we are being consulted on what challenge the next group should cover. I will always have a connection with these colleagues; and I reach out and ask for advice, as well as using tools from the programme.”

Customer insight One of the biggest learnings from the programme was improved customer insight through ethnographic research. This meant spending time with customers in a wide variety of contexts, just looking at how the Align products are used in

practice, seeing and learning up close what works and what frustrates. “Meeting actual customers as well as non-users and understanding how they do their work was the opposite of theory,” Kumar reflects. “I learned about our business, our offerings, and where colleagues think we do well or not.” Taylor adds: “The beauty was in meeting customers, not to sell to them, but to understand them better, the challenges they face in doing their jobs and how we might help. Some of the experiences were left-field. I even had a manicure, which was well outside of my comfort zone.”

Return on investment

There is huge gratitude for the executive team and the risk they took. “We need to recognize our leaders for having the courage to take us out of the business – it felt like a luxury, but now I think I’m walking a different leadership journey,” says Chu. And, in turn, the executive team can see the return on their investment. “It’s a heavy investment of resources for us: 20% of that level of leadership out of the business, plus the actual cost,” reveals Hockridge. “The executive team wants to do it again. Investment like this is a no-brainer!” “I have experienced the power of giving ten talented people the time and resources to really answer a difficult challenge and to create an opportunity out of it,” says Beard. Both sides reflect on the partnership that delivered the initiative. As O’Driscoll says: “The Catalyst participants jumped into the fray, leaning into the uncertainty and ambiguity of the challenge with curiosity and zeal. I have no doubt that the output they created will position Align for ongoing success. Having the opportunity to work with this team was truly a humbling experience.” Pascaud sums it up. “Duke Corporate Education made this happen. We need to recognize that; the entire Duke team was absolutely vital,” he says. “Align is carrying on the journey we started years ago. We are successful, but we don’t rest. We drive on an increasing level of positive paranoia.” — Faithe Hart is head of global talent management at Align Technology. Leah Houde is executive director at Duke Corporate Education Q1 2019 Dialogue

The sharpest writing worldwide on global management and leadership Dialogue is a quarterly business journal for senior managers and leaders across the world, covering global business issues. It is distributed in print and digital formats. We can offer advertising, sponsorship and collaboration opportunities on special projects designed for your brand. Contact us for more information Alec Egan, Business Development Executive | alec.egan@lidpublishing.com |


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Clever new companies are cutting up a classic business model

Razors, and all that jazz Phil Young PhD is an MBA professor and corporate education consultant and instructor

Have you heard the story of the razor and begun offering free videos, as well as paid the blade? It’s a classic model economists lessons on YouTube. Live lessons on Skype use to describe the business model where are also available. a company provides one element of its Just recently, one of the better-known product at an average or below-average performers with a very popular online gross profit margin while making a much course announced that he had been higher margin on the items that go with “secretly” working with several top guitar its usage. Typically, a company makes and makers to build a high-quality, but more sells both the razor and the blade. I’m sure affordable, handmade arch-top. What readers can think of other examples. caught my attention was the offer he made Two that immediately spring to to a prospective buyer of this guitar. First, mind are printer and ink cartridges; and the price seemed to be quite reasonable for coffee machines and pods. Of course, such an instrument: $4,999. But, second, such companies always have the risk of buyers of this guitar would automatically competitors offering a compatible version become members of his guitar club. This of the higher-margin consumable at a would entitle his customers to various lower price. I just discovered a coffee pod digital products – podcasts, videos and that works on my Nespresso machine at factsheets – free of charge. They are said a lower price than the genuine Nespresso to be worth $1,500 if purchased from him units. Internet shopping is truly a separately. In this example, what is the wonderful thing! razor and what is the The digital world blade? It is not clear. enables companies Perhaps the ‘mass The digital world to offer interesting enables firms to offer customization’ of his variations to the production team reduces interesting variations to traditional razor and the unit cost to less than the razor and blade model the one that individual, blade model. For example, a company small-volume luthiers can earn a high gross can achieve. But one profit margin on both their ‘razors’ and thing is for sure: digital technology is what their ‘blades’. Apple is perhaps the epitome makes this particular bundled offering of this. Its devices (the razors) command feasible. First, thanks to the internet margin well above the industry average, and YouTube, this jazz musician is able while its i0S platform and Apple Store are to provide lessons to a large number of ready-made distribution channels for its students. Second, he is able to promote his apps (the blades). Apple extracts fees from guitar and membership into his club to a app developers. And such fees have a very very targeted audience by using the email high margin. addresses of past and present students and Another variation, of which I recently those inquiring about lessons. And third, learned, has taken the razor and blade he is able to offer digital products with a model as a starting point, but disrupted high retail-value for free, because there it to dramatic effect. I am an amateur jazz is no significant cost associated with the guitarist. For most jazz guitarists, the making or distribution of these products. instrument of choice is a handmade, archApparently, his business model and top guitar. This can be quite expensive marketing effort are working well. While to own – a performance-standard model drafting this column, I received an email ranges in price from about $7,000 to from him saying that the demand for his upwards of two or three times that amount. guitar was overwhelming. So much so that Still, learning the art has become more he was forced to suspend the taking of any accessible. In recent years, an increasing more orders. It seems his new take on the number of jazz guitar professionals have razor and the blade is cutting through. Q1 2019 Dialogue



The case for CSI

Corporate social impact combines social good with financial success, says Scott Saslow

The word that often follows ‘corporate social’ is ‘responsibility’. Why? Corporations – presumably due to their huge treasure troves of cash and other resources – have a responsibility to give some of that back to the community. In some cases, the money goes back to those the corporation accumulated its riches from in the first place. The subtext is that the corporation does not have to give back to the community – and when it does, it is being kind. It is thinking about the greater good; it is not solely focused on making shareholders wealthy. This view is quickly fading. What corporations have is a large business opportunity with respect to corporate social impact – doing good and making money. Social impact encompasses both social and environmental topics. So, in addition to the private sector donating the resources and capabilities to address problems, they now have something else: a financial incentive.

Not your father’s CSR

Historically, and even now in most cases, Corporate Social Responsibility (CSR) translated into the companies involved providing grants of resources to not-for-profit and other community organizations. These include corporate philanthropy, employee volunteerism and product donations. In the US, Fortune 500 companies spend approximately $15 billion a year on CSR programmes, of which about 70% is in the form of product donations. Many organizations Dialogue Q1 2019

have formalized programmes for employees to volunteer, and the smallest slice of CSR is in the form of cash donations (only 15% of the total). As many CSR and community relations professionals will attest, the dollars are increasingly very hard to come by, and tend to be subject to the financial health of the company and the whims of senior leadership. To be clear, there are some innovations in CSR. Let’s look at Pledge 1%, which started out of the tech giant Salesforce as a programme to provide 1% of equity, 1% of employee time, and 1% of product (software) to a foundation to grow and serve the nonprofit community. Pledge 1% has spun out from Salesforce to allow it to encourage other companies to do the same, and now has over 1,000 companies – mostly privately held – which have pledged to do the same. Yet the real innovation is in corporations large and small, across every industry, finding ways to simultaneously make a positive social and financial impact, and in ways that complement each other. We term this CSI – Corporate Social Impact. Whereas CSR budgets are often relatively small and hard to increase, CSI is by definition profitable, sustainable and scalable.Too good to be true? Let’s unpack this a bit.

Sizing the opportunity

While CSR budgets in Fortune 500 companies are roughly $15 billion, total expenses of those same companies are roughly $12 trillion. That total spend represents millions of decisions –

Corporate social impact (CSI) is profitable, sustainable and scalable

which suppliers they choose, which employees they hire, how they create their products and services, how they go to market, their impact on the physical environment and their local communities, and so forth. Every decision that goes into how companies operate rolls up into the impact of the organization – and in the same way that organizations have optimized the financial aspects, increasingly they are evaluating their social levers. It’s certainly not the case that each and every way that a company could increase its social impact will increase its financial impact, nor even to say that increasing social impact is cost neutral. However what we are witnessing is companies discovering that in many instances, they can increase both.

Take time for an example. Levi’s is an iconic clothing company based in San Francisco. Realizing that the production of blue jeans is a very water-intensive process, the company set out to redesign its fabrication process to minimize the use of freshwater. The result? Since its inception, the initiative has resulted in the creation of over 13 million products using the ecofriendly process, and to date has saved nearly 200 million litres of water. The company proudly markets this achievement to its customers, who increasingly care about supporting sustainable brands. The more products Levi’s makes using this process, the more freshwater it saves, and the more it saves financially from not having to use as much water in its manufacturing process. Financial and social. This is CSI. Q1 2019 Dialogue



Show me the money

Okay, now you are starting to think, “This sounds really wonderful, doing good while doing your work.” Can this really add up to a substantial amount of financial value? Yes! BlackRock is the world’s largest asset manager, with over $6 trillion under management. Recently, its chief executive Larry Fink famously sent a letter to all of the companies in which BlackRock invests – a large proportion of publicly listed companies – informing the chief executives and directors that they are strongly encouraged to demonstrate their organizations’ social impact strategies, both for social and financial reasons. He cited in a follow-up letter that companies in Fortune magazine’s ‘100 Best Companies to Work For’ list earned, over the long-term, excess risk-adjusted returns of 3.5%. A separate study by Harvard Business School found that of the 180 companies evaluated, those with sustainable business practices outperformed their peer set by 4% each year.

Numbers aside, it is intuitive

Customers, employees, investors and suppliers all want to support sustainable businesses, and in some cases, are willing to pay a premium to do so. Since stakeholders in a company prefer – and often demand – positive impact by the corporation, the business case becomes clear. Customers want sustainable business practices. On the customer side, look at organic food. On average, organic produce costs 47% more. Yet is globally now over a $100 billion market, growing to over $250 billion by 2022. B-corporations, those for-profit companies that operate in a manner that drives positive impact for both society and the planet, are significantly growing in numbers and across all vertical sectors. Employees especially Millennials, are very concerned about the social impact ‘footprint’ of the company where they work. Hiring, retaining, and engaging these workers is much more difficult if they don’t see their employer following sustainable business practices. At many business schools – such as Harvard and Stanford – social entrepreneurship is among the most popular classes.

Companies with sustainable business practices outperform their peer set by 4% each year Dialogue Q1 2019

Leaders want to learn more about CSI. They are well aware that their employees and customers care about it, yet often don’t know how to best integrate social impact into core business operations. Working in partnership with Duke Corporate Education, ONE WORLD helped a cadre of senior executives from a Fortune 1000 pharmaceutical company gain direct exposure to early stage entrepreneurs in the medical field via a ‘Leader Exchange’ programme. The entrepreneurs were brought in to educate and inspire the



Fortune 500 companies’ annual expenditure on CSR

$1.9 trillion

Fortune 500 companies’ total revenue in 2017


Fortune 500 companies’ CSR spend as a proportion of revenue (Sources: Huffington Post, Financial Times, various)

company executives through discussing business challenges of mutual relevance. A ‘win-win’ in that the enterprise leaders gained knowledge from the early stage entrepreneurs, and vice versa.

Let’s do this!

“Okay, I am ready to find some opportunities to drive social and financial impact inside of the company... but how?” The below steps outline a straightforward path to increasing profitable social impact in your company. STEP 1

Identify social and business interests One way to start is for the organization (a leader, team, division, etc.) to first prioritize the business goals or, as we call them, ‘drivers’ it is keen to move. Drivers are in two categories: those that increase revenue, and those that decrease costs. If the desired impact initiative is coming from a sales division, then market share expansion, for example, may make sense. Once the financial dimension is identified, then the organization chooses which social or environmental cause is important to the company – its employees, its customer base, the community in which it operates. These could certainly be specific to the organization and the products and services it produces. For example, Pearson, the global education and publishing corporation, works extensively on social programmes targeting literacy and early learning in the developing world, which is tightly aligned with its overall mission. Alternatively, a company might poll employees about causes they are passionate about. Once a cause or theme is chosen, it would be helpful to align to the UN Sustainable Development Goals (SDG). This list of 17 goals serves as a taxonomy for the most pressing social and environmental issues. Aligning to the SDG will provide a rich set of other organizations, initiatives and professionals who focus on this area, from which to learn. Incidentally, the process outlined thus far


of its key customers, which include the major network, cloud and content companies who increasingly expect their suppliers to operate in an ecologically friendly manner. STEP 3

Create a pilot

organization seeking to increase its profitable social impact might first think about which social impact areas (or SDGs) it is focused on improving, and once identified, then consider which business drivers it can impact in doing so. This might be the way that a CSR team would approach finding the intersection. The next step is to consider how the organization may work toward this initiative in a profitable way – either to increase revenues or to decrease costs (bonus points if you achieve both). For example, if an organization determines it will address gender equality – which is SDG #5, it can then evaluate all business drivers that increase revenues (might the company create new services based on this theme?) or decrease costs (can the company reasonably recruit more efficiently once this initiative is underway?), or both? STEP 2


Benchmark Once financial and social dimensions are set, then it is time to learn from others. Refer back to the Impact Matrix. Which other companies are targeting similar SDGs or business levers? What specifically are they doing? What other professionals, social entrepreneurs, investors and industry experts are working in the same sector? It’s recommended to reach out to others, read about their work, leverage their expertise and networks. Take Equinix, a rapidly growing Fortune 500 data centre and interconnection service provider. As it sets out to meet its goal of utilizing 100% renewable energy to power its services, it has worked hard to understand how other entities have procured clean energy and the implications of doing so at scale. The ‘Green by Design’ initiative has put Equinix on the US Environmental Protection Agency (EPA) list of top five green power users, along with Microsoft, Intel, Google and Apple. Equinix employees care that the company is being a responsible steward of the environment. For the business, Equinix is able to meet the increasing needs

Let’s start designing the impact initiative. Like any successful initiative, you will need a lead, and also a team representing a few relevant interests in your organization. One recommendation is to have a lead from the part of the business with the most to gain. If the initiative is seeking to increase customer satisfaction, then a member from the marketing team; if the initiative will help reduce production costs, then someone from operations or manufacturing. Complement the lead with other vested parties, and ideally have at least one person who represents the social issue. Include a team member who has successfully launched a new product or service – this is a highly entrepreneurial activity, after all. The lead will develop a project plan with goals and deliverables. If funding is required, then a business justification is certainly needed as is some form of business plan. If having the support of outside organizations to help serve as a ‘trail boss’ makes sense, find one that has helped organizations in this specific regard, as has ONE WORLD via its Impact Pilot Program. Do not turn the initiative over to them to build – this needs to be owned and operated by the company. There will be a ton of learning along the journey about what motivates employees in the company, how new services are launched, a greater appreciation of the company’s ability to move the social impact dial, customer perception and so forth. Be sure to capture this learning in the form of frequent debriefs.


ABOUT ONE WORLD ONE WORLD provides organizations with training and capital to profitably increase their social impact. Based in the heart of Silicon Valley, it leverages its expertise in developing leaders to deliver innovative approaches to increase social impact in a way that it is profitable, sustainable, and scalable. Its clients range from entrepreneurial start-ups to Global 500 organizations, and we support a vibrant network of several thousand entrepreneurs, investors and corporate professionals. Additionally, the ONE WORLD Impact Fund invests capital into highly innovative social enterprises and supports our mission to enable organizations to scale their social impact and improve the lives of individuals globally. www.oneworld. training

More mission, more margin

In some NGO circles, there is a saying, ‘No margin, no mission,’ meaning entities that desire to deliver social good in this world need to be thoughtful about creating a sustainable source of income flows, otherwise the entity will ultimately not survive, and its mission will be compromised. I’d like to turn this around in the corporate setting to: More mission, more margin Translation: as companies find additional ways to profitably drive positive social impact through their core operations, they will find that such efforts become sustainable, scalable, and ultimately have a reinforcing effect on profit margin. — Scott Saslow is founder & chief executive of ONE WORLD Training & Investments Q1 2019 Dialogue



In the fast lane Professor Joe Perfetti reveals the world’s most financially agile firms

The world has been tuning in to the hit musical Hamilton. The spectacular show reimagines the story of one of the US’s most influential Founding Fathers. Yet while theatregoers are captivated by the rapping lyrics and resplendent costumes, there is another aspect that is worth noting. Hamilton’s deceptively simple set features a double turntable that enables the actors to stand still and move at the same time. Built into the floor of the stage is a spinning circle of wood, with another, independently spinning ring around it. The revolving stage suggests that the world never stops spinning, a metaphor that’s not limited to political history. As described in our article on strategic agility (see page 16), without doubt, the business world is moving at a much faster pace than ever before. Speed is such a critical concept in finance that my colleagues and I have studied a metric known as Financial Cycle Time to determine how quickly a company moves relative to the market. Similar to the double turntable on the Hamilton stage, the metric considers how fast your company (the inner ring) is spinning compared to the market (the outer ring), and Dialogue Q1 2019

how fast your company is generating cash relative to your competitors. If you don’t know the answer, you should. That’s because there are painful consequences if your company can’t keep pace, including lack of investment flexibility, pricing flexibility and decreasing market share.

2018 global productivity rankings

We looked at more than 1,000 publicly traded companies around the world and divided them in sectors per the Global Industry Classification Standard (GICS), including beverage, speciality retail, airlines, automotive, and personal products, to determine the companies that are most responsive and resilient. We used the Financial Cycle Time to measure a company’s financial agility: how long it takes on average to turn investment into revenue. The metric is measured in days – the fewer the days, the better (see table opposite).

Two important takeaways

First, it’s important to recognize that financial agility is industry-agnostic. It doesn’t just apply, for instance, to companies in transportation




C YC L E T I M E D AY S (without goodwill)


Industrial Conglomerates



VMware Inc




NetApp Inc

Technology Hardware, Storage & Peripherals



Activision Blizzard Inc




Electronic Arts Inc




Internet & Direct Marketing Retail



salesforce.com Inc




Cia de Distribucion Integral Logista Holdings

Air Freight & Logistics



Hotels, Restaurants & Leisure



Professional Services




Expedia Inc

Thomas Cook Group PLC Capita PLC

or consumer goods. Every company can – and needs – to be financially fit. Second, competitive advantage is a journey, not a destination. It’s no longer a question of whether you have advantage, but its duration. And what’s the next one? In order to catch the next industry wave, your company must be increasingly agile.

What this ranking means to your company

In order for your company to win, you need to be doing everything faster and with fewer resources. Here are two essential questions for your leadership team:


What could you do in less time?

In order for your company to win, you need to be doing everything faster and with fewer resources

Are there ways to increase the speed of every company activity and decision? The challenge is to identify ways to improve speed without compromising safety, quality or performance. Airlines could certainly improve speed in their operations by eliminating maintenance checks. But, we can all agree, that would be catastrophic for safety. Choose wisely.


What could you accomplish with fewer resources?

It may sound counterintuitive, but you’re in a stronger competitive position with fewer resources. That’s because you become more efficient in the process. What changes can you make for continuous improvement? Don’t be afraid to dream big. Netflix has become more valuable than Disney, not because it makes higher-grossing films, but because it can turn out a significant number of shorter productions for the same amount of money. Consider Avengers: Infinity War. It cost Disney $321.2 million to make the two-hour, 40-minute movie. By comparison, Netflix can produce an entire series of The Crown for $130 million. Investors want to know how much cash a company generates for every dollar of investment. Leaders’ mindsets need to focus on both components of return on investment – their profitability, and how long it takes them to make it. To benchmark your organization’s financial agility against the best in the world visit: www.dukece.com — Joe Perfetti is founder of Percipient Partners and an expert in corporate finance and strategy at the University of Maryland Q1 2019 Dialogue

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The great South African has lessons for business

What Mandela can teach every marketer Giles Lury is director at The Value Engineers and author of How Coca-Cola Took Over the World: and 100 More Amazing Stories About the World’s Greatest Brands

Nelson Mandela needs little introduction; South Africa’s first black president, Nobel Prize winner and anti-apartheid icon. Madiba, as he was known by those who loved him, was a master orator and storyteller. He had the ability to adapt his speeches so that he could ‘touch’ different audiences, whether it was a small group around a kitchen table, or thousands standing at a political rally. He did so without changing his central message, and all the while he was passionate and eloquent. Mandela simply knew how to adapt the way he spoke. Looking through some of his most famous quotes, I was struck by how many, when you consider them from a marketing perspective, are astute comments or calls to action that every brand manager could learn from. Perhaps not surprisingly, Mandela was a master marketer. I’ve picked my top five.

“It always seems impossible until it’s done”

As many of the world’s largest brands are discovering, we live in a world of mass disruption. This quote is a warning that, however safe you feel, things can and probably will change. Simultaneously, it is encouragement: a call to action for every young start-up; recognition that revolutions can happen. Just ask Uber, Netflix, Airbnb and Brewdog.

“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.”

Mandela said: if you talk to a man in his language, that goes to his heart

In some ways this is the logical development of the previous quote. Recently, I conducted interviews with 25 leading marketers asking them what characterized high-performance brands. One of the words I heard most often was, ‘bravery’. For nearly everyone I spoke to, there was a recognition that truly great brands don’t play safe or small. They challenge themselves, they challenge their audiences and they challenge perceptions. They stimulate change while remaining

true to their purpose and principles. My favourite, albeit reasonably old example, was the ‘gamble’ Boeing took when it bet its whole future on expanding from military aircraft to passenger jets.

“If you talk to a man in a language he understands, that goes to his head. If you talk to him in his language, that goes to his heart.”

For such a great orator, it is not surprising that one of Mandela’s most famous quotes is about the power of communication and the need to truly connect with your audience; not just on a rational level, but emotionally too. To paraphrase an old jazz classic – it ain’t what you say, but the way that you say it. That’s what gets results.

“The greatest glory in living lies not in never falling, but in rising every time we fall.”

This choice reflects the honesty of the man; no-one is perfect. Your brand or your idea probably isn’t always going to be right either. We all make mistakes. We all fail. It is how we treat those failures that define what sort of person, what sort of brand we are. Failure isn’t always negative, it can be a learning experience. It can help us grow. It encourages us to challenge ourselves, to do better next time, to succeed and move forward.

“Vision without action is just a dream, action without vision just passes the time, but vision with action can change the world.”

This is perhaps the most relevant and powerful quote for every marketer. It recognizes the need for both purpose and proof. While it is often said that actions speak louder than words, if those actions are guided by a purpose they become more potent, more meaningful. On the other hand, the most laudable of visions, beautifully expressed, are just hot air unless they are brought to life through actions. My top five. Which would you have included? Q1 2019 Dialogue



The brand blueprint The Olympics is a brand-building champion, writes John Davis

It is impossible to build a quality home that lasts without a blueprint. The same is true for building a world-class, enduring brand. And the very best brands do more than just create measurable value; they create meaning. Fifteen years of research, working with organizations around the world, shows that a brand blueprint consists of four foundational elements on which the unique features are added based on each organization’s context. These brand blueprint elements are: Destiny Distinction Culture Experiences

The Olympic Games offer a compelling example of a world-class, enduring brand that has created meaning. It is hard to imagine a global brand with a more universally understood reputation that has endured for nearly 3,000 years. Dialogue Q1 2019


Destiny answers the question, ‘why do we exist?’ For today’s organizations, this is purpose writ large. It is the ultimate ideal if our dreams are realized. Why do the Olympics exist? Very simply, to spread the Olympic philosophy of Olympism, which says: Olympism seeks to create a way of life based on the joy found in effort, the educational value of good example and respect for universal fundamental principles. Since their founding in 776 BC, the Olympics have stood for the very best in society as expressed through athletic competition. Whether victorious or not, Olympians are recognized as the very best of us, and this definition transcends differences in cultures and languages. Olympism has stood the test of time, despite the Ancient Games ending in 393 AD and the ensuing 1,500-year ‘break’. Baron


Pierre de Coubertin is credited with reviving the Olympics at Athens in 1896, and he was keenly aware of the importance attached to Olympic ideals and the significant responsibility implied when he said, “Hosting an Olympics means evoking history.” Have the Olympics avoided controversy? No, the Games are not perfect. But as a brand with an historic reputation, it remains clear why they exist.


the cultural chemistry that animates each Olympics.


Experiences focuses on ‘how do we it?’ There is a virtuous cycle in sports that the Olympics exemplifies and it undergirds how the Games are experienced:


Distinction answers the question, ‘what is unique about us?’ The Olympics now have Summer, Winter and Youth Olympics editions on staggered quadrennial cycles. The sheer diversity of sports within is extraordinary. No other sports event in the world offers such a huge collection of sports, athletes and host city locations. Each host infuses its version of the Games with its own personality to introduce the world to its distinctive traditions. Beyond sport, the Olympics have become a global platform for social and cultural issues, with each interest group having the opportunity to reach a large international audience. The combination of its role as a sport, social and political institution helps reinforce what is truly different about the Olympics.


Since their founding in 776 BC, the Olympics have stood for the very best in society as expressed through athletic competition

Culture addresses ‘who is involved?’ to help us fulfil our Destiny and reinforce our Distinction. The Olympics are inarguably the most complex mega-sports event in the world. Each Olympiad is a multidimensional mixture of athletes, media, sponsors, and fans, creating a one-of-a-kind cultural alchemy, and more than 206 National Olympic Committees (NOCs) have sent teams to the Games. Qualifying to be an Olympian takes years of effort, overcoming adversity and persevering against the most formidable competitors. Some 11,000 athletes in the Summer Olympics and another 3,000 during the Winter Games compete in a gauntlet of preliminary events to have a chance at the finals. A prior multi-year winning record offers no guarantee of Olympic success. The unrivalled diversity of athletic talent and the visibility of the Olympics creates an unpredictable dynamic that attracts billions of global fans. Media and journalists in the tens of thousands descend on each games, seeking the stories that will capture the public’s imagination. Sponsors integrate their distinctive personalities, associating their brands with the Olympics brand and the fortunes of athletes within. Fans from everywhere bring their passions and hopes into every event, living vicariously through each competitor’s Olympic journeys. Expectations are understandably huge, and the pressures can wreak psychological havoc on the most accomplished athletes. Indeed, the ‘who’ creates






Athletes attract fans; fans attract media; media attracts sponsors; sponsors provide funding to ensure future athletes have the chance to compete; and the hosts share in the entire spectacle and its associated qualities. This creates an unrivalled experience for all stakeholders. Whether live or via televised and digital media, the Olympics provide a breathtaking variety of entertainment, fostering a collective social enthusiasm and disappointment as athletes’ fortunes rise and fall. A dynamic mix of multisensory ingredients energizes each of the events, venues, pavilions and host city attractions. Just as importantly, the pre- and post-Olympics activities are designed to generate and reinforce ongoing enthusiasm and support. The measurable value includes nearly $6 billion in revenue during the recent quadrennial, from which 90% is redistributed to organizations supporting the Olympic Movement around the world, with the remaining 10% covering the operating costs. Sponsors, host cities and media invest in the Games for the innumerable qualities associated with the Olympic halo. Fans watch because of the variety and spirit of friendly competition, hoping their preferred athletes succeed. And athletes aspire to be Olympians, becoming the latest torchbearers in a 3,000-year-old tradition that continues to deliver meaningful value to people and organizations everywhere. — John Davis is regional managing director Asia at Duke Corporate Education Q1 2019 Dialogue



The Lego man Martin Lindstrom says the path to success is paved with micro-insights – not big data, finds Kirsten Levermore

It’s several minutes later than planned when Martin Lindstrom arrives for our interview. “I’m so sorry we couldn’t reach each other – I don’t have a mobile phone!” he apologizes. That is correct. One of the world’s leading consumer insights specialists, the man oft credited as sole saviour of such global giants as Lego and The Walt Disney Company, a branding expert featured on platforms ranging from Forbes magazine to Tyra Banks’ television hit, America’s Next Top Model, Lindstrom does not own a cellphone. “It started as a bet with Arianna Huffington,” he says. “But I have now become so accustomed to it, I don’t think I’ll ever want one again. “We use our phones to prevent boredom… but it is within boredom that we find our creativity! Without the phone I find I use my time a bit differently. Looking around, being present and really seeing the world are important to me.” It is in fact these qualities that have brought Lindstrom to our venue, today, as he addresses the Thinkers50 European Business Forum. “The key to success in the future is not big data,” he says. “It is in fact the total opposite: looking around, being present and observing your own and other people’s lives. It is not big data, no. It is small data.” The subject of his latest heavyweight bestseller, Small Data, is, says Lindstrom, “the so far unnoticed, seemingly insignificant things going on in people’s lives that actually have a profound impact on what is happening in our world.” And these ‘small data’ insights happen everywhere in our life, all Dialogue Q1 2019

around us, all the time, he explains. “The clues are there, but nobody sees them!”

Why you should move in with your customer

The head office of everyone’s favourite toy brick-maker, Lego, lies about 40 miles from our table. And, to paraphrase The Lego Movie’s Oscar-nominated song, everything there is awesome. “It wasn’t always like that,” Lindstrom – aka ‘Mr Lego’ – tells Dialogue. “Lego was in a huge crisis about 14 years ago, suffering from bureaucracy and internal politics.

Gathering stories and ‘small data’ at the individual level saved Lego – the opposite of what big data told it to do They also,” he grimaces, “had a lot of big data.” One of the insights that came out of Lego’s big data analytics, Lindstrom remembers, was that the generation of instant gratification had arrived. “Lego believed their consumers were now of a generation that wants to build a castle in half an hour – then move on to something else. So, the company flies into this big panic! They decide to increase the size of the Lego brick to make gigantic building blocks, so people could finish their castle in half an hour.” The big data insight, however, backfired. “Christmas of 14 years ago, Lego’s sales plummeted 31%, and left it close to bankruptcy,” recalls Lindstrom.

And that is where Lindstrom’s game-changing approach began.“A small team breaks out, and moves into the homes of consumers across the world.” It was an expensive and timeconsuming process, Lindstrom recalls. But one particular experience made it worth it, for decades to come. “Eventually, the team ends up in the home of an 11-year-old German boy. As they are all sitting on the carpet, they ask him one simple question: ‘What are you most proud of?’ “This kid points at an old, worndown pair of sneakers, high up on a shelf.” Lindstrom pauses, as we marvel. “The team are, of course, completely perplexed – they thought he would say a Playstation or Nintendo or something. But, no, he says it’s an old, worn-down pair of smelly sneakers. “He takes them from the shelf as the team ask, ‘why?’ The little boy answers, ‘Because, I’m the best skateboarder in town… and I can prove it with these sneakers.’” Tilting the shoes on their side, Lindstrom recalls, the team saw how one edge on each sneaker had been worn down. The boy said: “That angle shows I am number one.” “That was Lego’s first really profound insight,” says Lindstrom. “Breaking into the individual level, the team discovered that if a kid is willing to spend hundreds – even thousands – of hours fine-tuning the sole of a shoe, why wouldn’t they do that with Lego?” Lego’s first piece of small data brought about a significant change in strategy: storytelling and encouraging customers to invest time and energy in


Lego projects led the way forward – and continue to the present day. “The Lego Movie came out of that moment. Lego reduced the size of the Lego brick to what it was. Then made it even smaller! Lego changed and grew the storytelling across their corporation. And Lego became the number one toy company in the world.”

Small projects mean hard work

Using small data to guide successful strategy is a lot like journalism, Lindstrom offers. “Capturing small data means that we understand that seemingly insignificant signs in our society actually have a little story,” he

says. Yet many corporations struggle with this: “Because these stories and signs are happening on an individual basis, and we don’t have millions of those data points, in certain contexts, we don’t take it seriously. And, to most businesses, the millions count, but the single one doesn’t. What’s funny, Lindstrom half-jokes, is companies’ over-reliance on big data analytics. “They are all sharing the same big data… and some companies are so focused on it, that they find themselves going in the same direction as one another!” Lindstrom’s advice? Think of the skater boy. Listen more closely to the


small data (“you’ll quite often find a lot of it, if you are listening”). Then use your findings to correlate and colour big data. “It’s those mini-insights that are really going to make a difference to businesses, from planes to supermarket designs. “Leaders are not employed to just be number-crunchers; leaders follow their instincts, learn from their experiences and connect dots in new ways.” However small those dots may be. — Martin Lindstrom is a globally renowned consumer expert and bestselling author of Small Data and Buyology — Kirsten Levermore is assistant editor of Dialogue. Additional reporting by Niki Mullin Q1 2019 Dialogue

Immediate impact, growing advantage. At A.T. Kearney, we pride ourselves on our uniquely collegial culture and care passionately about our work and our people. We offer our clients a range of global capabilities anchored in our heritage of essential rightness. The same promise we make to our clients—immediate impact, growing advantage—we offer to our people. Working together, we drive immediate results and help build lasting, transformational advantage. Consulting Magazine has recently named A.T. Kearney as one of the Best Firms to Work For 2014 and honored the firm with an Achievement Award for Excellence in Diversity. For more information about A.T. Kearney and to read some of our latest thinking, please visit www.atkearney.com.

A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.



Diversity of thought is hard to achieve

In search of difference Patrick Woodman is former head of research and advocacy at the Chartered Management Institute. He now works as a management and leadership analyst

Every leader needs people in their network who help them think differently

As the seasonal holidays arrive, many leaders look forward to spending time with their families and recharging their batteries. For many of us, it’s a vital chance to stop and think: the implication being that we’re too busy for thinking when we’re grappling with the day-to-day challenges of leading a team or running a business. But what if the problem isn’t ‘not thinking’, but thinking the wrong way? Nobel prize-winning economist Daniel Kahneman has spent decades exploring how the mind works to solve problems and make decisions. His now-classic book, Thinking, Fast and Slow looks at two modes of thinking. System 1 is quick, instinctive and relatively easy, while System 2 is slower and harder, deliberative and logical. Most of us like to think our businesses run on System 2 lines: making rational decisions, using data to build smart, insight-driven strategies. But to what extent is that the case? When it comes to how we view leadership, we often favour System 1 traits. We prize gut instinct. We revere chief executives who shoot from the hip. We laud the ability to reach snap verdicts, proclaimed with certainty and conviction. Clearly, there are times when that’s just what’s needed. No decision can be worse than a bad decision. But what about times when no decision is the smart move – or at least, ‘no decision for ten days while we figure this thing out’? Do we recognize those moments when they arrive? Or are we conditioned to give the snap judgment? Over-reliance on System 1 could let leaders down in multiple ways. Loss aversion – a System 1 reaction – means we recoil from risks when being bolder might pay off, if we could only reframe how we see our opportunities. Our reliance on heuristics makes us vulnerable too. Used by the brain to learn and recognize patterns, they mean we can move fast when we see situations repeated. But that ability doesn’t necessarily work reliably in today’s fast-moving VUCA business environment. When we think we

recognize a situation, there’s an everbigger risk it’s actually something new. Just consider the sheer scale of data now available. Walmart analyses 2.5 petabytes of data every hour: that’s 2.5 million gigabytes. It’s impossible for any human mind to categorize situations on that scale. While the two systems are hard-wired in us, there are ways to mitigate some of our tendencies. First, find the time and energy you need for System 2 thinking. Look at the evidence, question it, crossexamine it, with the knowledge that System 1 has already biased your assumptions. It’s undoubtedly time well spent. Second, create teams with diverse perspectives, and a culture that empowers dissidents to challenge orthodoxy. We’re all biased to believe people with whom we feel affinity. If you’re a tech-bro CEO, you instinctively want a team of fellow tech-bros. But where then will different views come from? As Airmic’s classic Roads to Ruin study showed, executive groupthink is a critical factor in many corporate collapses. At a personal level, every leader needs people in their network who help them think differently, who they consult about challenging problems. Or about those problems that look simple on the surface, but we might be misreading thanks to those System 1 biases. It also means diversity in personal characteristics. Lest we forget, white men are reported to account for 72% of corporate leadership in Fortune 500 companies. While in the UK, more FTSE 100 firms are run by people called David and Steve than by women and ethnic minorities. Yet McKinsey has shown that firms with the most diverse leadership teams are 35% more likely to outperform the median. If only for that reason, we must keep diversity on the corporate agenda. Ask yourself again whether your mind may be playing tricks on you? If you do one thing this holiday season, make sure it’s giving yourself the time to change the way you think. Q1 2019 Dialogue




What you need to know about knowing your stuff It is time to relearn the art of expertise, writes William A Cohen

Dialogue Q1 2019


Q1 2019 Dialogue




Peter Drucker uncovered an uncomfortable truth. He found that many professionals failed because they spent more time on office politics than they did on knowing what they were supposed to know. It is unfortunately true that some otherwise skilled professionals don’t know their stuff to the extent that they should, and don’t seem much to care about their lack of knowledge. Their emphasis is less on being or becoming an expert and learning their trade, than on getting ahead. This leads to a focus on office politics and other aspects of the management scene, rather than expertise and good performance. Some management books fall into this trap when advising their readers. They fail to emphasize that a leader becomes a real leader only when everyone recognizes that the leader knows what to do when he or she gets ahead, not because the leader knows how to get ahead. People don’t follow others because leaders are good at office politics. They follow leaders because they are good at what they do. There is no substitute for a leader investing his or her time in becoming an expert. As an article in Fortune proclaimed: “Forget about fighting over titles and turf - it’s what you know (and how you use it) that really counts.”

THE FOUR ASPECTS OF KNOWING YOUR STUFF Peter Drucker knew that there were four main aspects to knowing your stuff. To really master your stuff, you had to know all four. These four are:

1 Know your people

2 Become an expert at what you do

3 Learn from every experience, whether successful or a failure

4 Never stop learning



Know your people as individuals

Regardless of your job, you have an awful lot to learn about your people. Moreover, there are a lot of people to know. The list includes those that may report to you, those at your level, and those in other organizations that you work with including in other companies, those higher up in the organization including your boss and, of course, your customers. Whew! That’s quite a Dialogue Q1 2019

job. Moreover, each person is different and has a unique way of doing things. This fact constitutes one of the most fascinating, yet challenging, aspects of your knowing your stuff about them. Every single one thinks differently and may be motivated to action by different stimuli. Psychologist Carl Jung found that, faced with the exact same situation, each of us have our preferred ways of acting, decision-making, or getting a job done. The best way to get the job done depends largely on expertise. So everyone should strive to become expert at what they do.


Becoming an expert may be easier than you think

When researchers investigated how long it took to become an expert in any field, they discovered that it generally took about five years. Of course, this probably varies somewhat depending on the field, and how you define expert. It took the filmmaker Steven Spielberg much longer – although the fact that his success came at an early age made it appear that it took much less time than it did. Steven Spielberg is arguably the most successful moviemaker of our time. Spielberg was only in his twenties when he directed the immensely successful movie Jaws. Spielberg didn’t stop with one big hit. This is the man who made science-fiction thrillers like Close Encounters of the Third Kind, sensitive movies like ET, adventure thrillers such as Raiders of the Lost Ark, serious movies including The Color Purple and Schindler’s List, and movies of spectacular technical effects such as Jurassic Park. How did Spielberg accomplish all this at such an early age? Parents with connections in the movie industry? Not quite. His father was an electrical and computer engineer; his mother a concert pianist. They got divorced when Spielberg was still in his teens shortly after they moved to California. Maybe Spielberg went to a great graduate film school like the University of Southern California (USC) in nearby Los Angeles? Then, he was hired right into a high-paying director’s job. Right? Wrong! In fact, Spielberg applied to USC twice. And, he got turned down twice. USC probably

If you think that you have learned all you’ll ever need to know for your career, you’re making a big mistake


Success is not final, failure is not fatal: it is the courage to continue that counts – Winston Churchill

regrets that decision dearly today. No, Spielberg’s secret was that he took the time to become an expert at what he wanted to do. While only 12, he got his hands on an 8mm movie camera and began to turn out home movies starring relatives and friends. He decided right then on his life’s goal: he wanted to make movies. A year later, he won a prize for writing a fully scripted war movie. At the age of 16, he made a real 140-minute science-fiction movie. It cost $500. He persuaded a local cinema to run it as a favour. It must not have been a great movie because it only ran once. But that didn’t bother Spielberg, because he was gaining expertise along the way. While he was waiting to receive the second of two rejections from the USC film school, he was accepted at what was then California State College, Long Beach, and graduated in 1970 with a BA in English. Because of his determination, he was offered a small unpaid intern job at Universal Studios with the editing department. He later was allowed to make a short 26-minute film for theatrical release. At age 22, he borrowed $15,000 from a friend and made a short film. It won some awards and came to the attention of a vice-president of Universal Studios. That vice-president immediately recognized Spielberg’s talent and expertise. After watching the film, he hired Spielberg as a director on a seven-year contract. Spielberg had become an expert. He knew his stuff, and his many successes followed.


Learn from every experience, even failures

During World War I, Winston Churchill was First Lord of the Admiralty and engineered the disastrous Gallipoli campaign because he believed it would outflank the German forces and end the war sooner. But it failed after a horrendous loss of life and Churchill resigned his safe civilian post, went into the Army and volunteered for frontline duty where the danger was the greatest. Everyone thought that it would permanently end his political career. But as you know if you watched the movie Darkest Hour, he became Prime Minister and he not only led the UK when it

stood alone against Hitler early in World War II, he held things together until things could be turned around. Today many credit him with having saved everything, even Western civilization. It’s good to remember his words when you think your project will end in failure: “Success is not final, failure is not fatal: it is the courage to continue that counts.”


Never stop learning

If you think that you have learned all you’ll ever need to know for your career, you’re making a big mistake – and I don’t care at what point you are in your career, a new hire, or the president. New ways of doing things are always being developed. Technology changes. The business environment is constantly changing and is usually different as you become involved with

new companies, industries, or geographical areas. I remember hearing one new college graduate proclaiming: “I’ll never need to read another book again.” Boy was he wrong! Drucker learned that “a successful organization that continues to do what made it successful in the past will eventually fail” because of some kind of change. Change makes what an organization knew or did to achieve success in the past irrelevant or even wrong. And this goes for everything. So, you must learn to keep up with change. You must consider innovative approaches and new techniques with every task or project that you are assigned. It’s all part of knowing your stuff. — This is article is adapted from the forthcoming book Peter Drucker’s Way to the Top by William A Cohen, to be published by LID Q1 2019 Dialogue




Agility, Chinese style Look East for the new way to win, write Mark Greeven and Antonio Nieto-Rodriguez



Most Western companies have a functional/hierarchical structure. This was ideal for running a business efficiently in a stable world. Departments are divided along a value chain influenced by US academic Michael Porter’s value chain model. Traditional companies are generally run by a chief executive, a chief financial officer, and often a chief operating officer and a chief information officer, followed by the heads of business units and functional departments. Each has their own budget, resources, objectives and priorities. Hierarchical organizations consolidate information and control only a few people at the top of the companies. The most important and strategic decisions are taken by the leading group, often slow and far from the market reality. Until recently, departmental success was measured using key performance indicators tailored to each unit or function. The finance department’s success was measured by whether it was closing the books and producing the financial statements on time; the HR department by whether it had managed to keep good people on board (low turnover) or had finished employee appraisals on time. This approach creates significant internal competition, often leading to the well-known ‘silo mentality’. Some heads of department build their own little kingdoms, and cooperation with other parts of the business becomes difficult, sometimes impossible. In many cases, the key performance indicators of one department are at odds with those of another. At the same time, the largest and most critical projects — the strategic ones — are almost always transversal. A strategic project, such as digital transformation or expansion into another country, requires resources and input from several business units

and departments. Facility experts find the location, lawyers handle the legal documents, HR experts recruit the people, and salespeople develop a commercial plan, and so forth. Without the contribution of all these departments, the project will not succeed. Cross-departmental — or companywide — projects in a traditional functional organization always face the same difficulties, some of which are linked to the following questions: Which department is going to lead the project? Who is going to be the project manager? Who is the sponsor of the project? Who is rewarded if the project is successful? Who is the owner of the resources assigned to the project? Who is going to pay for the project?

Adding to this complexity is the silo mentality, with managers often wondering why they should commit resources and a budget to a project that, although important, would not give them any credit if successful. Rather, a management colleague, often an internal competitor, would benefit. Within the traditional functional organizational structure, quick project execution is not possible. Managing just one project in such a complex structure is a challenge, so imagine the difficulty

Managers often wonder why they should commit resources and a budget to a project that – although important – would not give them any credit if successful

of selecting and executing hundreds of projects of varying sizes.

The Chinese way

Faced with a silo mentality, a lack of agility, attachment to the status quo, innovation paralysis, and all the downsides of traditional organizations, Chinese companies have frequently managed to successfully reformulate their organizations. Consider three successful Chinese organizational models: Xiaomi, an electronics company, started life in 2010 and has grown rapidly. It outstripped Apple’s smartphone sales in China within four years. It then introduced new products to the market at breakneck speed, disrupting, or at least surprising, market incumbents every time. By 2018, Xiaomi had successfully introduced over 40 products, ranging from smart rice cookers and air purifiers, to robot vacuum cleaners and smart running shoes. However, the truly innovative aspect of Xiaomi is how its organizational model is driven by projects. Its 40-plus products in the market are not organized in strategic business units and have not become part of the organizational hierarchy. The company has a relatively flat organizational structure: the seven cofounders are only one line of management away from the engineers and sales. The latter make up the largest part of their employee base. Moreover, the cofounders are required to be involved with projects and new product development directly. They participate in user interaction, such as on Xiaomi’s own platform, and keep up-to-date with products. Each Xiaomi employee, including the founder, has contractual responsibility to directly deal with a certain quota of customer Q1 2019 Dialogue




requests. A sophisticated digital problem distribution system allocates questions to any suitable employee. Each new product development is treated as a project that can be achieved by mobilizing resources inside and outside Xiaomi. Two features stand out:

There is no HR guidebook, only a set of strong principles that guide the employees to operate in a highly dynamic environment


Iterated product development in customer-driven projects; 2 Leveraging an ecosystem of external resources to speed up project execution.

Xiaomi uses a new product development approach that focuses on getting prototypes to market as soon as possible, i.e. with good-enough products, and actively involves users in fine-tuning and updating the technology and design. The result is a product that is largely co-developed by the community, i.e. closer to the market need, and with a more efficient R&D process. The key competence of Xiaomi is a project-driven structure where the business model, marketing and promotion and design, centre on customer interaction, rather than manufacturing. The result is that it can deliver good-quality products that customers want, without the investments in production and R&D that a traditional organizational model would require. Second, customer-driven projects gain speed in Xiaomi by leveraging external resources. Following its three original designs – the smartphone, TV set top box and router – all other Xiaomi products were developed as projects in collaboration with other companies or entrepreneurs.

Alibaba Group is the world’s largest and most valuable retailer. Its success can be largely attributed to its new organizational form, a business ecosystem, which has fostered the rapid growth and transformation of its businesses since the company began life in 1999. Its business ecosystems consist of hundreds of companies, ventures and projects across at least 20 different sectors. But the majority of these are independently run operations, neither part of strategic business units, nor subject to reporting structures. In fact, many of the players in Alibaba’s business ecosystem are still fairly small in size. Alibaba is widely characterized by dynamic systems of companies, ventures and projects enabled by digital technology. Instead of directing the development of new products and implementation of a project topdown, Alibaba functions as the gravity provider and network orchestrator. For instance, Alibaba’s core comprises four ecommerce platforms (Alibaba. com, 1688.com, Taobao.com, Tmall. com) that are home to 700 million users. Moreover, the interdependence between the companies, ventures

HAIER’S PROJECT-DRIVEN O R G A N I Z AT I O N A L P L AT FO R M User New product development Create value Marketing

Spin off

External investor

1st level work unit Production

Resource platform

2nd level work unit 3rd level work unit

Dialogue Q1 2019

and projects is not only financialand equity-based, although it is a prerequisite to be part of the business ecosystem. The interdependence is found in growth strategies, investment approaches and resource sharing. Entrepreneurial projects in this ecosystem are allowed to fail without severe consequences for the sustainability of the whole ecosystem, or the careers of top management. Employees in Alibaba’s ecosystem are selected and managed on alignment of values rather than rules. The consequence of such a valuedriven approach is encouragement of taking risks, a strong organizational culture and competition. There is no HR guidebook, only a set of strong principles that guide the employees to operate in a highly dynamic environment. They can initiate any project they like without regard to their current company or department. In fact, the ecosystem of Alibaba provides a safe marketplace of resources in which project initiators can execute without the limits of corporate hierarchical boundaries and complex vertical reporting structures. Alibaba has made considerable efforts in keeping its business ecosystem entrepreneurial. It has been, by far, the most active generator of new chief executives in China. By the beginning of 2016, over 450 individuals had emerged from Alibaba to start their ventures. In total, over 250 ventures have been established by former Alibaba employees. Many of these new projects are started within the ecosystem of Alibaba, leveraging its rich resources and opportunities. New project initiatives and implementation stay within the ecosystem and do not suffer from bureaucracy, department silos or managerial limitations. Haier Group is the world’s leading white goods brand. It reached revenue of over 200 billion RMB in 2016 and acquired General Electric’s appliance division for $5.4 billion, a feat unimaginable considering its humble beginnings three decades ago. It has many examples of products that satisfy special needs in China. For instance, washing machines with quick, 15-minute washing cycles. Many of the product ideas come from the front-end of the company, such as repairmen and salespeople. Haier’s Crystal washing machines series is


FOUR CHINESE INGREDIENTS The cases of Xiaomi, Alibaba and Haier illustrate how these Chinese companies organize and expand their businesses by combining lean processes, agile systems and design-thinking within project-driven structures.


Lean Operating in the complex and dynamic Chinese market, these companies have designed their organization as a system of work, rather than a system of control. The approach focuses on making decisions by experimenting and learning, and empowering people who are closest to the customer.


Agile The embrace of digital technologies deeply embedded in their organizational

the outcome of a succession of user observations. Since 1998, Haier has been experimenting with new organizational forms, to reduce hierarchy and control, and increase autonomy with self-organizing work units and internal labour markets. But it was not until 2010 that Haier put a unique project organization platform in place throughout the company. The organizational model is illustrated on page 78. Haier’s first step to create a platform organization was to fundamentally reorganize the company’s structure. First, the company eliminated strategic business units and managerial hierarchies with the purpose of creating zero distance to the users of its products. The company reorganized around projects with specific focus, such as on new product development, marketing and production. These three work units, or small project organizations, are the core of Haier and closest to the user. A second set, or level, of project organizations is organized around corporate support functions like HR, accounting and legal. The highest-level work unit is the executive team. Yet the third-level work unit is the smallest and positioned at the top of the inverted pyramid. Its role is redefined as a support function for the customer-facing, self-organizing project organizations. Haier now has thousands of work units, more than 100 of which have annual revenues in excess of 100 million RMB. More recently, the platform has

structure has allowed these companies to adapt to changing market conditions by iterating product development.


Design-thinking The ultimate goal of reaching zero distance to the customer is shared by China’s successful companies. Besides increasing responsiveness, this also allows the organization to deal with ambiguity, and experiment to explore solutions that customers want to buy.

evolved further to allow work units of non-core products to spin-off. After 2014, external investors were allowed to invest in promising new products, jointly with Haier’s investment fund. For instance, a furniture-maker invested in one of the ecommerce platforms (youzhu.com) that a work unit developed on house decoration. To date, 41 such spin-offs have received venture capital funding, of which 16 received in excess of 100 million RMB.

Organization 2.0

Western corporations have been organized in the same way for the past 100 years. Their hierarchical structures have become one of the major hindrances of innovation, growth and successful project execution. For many, changing the model has become


Project-driven structures The three organizational models of the Chinese companies Xiaomi, Alibaba and Haier represent entrepreneurial business ecosystems built around customers with project-driven structures. They have common attributes. First, no strategic business units as the dominant organizational structure and means of management governance; second, entrepreneurial motivation and dedication; third, relatively simple organizational structures.

a necessity for survival. Meanwhile, Chinese companies have experimented and led the way to modern ways of organizations. The examples described provide three models that could liberate Western companies from their obsolescence. Adjusting the structure, shifting power and breaking the traditional management models is the only way forward. Yet, to achieve it, requires sacrificing the old individual driven mindsets for the common good of the organization. It also requires courageous and determined leaders. Are you one of them? — Mark Greeven is a Chinese-speaking Dutch academic, author and speaker based in China — Antonio Nieto-Rodriguez’s new book The Project Revolution will be published by LID Publishing in 2019


This article draws on insights from a decade-long research programme at Zhejiang University (2007-2017) that included interviews with hundreds of local Chinese entrepreneurs and investors, as well as executives in large Chinese firms, focusing on the status and development of dynamic capability by local Chinese firms. Specifically, research on the digital ecosystems of Alibaba, Baidu, Tencent, Xiaomi and LeEco, and a proprietary database on their expansion activities, is summarized in Business Ecosystems in China: Alibaba and Competing Baidu, Tencent, Xiaomi, LeEco (2018, Routledge). Research on

pioneering Chinese companies and hidden champions is summarized in the forthcoming book China’s Emerging Innovators: Lessons From Alibaba to Zongmu (2019, MIT Press). Also, the article draws findings about Western organizations and their structures from the research performed for the book The Focused Organization (2012, Gower). Lastly, the authors’ extensive presentation and discussion of the practical implications of the research with hundreds of senior executives of Fortune 500 companies allowed us to reflect and refine our research findings and create face validity of our insights. Q1 2019 Dialogue




The comeback country Poland has become the first country from the former Warsaw Pact group of nations to be classified a ‘developed market’ on the FTSE Russell index. Aiming to become Europe’s seventh largest economy by 2025, how will Poland grow from here?










Mass exodus






Official languages

sq mi

(304,255 sq km) Population


Polish GNI per capita



Life expectancy


82 Women

Major religions

Catholicism Dialogue Q1 2019

A diaspora of Polish workers are living abroad in exchange for better pay and more opportunities

Exclusive invitation


Land area

2.1 million

74 Men

Poland has been a bright spot, but its economy is becoming increasingly dependent on its European environment. In such conditions, leaders can lose momentum and eventually become laggards Poland 2025, McKinsey & Co. 2015


Advanced ‘developed’ global economies on the FTSE Russell index, which takes into account regulatory environments, quality of capital markets and the status of derivatives markets, and includes the UK, USA, Japan and Germany

The brain drain


Poland ranks second in the world when it comes to an outflow of qualified personnel



Join the Dialogue


US $135

Money offered per month in dollar equivalent by the Polish government to families for every child after the first until the age of 18, equating to almost 40% of the net minimum wage, in an effort to boost population size


US $95 billion

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Funding Poland will receive from the European Union between 2014 and 2020



Jobs in business services to be introduced in Poland by 2025 to encourage Polish nationals to return to their native country

In Poland, 70% of young people are thinking about emigration. Last year more people died than were born. This is very dangerous for our country Artur Debski, Polish MP, to The Guardian


Dr Liz Mellon, chairman Tom Albanese, chief executive, Vendanta Resources Michael Canning, chief executive, Duke Corporate Education Professor Pedro Nueno, president, China Europe International Business School Ben Walker, editor, Dialogue EDITORIAL

Ben Walker, editor Kate Harkus, art director Luisa Cheshire, chief subeditor Kirsten Levermore, assistant editor Miro Iliev, digital products marketing executive MANAGEMENT

Martin Liu, publisher Niki Mullin, business development director niki.mullin@lidpublishing.com Alec Egan, business development executive

Disclaimer Copyright 2018 by Duke Corporate Education and LID Publishing Ltd. All rights reserved. Material may not be reproduced without permission of the publisher. While we take care to ensure that editorial is accurate, independent, objective and relevant for the readers, Dialogue accepts no liability for reader dissatisfaction rising from the content of this publication. The opinions expressed or advice given are the views of individual authors and do not necessarily represent the views of Dialogue. This journal is also supported by Knowledge Partners, including Duke Corporate Education as Lead Knowledge Partner. Whenever an author is related to a Knowledge Partner it will be noted as such. Dialogue takes every effort to credit photographers but we cannot guarantee every published use of an image will have the contributor’s name. If you believe we have omitted a credit for your image, please email the editor. ISSN 2053-4361



Published in the United Kingdom by LID Publishing Studio 204, 16 Baldwins Gardens, London, EC1N 7RJ

Printed by Pensord www.pensord.co.uk

Q1 2019 Dialogue




Dare or die

The old guard is out. The new board is in, finds Donna Williams

Boards That Dare: How to Futureproof Today’s Corporate Boards Sir Cary Cooper and Marc Stigter Published by Bloomsbury Business www.bit.ly/ boardsthatdare

Dialogue Q1 2019

Across the global corporate landscape, ageing boards are clinging on for their lives. Consult any 2018 ‘top 10 companies’ list, and you will see a smattering of start-ups displace and relegate well-known brands and previously omnipresent companies to the ignominious lower echelons of the ladder. Why? Boards That Dare by Sir Cary Cooper and Marc Stigter puts forward a convincing argument: a reluctance in the boardroom, interwoven into decades of ‘sameness’, greed and nepotism, has resulted in a pervading arrogance in thinking that customers and employees alike will be ‘grateful’ for a job or product. Throughout the slim hardback, the authors present today’s paradigm shift in both consumer behaviour and employees’ malcontent, looking at how the old ‘take it and like it’ attitude is being replaced with proactive decision-making on where to work and spend; demanding to be heard, respected and treated fairly in an inclusive manner. The key reason for this shift, says Boards That Dare is seated firmly in the boardroom. Clearly and carefully defining the rotting heads of many corporations, the authors describe how stagnating boards are paralyzed by

ingrained practices. Recruiting new members from a pool of people already known to the board ensures consenting nods and ‘ayes’ drown out the disruptive challenges mounting outside boardroom doors. With its functional, meticulous, informative style, Boards That Dare then ‘dares’ boards to redefine their fiduciary responsibilities and present a future-proofed get-out clause for the decaying corporate boards. Aware such change is not easy, readers are carefully walked through the flaws and landmines of the current short-term, operationally-focused character traits found in closed, inward-looking corporate boardrooms, before the authors skilfully separate out five segments of behaviour and mindset to futureproof boardrooms. If followed through, the book promises, companies will be able to reconnect success and social progress, and become a conscientious employer. Tired, old board members, read this book today. Time is of the essence to reframe your business. Consider and embrace the changes explained in this book to future-proof, and you may yet realize sustained shareholder value. — Donna Williams is a global planning director with 25 years’ experience on three continents




Unhappiness, engineered Kirsten Levermore discovers a tonic for the 21st century

Notes on a Nervous Planet Matt Haig Published by Canongate www.bit.ly/ nervousbook

“It helps to know I am just a caveman in a world that has arrived faster than our minds and bodies expected,” writes British journalist and author, Matt Haig. The rain hammers the thin shell of the early morning train, swaying with the weight of commuters. Looking around myself, I see discomfort. Weariness. Loneliness. Grit. What are we all doing here? When Haig released Sunday Times bestseller, Reasons to Stay Alive, in 2015, the tone of public discussion around mental fitness gained an informed, conversational and relatively destigmatized flavour – rare, to say the least. It was a deeply intimate and highly illustrative exploration of the author’s ongoing struggles with anxiety and suicide. Now, in his second outing into the mental fitness genre, Haig takes on a question: how do we stay sane in a world gone mad? Presented as a compendium of, well, notes, Notes is an accessible hodgepodge of punchy quotes, errant poems, thought-provoking philosophies, imagined dialogues, lengthy lists, film references, fictional supermarket visits, clever witticisms, old memories and the like. Perfect for the easily distracted, tired or emotional mind, insights are loosely gathered into sections ranging from internet-fuelled

anxiety to the news, sleep, work and the future – but the disjointed nature of the pages themselves (some of which can be swallowed whole in under four seconds) makes Notes a ouija board for those looking for meaning in our madness. Somewhere between Paolo Coelho’s Warrior of the Light and a full Twitter feed of #mentalhealth, Notes is a Chicken Soup for the 21st-century-weary soul. The chart-topping author of numerous adult and children’s books, Haig’s style is forever kind, warm and uplifting. Sceptics will be pleased to know, too, that the gentle words do not exposit the mindfulness movement, meditation or even digital detoxes. Rather, Notes is simply a collection of Haig’s own personal grievances, with a surety and commonality that makes it a comforting and enjoyable – if not entirely profound – read for all.

Masters of our own misery

Perhaps the most impactful insight is this: we are miserable because we have designed the planet to make us miserable. Recalling an anxiety attack in a grocery store, Haig questions panicinducing marketing strategies; considering social media and the ‘selfie’, he addresses the pressure felt by both men and women to appear a certain way; defying the click-counters, the author forcibly rejects hype and encourages readers to pursue measured and well-researched news stories. “There is no shame,” urges Notes, time and again. No shame in struggling in a wild world of noise, technology, rude people, social climbers, task-masters, pencil-pushers and idiots. Because, as the book reminds you with each page, there are people out there who feel just like you. And perhaps, together, Haig poses, we can start a revolution. For a gentle hug, read this book. Keep it on your desk. Keep it in your travel bag. Devour it on a plane. Consult it for daily affirmation, or even just a laugh. And spring for the hardback: sheathed in a light-absorbing dark, matte black jacket, it is entirely unassuming and very respectable. But remove the jacket and reveal the bright rainbow of colour, bursting from within. Q1 2019 Dialogue





Book clubs can boost employee retention

Time to start a book club Christian Smythe is head of content & partner strategy at BlueBottleBiz

A book club allows employees to become familiar with more people inside the company and make new connections Dialogue Q1 2019

In October, BuzzFeed announced that it will partner with Amazon to create a book club. The two are offering a “dedicated space for reading and discovering new books together”. This is big news. One of the largest and most popular digital publishers partnering with the biggest online retailer to breathe new life into the book club idea speaks volumes on how people connect over content; in this case specifically books. It is worth examination – there are many lessons here that can be applied to the corporate world. Office book clubs are not only a great learning tool, but can also be used to increase employee retention. On average, Millennials change jobs every two years. This is a new challenge for businesses, and employee retention is still a tricky nail to hammer down. Some techniques work but are expensive – such as high-wage structures, elaborate perks and unlimited days off; while others cost less but have significantly less impact, such as employee-of-the-month awards, free fruit and visits from the in-house masseur. First, retention is not just about money. It is about value, and how the workforce feel valued. A key concern for Millennials is not being appreciated and not being given the opportunity to develop. This is where a book club comes in. We look for external experts to help us with our understanding and development. Books provide that expertise and a chance for professional and personal evolution. In additional to knowledge, there are four other key benefits that an office book club provides that can directly improve retention.


Discoverability A book club brings together different perspectives from

all over an organization. You may not think a book is worth the time until another person shares their valuable takeaways. It is a forum that helps employees develop personally and professionally.


Teamwork development A book club allows employees to become familiar with more people inside the organization and make new connections. This helps in building trust and familiarity with each other. Additionally, it allows people to find a mentor or someone who can help solve an existing problem or challenge.


Innovation In addition to problemsolving, book clubs can spark innovation. New ideas discussed in a book club can easily be applied to any aspect of your business, and help employees advance within the company. It also allows them to work on things that are meaningful to them personally.


Stress relief One of the most important parts of a book club is that it is fun! It’s great to get together with like-minded people and discuss exciting ideas. Think of it as a happy hour for the soul! The struggle to retain top talent is an ever-present challenge. It is necessary for companies to look for new ideas that will add meaning to their employees’ experience. That includes providing an opportunity for them to grow professionally and connect with their co-workers. Although book clubs have been around for years, they are not just for that latest fiction release. Office book clubs can be an effective tool in building teamwork, driving innovation, and creating a happier work environment.





Too many companies are muddling on with poorly performing teams

How to make the team of tomorrow

Piers Cain is a management consultant

We should understand that conflict is necessary for new ideas to emerge. But conflict mustn’t be allowed to turn into combat

Simon Mac Rory’s Wake up and smell the coffee is a book born, in part, out of a sense of frustration. It is a book about management practice: how organizations can develop and deploy teams more effectively. Its main premise is that most organizations need to treat improving team performance as a strategic imperative, but most do not, preferring to muddle on with poorly performing teams. They need to change their attitude. Mac Rory has a background as a specialist team developer. Here, he has produced a ‘how-to’ book, based on extensive experience, which is also informed by a shrewd assessment of the latest literature and research. Many of the factors that affect team working have stayed the same for generations. But two drivers of change today are having a big impact – the use of technology to enable the creation of ‘virtual teams’ and the rise of a new generation, the Millennials (those born between 1981 and 2000). By 2025, Millennials will make up 75% of the working population – they already make up 40%. This group has very different attitudes and priorities from earlier generations – for example they crave flexibility and collaboration, and this affects how teams need to be run. Mac Rory is strong on the importance of definitions: of what is and is not a team, and the different types of team. He identifies four: Traditional, Project, Virtual, and what he refers to as Teaming Working Groups. (The latter a new development – a way of working around shifts, with large membership and leadership that are constantly changing). Each type of team has distinctive characteristics, benefits, costs and challenges for the leader. Mac Rory supports the view that the leader should serve the team by removing what stands in the way to achieving its objectives. In other words, the leader sits at the bottom of the organizational pyramid, not the top. Although it is fashionable to hold this view, unfortunately in most organizations the leadership is self-serving. Many leaders

believe the team’s role is to support them in fulfilling their personal ambitions. The role of the leader is critical, not only because leaders are responsible for the performance of their teams, but also because, if the organization’s senior leaders do not model good team behaviour, everyone else will draw the logical conclusion. Too often those at the top of the organization compete rather than collaborate. A simple and effective way of improving the performance of a poor team is to change the leader. Mac Rory notes that poor leadership behaviours at the top are sometimes tolerated in the belief that the individuals are too valuable to lose. This book makes many sensible points. A couple of issues in particular stand out because managers often shy away from dealing with them. We should understand that conflict is necessary for new ideas to emerge, and this is important for innovation and growth. But conflict mustn’t be allowed to turn into combat. Teams need to understand this and understand how to handle conflict well. Recognition is important, too. People crave it and will become demotivated if they are not recognized. It is easy to praise people, but team leaders must rise to the challenge of ‘recognizing’ average or poor performance – otherwise weaker team members will freeload and high performers will feel cheated or exploited. If I have a criticism of this book it is that it ends rather abruptly, without a proper conclusion. The question the author doesn’t really answer is: if, on the whole, we know what we need to do, then why don’t we do it? In my view, this is largely due to the continuing failure by both business schools and employers to inculcate good team behaviour and ethos as core elements in the development of future leaders. If there is no change of attitude at the top, nothing will change elsewhere. Nonetheless, this is a useful and timely book. Truly it is time to smell the coffee. — Wake up and smell the coffee: The imperative of teams by Simon Mac Rory, LID Publishing Q1 2019 Dialogue




Fluency in foreign tongues delivers much more than vocabulary

A language for living Don’t take it from me, take it from Jack Ma. The founder of Alibaba, whose e-commerce company’s market capitalization stands at $468bn, says, “Computers are always smarter than you. AI will kill a lot of jobs. People need to develop soft skills to compete.”Among those skills, languages are paramount. They open the mind to empathy, to new experiences, to continuous learning, to teamwork and cultural awareness – elements that distinguish humans from robots. Yet the Anglosphere, blessed – or rather damned – by being native to the international language of business, is hardly covering itself in glory. In the US, only 26% of adults have a good grip of a language other than English; in the UK, 35%. In England and Wales, the recent GCSE and A-Level secondary education results highlighted a five-year continuous drop in studying foreign languages. Compare this malaise to two other major European economies with large global spheres of linguistic influence. There are 520 million hispanophones worldwide and 212 million francophones. Yet data from the European Union reveals that 54% of Spaniards and 60% of French have command of a foreign tongue. Language skills are being called for by business as much today as they will be in years to come. A CBI/Pearson employer survey showed increasing demand for languages. Over 50% of businesses rated French as useful for their business, over 35% Mandarin, with others wanting everything from Russian to Japanese. Arguments against learning languages don’t stack up. Everyone speaks English? Not true. Never underestimate how important it is to speak your counterpart’s language, even if their English is impeccable. A light conversation in German, say, acknowledges the importance you give to their culture and can quicken a deal. Other mono-linguists argue that wearable translating devices are a reality and getting better by the day. Why go through years of hassle to learn a language when technology does it for you? Machines are useful, but they Dialogue Q1 2019

cannot reproduce the subtleties of language and the personal connection. Lastly, there is the myth that if you are not gifted for languages you shouldn’t bother. Nonsense. Unless the Dutch – foreign language command 86% – have a genetic quirk that allows them all to learn a couple of languages by 16 years of age, we are all capable of picking up enough of a language to communicate. Three things need to change. First, Anglosphere governments and businesses need to put the same emphasis on languages as they do on STEM (science, techonology, engineering and mathematics). A public campaign needs to bring home the importance of the subject in the development of children’s job prospects. Second, learning a language should start much earlier, at nursery, when the effort involved is minimal. The absurd emphasis on being able to write a grammatically exact sentence should be dropped for a sensible focus on listening and speaking. Third, the technology is there to make learning fun – let’s use it. Take Duolingo, a free platform with 200 million users. It can teach you, say, Spanish in a ‘casual’ way for five minutes a day, or in an ‘insane’ way for 20 minutes a day. Teaching language as it is spoken rather than as it is written helps learners avoid many pitfalls. When top law firm Freshfields merged with German firm Bruckhaus in 2000, the British lawyers found their German counterparts spoke excellent – albeit literal – English. This caused several breakdowns in communication, often born of Britons’ obsession with politeness. There were reports of memos being distributed explaining that when an English lawyer says, “What an interesting idea,” they actually mean it’s a terrible idea. Learning languages makes sense at all ages. Studies show that learning a new language can slow down the onset of dementia by three to six years. Worth a try? Russian, here I come! — Karina Robinson is chief executive of Robinson Hambro

Languages open the mind to empathy, to new experiences, to continuous learning, to teamwork






£9.99 / $14.95 conciseadvicelab.com

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