Now is the time to innovate

It’s pretty scary reading the papers and listening to the news these days. We are all left wondering how this current downturn will play itself out. Unfortunately I don’t have a crystal ball and make no claim to any ability to predict the future. I don’t know what is going to happen any more than any commentator on current affairs.

That said, I’d like to propose two ways of looking a the current global situation:-

  • learning from the past
  • learning from the future

Firstly

Learning from the past.

You may already know this, but I’ll ask anyway. What do the following companies have in common:

  • Motorola
  • Hewlett Packard
  • Xerox
  • Unisys
  • Texas Instruments
  • Revlon
  • Ryder?

I deliberately organised the list this way so that you might be misled by the first five entries that they were all technology companies. But you would have know that Revlon was in the cosmetics business and probably (although I had to refresh my memory) that Ryder was a transportation and logistics group.

If you haven’t worked it out yet, I’ll tell you. All these companies were founded during the Great Depression. My source for the short quiz above was this article by David Silverman (although Silverman in turn tells us we could all do this research independently by checking Funding Universe .)

David also points out that a number of well known brands and products of today were established during the Depression. So while many businesses were going to the wall, it was as hard as it ever had been to raise capital and consumer confidence was at an all time low, some individuals were bold enough to launch new enterprises that have passed the test of time and some companies launched new products that have turned out to be stayers.

Now I have to put a disclaimer in here. This is, by necessity, a first look analysis. I generally criticise research which looks at successful anythings to try to find what the successes had in common. This applies to companies, leaders innovators, entrepreneurs and anything else you might like to name. We don’t know from this brief analysis how many companies started during the Depression went bust and how the success rate of startups during that period compares with that of startups during more bouyant times. So I am not suggesting this proves a downturn is a better time to innovate than during a boom. I am suggesting though that some people who have tried have found success in doing so.

And this first level analysis makes some sort of intuitive sense. Even if we think of it in terms of ‘survival of the fittest.’ Anyone can make money during a boom but in tough times, only the fittest (or perhaps in a business sense, the smartest) survive. A recession shakes us all around and sorts us out. During a recession we have to find new and smarter ways of doing things. We have to use our advertising dollars smarter. We have to work out which parts of our business never really made sense anyway but coasted along in the boom and which parts of our business could be the source of sustainable growth into the future.

All sorts of questions come to mind regarding our employees. Which ones stuck by us in the boom when they could have made more money elsewhere? Who shows real promise with creative thinking and can come up with some of the new ideas we need to survive and prosper? Who have just been hanging on and coasting.

Finally, as other businesses fall over around us what are the new opportunities? We can be fairly sure we are not going to grow by copying outdated business models or just copying products that our erstwhile competitors can no longer provide. But what new products and services do these holes in the market call out for?

“Oh for a crystal ball,” you may well exclaim. This is where we move on to my second way of learning:

Read more

The Heroic CEO (again)

Late last year I was at one of the usual round of Christmas
parties
I attend each year. Also as usual, I found myself talking to
a new acquaintance explaining that I work as a Leadership Mentor when a third
person joined the group. The conversation moved to executive remuneration
and specifically CEO remuneration. During the conversation my new found colleague
turned to me and said

“You’d know this — the CEO makes the difference”.

I replied “The CEO makes a difference.”

He was unconvinced and repeated his earlier assertion.

At this stage I deferred — neither of us was going to change our position.
If my colleague is reading this I must say, with greatest respect, I still
disagree with you.

And still, after 20 years as a consultant, I remain absolutely amazed at the
predominance of this view. It is beyond the scope of this short piece to delve
into a deep discussion of Wilfred
Bion’s
Basic
Assumptions
, but it seems to me that the unchallengeable way in which this
view of the messianic CEO is discussed in business almost indicates a very
large group Basic Assumption Dependency.

Briefly, Major Wilfred Bion, whose task it was to provide therapy to thousands
of soldiers returned from the Second World War, after studying the many many
groups he worked with developed a description of group behaviour in which every
group was, in fact, two groups — the Work Group and the Basic
Assumption Group
. The Work Group was the group that any observer could
see. A group assigned to and attempting to complete a task. Bion suggested
that in addition to this the group behaved as if some basic assumption
were true — ie it was simultaneusly operating at two levels. The visible
(work group level) and the invisible (basic assumption) level.

From his observations, Bion suggested that all groups acted with one of three
Basic Assumptions: Dependency, Fight-Flight or Pairing. For the purposes
of this piece I will only discuss the first of these — Dependency — and
briefly at that.

Anything I write here will undoubtably reflect what has already be written
by others, so I will simpy quote from ChangingMinds.org:

In this state, the group seeks a leader who will relieve them of all anxiety. This leader is thus invested with omnipotence and is expected to be able to solve all problems.

If this magical leader does not perform up to scratch, then the leader will be attacked and a replacement sought. Thus a cycle of leader-seeking, idealization and denigration occurs.

Does this sound familiar? The company is not performing as well as we want
it to so we bring in a new CEO. If the CEO is any good, they can solve all
the company’s problems. If they don’t solve all the problems then they are
not up to scratch and everyone from the board to the business press will point
out there shortcomings.

Yes, I have seen many CEOs and leaders who have almost single handedly wrecked
their organisations and I have seen a very few individuals who have inspired
their teams to achieve beyond their wildest dreams. But most CEOs I have met
are somewhere in the middle. They lead a multi talented team — a team
in which they had only a small part in putting together. Sure they can set
the tone for the day to day work of the company’s employees and they have the
final say on the most important decisions. However, the company’s success or
otherwise depends first and foremost on the uniqueness of its products and
services and the way they are marketed. This in turn is dependent on the company’s
culture. Something that is built into its DNA. The CEO can’t change this. They
can influence it. They can make decisions that make best use of it. They can
affect the performance levels of their people to some degree. But they can’t
single handedly mandate and make happen large scale change.

I was reminded of this when I read this
article
by Greg Baum in Melbourne’s The
Age
yesterday. For those of you from non-Cricket playing countries,
I may need to tell you that the Australian
Cricket Team
has just suffered
its first loss in a series at home since 1992/1993 (having lost the Second
Test
to South Africa.)

Baum notes the predictable reaction

In the aftermath, fingers of blame
have been pointed in all directions: the selectors, the captain, Cricket
Australia
,
Matthew Hayden, Andrew
Symonds
.

But

Captain Ricky
Ponting
has worn the brunt of the criticism.
This is the captain’s lot, but it is also a manifestation of the syndrome
by which the leader of a sporting team — the captain in cricket, the
coach in football — is made not only to account for his team, but
personify it, so obviating the need for any more complex
or subtle study
.
Hence, Ponting’s failings are Australia’s, Australia’s Ponting’s, all in
one soundbite. (My emphasis added)

Again, does this sound familiar? The second sentence eminently qualifies
Baum as a business analyst. Particularly the part I emphasised.

Buam hits the nail on the head regarding the problem with our belief in
the messianic
CEO.
It is too simple and it obviates the need for any deeper
study of the organisation.

This would not be so much a problem if the wellbeing of us all was not
bound up in business. Our governments provide grants, low interest loans
and incentives to business because they believe it will grow the economy.
As we have seen in recent times, we all depend on a healthy economy. When
the economy dips we all suffer.

How much more efficient would business be if it were not transfixed by
the fantasy of a heroic CEO?