CEO Speak - Culture of Innovation

CEO SPEAK.

Welcome to the first episode of CEO SPEAK.

This series will be about the office of the Chief Executive Officer and how that position needs to evolve in the face of major changes in the world of business specifically and society in general. I would like to start by going over how dramatically the marketplace has changed and how we as the leaders have been remiss in recognizing the new environment and consequently changing along with it. Call 647-466-9717 or email ron.caughlin@brandedstoriesinc.com

Maybe it’s human nature to see no evil, and to take comfort in the status quo. Power, after all is intoxicating and not many leaders are prepared to give it up or dilute it or even change it.

Changes have come in other aspects of life and leadership either forced by the market, by the shareholders or by the people.

Communism, dictatorships, and even democracies have undergone substantial change in their importance, structure and their leadership.

As far as industry is concerned we need only remember Enron and Arthur Andersen. Their actions certainly forced legislators, and shareholders to act and to demand more governance from boards. Some of the new regulations even put more direct responsibility on the CEO. But fundamentally that office still works day to day at its discretion.

We need to re define what leadership is, what it means in this new and changing environment and what the new paradigm requires from that office and the person in it. Otherwise it’s like changing the ship from a rowboat to an ocean liner and not looking at the qualifications and duties of the captain. Or better still to going from an ocean liner to an aircraft carrier and not looking at the captain’s day to day duties, responsibilities and his or her qualifications.

Unfortunately leaders do not self-regulate like many other professional groups, and it’s understandable why change is not volunteered. And why we’ve evolved to a point where the idea of the office is to some, more important than the responsibilities.

I want to share a few examples of why the way we do things that we’ve accepted as conventional wisdom are failing us. As a result, we are challenged with identifying a replacement for conventional wisdom. Because what is revolutionary today is mundane tomorrow and likewise what is conventional wisdom today is anachronistic tomorrow.

There are examples of how the convention has failed us and equal examples of the power of unconventional thinking.

Consider the following:

  • The world of business has been described as being in perpetual whitewater.

  • Free Trade, Deregulation, globalization and technological advances are generating remarkable upheavals in both organizations and products.

  • Markets are becoming less homogeneous and less predictable.

  • Barriers to entry in industry after industry are crumbling …..and new businesses are bubbling up in market arenas that didn’t exist just a few years ago. (amazon, ebay, Spotify, spacex, Netflix, Amazon TV, crave TV, bitcoin, A.I. digital etc,etc).

  • The fact is that in every sector competition has intensified exponentially.

  • With over 2 trillion dollars being exchanged globally every 24 hours it’s much easier and more enticing for entrepreneurs to enter the market.

  • The turbulence in today's marketplace is not just about Commerce and Business. It's one aspect of a more profound revolution the likes of which we have not seen since the modern age began 500 years ago (From Agriculture and handicraft to The industrial revolution and all the attendant changes)

Call 647-466-9717 or email ron.caughlin@brandedstoriesinc.com

It seems to me that the people who rely on us to lead are ready for change. Yes, I believe it’s obvious that shareholders, employees, and other stakeholders including society in general is ready for business to do things differently.

The Leaders. The CEOs need to take in what’s going on and find new courses, new paradigms, appropriate for today’s and tomorrow’s marketplace, even if the changes affect the very position they are pulled to jealously guard or protect. At the very least corporations who want to survive and thrive must see the opportunity in front of them and take advantage of it. NOW!

That’s what I want this series to be about. A sense of urgency and No Fear. Dealing with the facts and reacting accordingly.

After, I earned my stripes as a young consultant, One of my first assignments was to do an operational analysis for one of our clients. After completing the work, I wrote the report. My mentor and senior partner read it and said: “We can’t send this to the client.” “Why I asked?” he said “Because the changes you’re recommending, even though they’re the needed changes won’t be acted on. This report will end up in a bottom drawer never to be seen again.”

WE changed the report to something more actionable, a small fix really, but one that would be acted on.

I don’t want to do that anymore.

I want to do this for CEOs and others in positions of authority and leadership, who are willing to engage in the conversation. Those who are prepared to confront and understand the anxiety that has driven decision making. Decisions grounded in the status quo mentality or, see no evil and conventional wisdom. Once we see what got us here, we can course correct and take advantage of the enormous opportunities available for those who are prepared to do the right thing. Even if it’s hard and uncomfortable.

My curiosity led me to spend five years in a psychotherapy program to help me to understand and to appreciate the different personality types and character structures, of people with the ambition and drive to climb to these heights. And to answer the question… Why did they fail?

My conclusion after, my studies, my work, my experience is that the reason for failure is simply FEAR, ANXIETY.

Individual, collective and corporate. Fear and anxiety.

Let’s look at some real-life examples:

The Thomas Lawson sank December 13, 1907. It was a seven-masted sailing ship that the shipping establishment put forth to compete against the new steam powered vessels that had increasingly taken cargo business away from sails. The last gasp effort to deny technological advances was futile of course. The age of commercial sail ended with the Thomas Lawson and steamships began to rule the seas. This affliction called the Thomas Lawson Syndrome is the tendency for organizations to prop up current products, services, and processes in the face of technological advance that spells their obsolescence. By hindering managers from discarding old technologies and embracing the new the syndrome prevents organizations from transcending the status quo and looking ahead to the future.

  1. Du Pont. It’s cash cow was nylon and it clung to nylon despite the scientific evidence that a new product ..polyester.. was superior for tire cords despite the fact that Goodyear, its leading customer, had publicly come out in favour of polyester. Meanwhile Celenese, a competitor whose position was small compared to Du Pont faced far fewer internal barriers to polyester. Celanese had no nylon investments to protect, no nylon tire cord facilities whose cost had to be justified, they had no managers or researchers whose careers success, reputation and egos were tied to nylon. While Dupont poured money into improving nylon, Celanese began to turn out polyester tire cords and within 5 years had 75% of the market.

This syndrome even affects market leaders who are not closed to new advances. Research has determined that where established firms enter into competition with threatening young industries, they will not necessarily pursue the new product aggressively and often continue to make substantial commitments to the old product even after its sales begin to decline.

Now this may be explained by the fact that they do not have the technical expertise or that internal politics may play a role. In addition, managers’ comfort zones or dug-in habits may contribute to why their attitudes against change are grounded in fear and anxiety.

Even IBM, when their labs produced breakthroughs in microprocessors and PC, had all the technology but fell back reflexively protecting the mainframe business and forbade the PC people from selling to potential main frame customers.

We could go on and on but it’s clear that established companies with leading products and services can have a difficult time accepting anything new that may threaten their position or cash cow. It just shows how afraid people are of change. The fear it engenders is almost paralytic.

Even when these companies know damn well that the new technology can’t be ignored, leaders often assign the responsibility for the new technology to managers who are entrenched with current successful products and you know what that means. Nothing is done to champion the new product or service. It’s left to peter out. Self-sabotage.

It happened to Kodak. To Marconi.

Some of the most venerable companies and brands have succumb to this Thomas Lawson Syndrome.

I maintain that there is a culture of fear across the corporate world. No not all corporations have evolved to that state but until we see overwhelming evidence to the contrary it is fair to assume this is the generally accepted state of affairs.. We should assume that conventional wisdom has failed us.

I submit that the way forward is to eschew convention and conventional wisdom and embrace the unconventional.

Consider the following:

CNN. Ted Turner, who founded CNN was anything but conventional. In fact, every fiber of conventional wisdom thought he was crazy. The network executives thought he was crazy.

The same with 3M post it notes.

Coleman stoves.

Fed EX didn’t rest on it’s laurels. It saw trends and moved toward warehousing and logistics.

And, of course there’s Steve Jobs and Wozniak

And there are many other examples of companies who went against the grain and developed products and services that the consumer didn’t know they needed. Products and services that conventional market research would never have identified.

For me the chief responsibility of a CEO is to create a corporate culture. If you don’t envision the culture you want to create, one will be created for you. The culture you deserve. Often as we’ve seen it’s a dangerous culture. So, let’s take the bull by the horns and create the culture we want. A culture devoid of fear and anxiety. A culture of courage and innovation. A culture that will be difficult to imitate and impossible to duplicate.

I’ve been writing and talking about culture for a long time. I’ve worked with CEOs on vision development and implementation and attended many off-sites intended to talk about and agree on the values that the envisioned culture would be grounded in. Sadly they all ended with a nice couple of days at a nice resort with all the attended amenities and then we all went back to the office and continued doing exactly what we had been doing before we went to the off-site. Nobody seemed to care. Nobody seemed to get it. Everybody just wanted to get back to doing what they always did, what was nonthreatening, what was comfortable. An understandable part of the human condition. But not particularly productive. Quite the opposite. Destructive behavior. We can spend hours talking about the psychopathy of this condition but that’s not why we’re here. We want to find a way forward, with courage and a sense of urgency.

Sometimes failure can be the best teacher:

  • Louis V. Gerstner, who was responsible for turning IBM around said:

“Until I came to IBM, I probably would have told you that culture was just one among several important elements in any organization's makeup and success -- along with vision, strategy, marketing, financials, and the like. I came to see, in my time at IBM, that culture isn't just one aspect of the game; it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value. It is the game, and the game changer"

I repeat, “ in the end an organization is nothing more than the collective capacity of its people to create value”

I’m still very passionate about the power of culture, so much so that I’ve spent time understanding corporate and leadership failures and learning the advanced management tools, and techniques available right now for today’s and tomorrow’s corporate challenges. Leaders, with vision, who embrace these cutting edge tools and concepts will see the power of their people’s collective capacity to create value. And it doesn’t matter if its 10, 100, 1000 people. Their companies will be catapulted to new heights and take a position of leadership in their market. The concepts are relatively simple to understand, but hard work, commitment and courage will be required to implement these bold ideas and deal with the practical realities of making the changes needed to achieve the desired goals.

Of course, there have been many past attempts by CEO after CEO to right the direction and create the desired culture within their organizations. Many have failed and been replaced only to see the next CEO try his/her hand at it. Very few have been successful and then only because their particular approach resonated. Their particular creativity and genius was right for the product, or for the time. But that is hit or miss. No one thought to come up with a PROFESSIONAL generally accepted process that a CEO must follow to win or at least be competitive. And many times even when a particular CEO had the right process it failed. Why?

The chief reason CEOs fail to achieve their goals is not lack of vision, lack of ambition or even lack of desire. No, the chief reason leaders fail is lack of execution.

And the reason corporations fail (see no evil, dysfunctional board, fearing the boss, and/or dangerous culture) can be attributed to failure of another sort… a failure of communication.

And I submit to you that communication is a key component of execution. Maybe the most important piece.

Leadership communications is a continuous job. Messages must be communicated and recommunicated in ways that make them understandable and credible to various audiences and able to be acted upon by those audiences. This process is called sustaining the leadership message. In addition, the leader must connect with his or her people on a personal level, in order to build a sense of trust. When a bond of trust has been established the future becomes possible. People will be inspired to follow and, in the process, achieve inspired results for themselves, for the leader, and for the organization.

As Jack Welch leader of GE once said”

“Real communication is an attitude, an environment. It is the most interactive of all processes. It requires countless hours of eyeball to eyeball back and forth. It involves more listening than talking. It is a constant, interactive process aimed at (creating) consensus”.

How often have we heard that CEOs or bosses don’t listen, that they’re insensitive, or arrogant. It gets worse when certain personality types, can’t connect with their people. They don’t listen because they’re too busy with the weight of their responsibilities. Unfortunately this can manifest into behavior that involves interrupting others and finishing sentences with their own thoughts, not realizing that they’ve just embarrassed or marginalized someone in front of their peers. And it’s even more dangerous when it’s done in social settings, with family and friends around.

Why do they do it? They’re intelligent, they’re smart, social, and sometimes even generous

I believe it’s because they lead with the head and not their heart!

And the reason for this is understandable. In the old days. The anachronistic days, aspiring Ceos felt they had to engage in politics and one-upmanship. The other guy had to look bad in order for you to get the promotion. This was the culture. Ruthlessness was the order of the day. Thinking, thinking, thinking was a necessary investment to stay ahead of the competition, the internal competition. As a result, the head became all important and the heart was considered a weakness. Funny thing about the heart. If you don’t use it you lose it. Generosity, compassion, empathy, listening, love and respect have to come from the heart. Arrogance, superiority and the attendant valuing of material things are all driven from the head. The heart feels value in others, more than self.

Fortunately, we have great leaders who have shown us the power of the heart. Leaders, like Vince Lombardi and Coach John Wooden, Mother Teressa and many others.

At this point it’s appropriate to remember that CEOs are made.. They are not born.

Coach Lombardi knew that leadership was a learned ability, which individuals can earn with hard work and he emphasized the importance of using that knowledge or talent once earned..

And as mother Teressa said:

“Remember, before you speak it is necessary to listen, and only then from the fullness of your heart you speak and God listens”.

One of John Wooden’s (Beloved UCLA Coach) ex- players, now broadcaster writes:

The joy and happiness in John Wooden’s life comes today, as it always has, from the success of others. He regularly tells us what he learned from his two favorite teachers, Abraham Lincoln and Mother Teressa, is that a life not lived for others is a life not lived . . . I thank John Wooden every day for his selfless gifts, his lessons, his time, his vision and especially his patience. This is why we call him coach.

Unfortunately, many of the CEOs I’ve seen fail believed that self-confidence was the key to success and achievement. Don’t get me wrong. Self-confidence is wonderful. I’ve seen people, as we all have, who are confident and actually have something to say, and to be confident about. It’s infectious, it draws you in especially if it’s grounded in honesty or vulnerability or knowledge.

Self-confidence can also be a con. Self-confidence without heart or without being able to connect from the heart, will have no chance of gaining credibility and may result in a lack of trust between the communicator and the audience. This lack of trust will diminish the effectiveness of the leaders’ communication and any initiative to execute will wither and lose momentum.

Fortunately, we can course correct. We can learn from past failures. We can learn from Lombardi and John Wooden and Mother Teressa, among many others. They all basically deliver the same message. If you want people to follow you? If you want buy in and consensus, you must communicate from the heart and listen whole heartedly. If you do there will be real buy-in, consensus and trust, the key ingredient for motivation and commitment to common goals and vision.

Today’s LEADER/CEO needs a good measure of both heart and head. They need to be a total human. They don’t have to be particularly special. But we can all strive to be good people. A good man. Or a good woman. Obviously, you don’t have to be a Lombardi or a Wooden or a Mother Teressa or a Colin Powell. We’re not creating missionaries but it’s not too much to ask that our leaders who want us to trust and follow them have some grace and kindness.

And since we’re talking about people. The place I recommend you start the rebuilding of your organization is with the people. Here is a quote from the imitation game we should bear in mind,

“Sometimes it’s the people no one imagines anything of, who do the things no one can imagine.”

These are the advanced management concepts I’ve referred to. They all affect the people and it’s the right starting point.

BIG BRAIN VS SMALL BRAIN

FLOOD YOUR ORGANIZATION WITH KNOWLEDGE

OBLITERATE BARRIERS TO THE FLOW OF IDEAS

LIBERATE YOUR EMPLOYEES

If, like me, you agree that most organizations’ greatest asset is their people then it makes sense to respect and engage and motivate them. It makes sense to get away from command and control structures and get everybody in the organization acting like an owner or CEO. And that’s what the big brain vs small brain vision is all about.

Yes! imagine the power of 10 or 100 or 1000 employees all devoted to the same goal. To the same common vision. And to motivate them and gain deeper trust you transition from a pyramid structure to a flat round structure. To increase the size of your company’s brain.

You need look no further than Amazon. Their founding by Jeff Bezos was instinctual and their 600,000 employees are called associates. Imagine the power of this big brain. Look at what it has accomplished and imagine it’s potential over the next 5 years.

In the pyramid structure there is a small brain at the top where information, control and sign-off is hoarded among a few executives and the staff or employees are in the body below. Yes some have tried to flatten the organization and even made some changes but essentially it’s still a pyramid with a small brain and large cumbersome body. Still a command and control structure. To move towards a big brain and all it’s benefits go to a circular flat structure where the CEO and executives or coaches and leaders are in a dotted lined circle in the center and the employees are in the larger circle The dotted line represents the flow of communication information and time between the two circles. Show diagram?

Now flood the organization with knowledge and obliterate current barriers to the flow of ideas.

Now you’ve got your organization’s greatest asset, your people, liberated and authorized and informed to allow the flow of ideas that can improve internal processes and recommend ideas for new products and services that will delight and exceed your customer’s expectations.

As Louis Gerstner said: In the end, an organization is nothing more than the collective capacity of its people to create value.

Now the coaching begins and the CEO leads. Execution and communication is imperative. The small group in the middle will have had their conversations and all have reached consensus. That is the right place to start. Now it’s time to coach and gain consensus and buy in from everyone else. This is where patience, connection and grace and kindness will be required. If you’re not good at it. Get good at it. If some counselling is needed as a group or one on one then get some counselling.

I can’t stress strongly enough how critical the execution phase is. Remember this is where most fail.

This leadership initiative, grounded in a Vision to create a new culture will make employees more powerful, make the CEO more powerful and more importantly make your organization smarter and more focused on what your customers will need tomorrow. Now you’re leading the market and not responding to it.

Yes, get rid of command and control structures and the need for multiple sign offs and flood your organization with knowledge. And Liberate your employees. Make them part of the brains of the organization. I know knowledge is an intangible. I don’t mean flood as in overwhelm your organization with reports and paper. But we are in a knowledge-based economy. That means ideas based on knowledge/information NOT based on balance sheets, buildings, number of employees or sunk costs.

Knowledge is an intangible, a soft concept.

Knowledge is expertise, intelligence, imagination and ingenuity. It is the key determinant for economic and business success.

Today knowledge is Intellectual Capital. Peoples’ capacity to excel at sensing, judging, creating and building relationships. These are the most valuable assets of your corporation.

Do you have the vision and courage to see this and unleash its power?

Yes! Good!

Executing, communicating over and over, listening, being patient, kind. This is the exciting part because you’ll begin to see that you’re not alone, because you’re constantly increasing the size of your organizations’ brain and slowly making it a cauldron of ideas. Ideas that can help you manage the process and ideas that produce products and services that satisfy your customers constant raising of the bar by delighting and exceeding their expectations. In short you don’t have to react to the market. You lead it!

But let’s not get ahead of ourselves because as an Italian once said, “From the saying to the doing there is an ocean”. That’s why staying power, a clear vision and commitment is important.

To get from point A to point B is where leadership comes in. You don’t just walk in one morning and have a staff meeting and announce that everybody is liberated and they should all start acting like responsible CEOs. No. Of course not. You use common sense. You assess where you are, have a vision of where you want to be and start with the other executives in the “small brain” structure. Share with them the culture you want to move towards and why. Then make sure there is understanding, consensus and buy in. Take all the time and provide all of the counselling that is needed for this first group to be on the same page and equally excited.

I must point out that consensus is not automatic, sometimes not even after hours of listening and talking. There might be a saboteur or two at this stage. They are dangerous and that’s a problem. I have seen them destroy a great vision by taking a value like say, Client Obsession, and dilute it so that it means nothing. You may have to get rid of one or more of these people. The most powerful starting point for creating any culture is common buy-in, belief and commitment among the executives who will drive it. This isn’t simple or easy (if it was everybody would be doing it). So, bear this in mind and stay committed to the process. But let’s go back to the CEO for a minute, because this position is critical to the success of this process.

Some of these men/women are more in love with the idea of being the CEO than the responsibility and the hard work involved. You have to soul search and be honest with yourself. If that’s what you’re about then your chances of success are greatly reduced. I’ve seen it happen. Great people who hear the buzz words and get excited and want to go in that direction. They begin the process with good intentions and energy. High energy at the beginning which will peter out as soon as it gets hard and believe me it gets hard.

As Jeff Bezos says “ Be stubborn on the vision, if necessary compromise on the details”

One of your partners/ colleagues won’t get it or they’ll be threatened by it and do something to weaken or slow the goal. This will be sensed immediately and doubt and negativity will spread like a disease and if you let it take hold or compromise against your better judgement. Watch out! You must stay true and focused and committed. But believe me if you do stay focused and committed and true the payoff for you personally and for your organization will be extraordinary. Ok that had to be said now let’s move on.

The whole small brain/big brain concept is based on transitioning the pyramid of the command and control structure where the tip of the pyramid is the small executive group and all others are underneath, to a flat circular structure where the CEO and executives are in the center circle surrounded by a permeable dotted line to everyone else.…The staff, whoever and whatever function they represent in the organization are part of the big brain. The core competency knowledge growing and value adding part is in the big brain. Otherwise it is sourced to outside partners or if determined it is not needed then eliminated entirely. H. R. is my pet peeve. I would eliminate it entirely. Redirect the money to real value adding training for those in the big brain.

  • If two heads are better than one then it’s simple mathematics that 10, or 100 or 1000 heads are better yet. The challenge is harnessing the intelligence, entrepreneurial skills, creativity, ingenuity etc of all the employees.

In the race for market share and profitability “smart organizations” or those who connect to the Big Brain metaphor are the horses to bet on. For them training and job enlargement is de rigueur. Everyone on the payroll continually expands their skills, contributions, and responsibilities, in order to help the organization attain it’s mission and goals. So that information and contact flows through freely and easily.

Everyone has access to information, expertise, learning opportunities, fast decision-making authority, AND Accountability. Information and data that was previously hoarded now becomes dispersed. People with ideas freely cross permeable boundaries within and beyond the organization. Expert systems, electronic databases and open telecommunication systems proliferate.

The manager in this kind of organization is no longer a Boss. No longer an empire builder. In this system, de-massed organization playing power politics and even attempting to hoard talent or information for self-aggrandizement becomes downright absurd.

Employees are no longer order takers, who expect good things to occur if the keep their noses clean. In fact, they are the first ones downsized in a brain based organization, because as an executive declared to his people “if you’ve got a yes-man or yes-woman working for you, one of you is redundant”

Now schematically, at least you have an organization with a large brain and small body. Now we need to not only draw upon it but make it work the way it should so that this large brain becomes a bubbling hot cauldron of ideas. For process change to improve and save money and for the proliferation of new products and services.

Now that you’ve gotten this far, if you’ve gotten this, the next thing is to obliterate barriers to the flow of ideas. Smash barriers to the free flow of knowledge, barriers such as multiple sign offs, narrowly focused functional silos, rigid job descriptions, meager training, and corporate cultures marked by secrecy, fear and one-upmanship.

Now that you’ve taken the first steps to flood your organization with knowledge, making it accessible to liberated employees, who you empower to act as they would if they were accountable owners or CEOs ( of course there have to be legal and ethical boundaries or rules of the game, which you as the coach will establish) and you’ve begun to eliminate or obliterate barriers to the flow of ideas, along with multiple sign-offs, you’re on the road to creating a culture that will catapult you above the competition and put you and keep you in a leadership position.

Do you see it?

That’s what they tell quarterbacks. See it…. then Do it!

End of first episode

For more info Call 647-466-9717 or email ron.caughlin@brandedstoriesinc.com

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