CEO Speak - Culture of Innovation
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 email@example.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)
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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.
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.
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 be