Quick takes

Citation

Gorrell, C. (2015), "Quick takes", Strategy & Leadership, Vol. 43 No. 5. https://doi.org/10.1108/SL-07-2015-0060

Quick takes

Article Type: Quick takes From: Strategy & Leadership, Volume 43, Issue 5

Gorrell Catherine

Catherine Gorrell is a veteran strategy consultant newly based in Portland, Oregon (4mcgorrell@gmail.com) and a contributing editor of Strategy & Leadership.

These brief summaries highlight the key points and action steps in the feature articles in this issue of Strategy & Leadership.

Good strategy makes good leaders

Robert J. Allio

A scan of the business idea marketplace to identify any breakthroughs in the perennial quest for insights into the field of leadership – who are the leaders others should emulate, what are best practices, how did the acclaimed exemplars get to be leaders, and what can we learn from their stories – clearly shows:

• Forget leadership – Its strategy that matters. Companies excel when they adopt good strategies and implement them efficiently.

• The role of the leader is diminishing, and leadership has little utility as an organizing principle.

Look realistically at attempts to show how some CEOs shaped the future of their firms. Stories of success and failure typically exaggerate the impact of leadership style and management practices on performance. They focus on the singularities – the few extraordinary successes – and ignore the many events that failed to happen. We all fall prey to this affective fallacy when we admire certain individuals for their style or panache – and then overweight their contribution to the success of their organizations.

Debunking the cardinal hypothesis

Evidence does not support the cardinal hypothesis – great leaders create great companies, for over a short period of time, strategy and luck are what matters. And over a long period of time, all firms regress to the industry mean: good firms do worse, while the dogs of the Dow do improve! Furthermore, few firms beat the odds regardless of their leadership.

Strategy is the key

We need to refocus our attention on strategy. Successful leadership ultimately comes down to good strategy and good fortune. We have little control over the vicissitudes of the macro-environment, but firms that adopt the right strategy will do better over the long term. Good leaders must be good strategists.

It is true that the world of strategy is full of disappointment and frustration, of means not working, of ends not reached, of disenchanted teams. But in the long run it is strategy that makes the difference. Of course strategy is not about reaching a prior objective. Strategy emerges, and practical strategy is simply about moving to the next stage.

Going forward

Here is advice for those who aspire to be identified as effective leaders:

1. Forget about learning to be a leader via best sellers and fad coaching.

2. Practice the art of strategy formulation, enlisting a wide range of talent to inform, test and innovate as you progress.

3. Concentrate on effective implementation, which can often overcome the deficiencies of a mediocre strategy. Good implementation demands that you inspire, build capacity to motivate and manage others, enhance the culture’s decision-making capacity, and above all, learning and adapting as you proceed.

4. Stay alert and nimble. Hope that competitors will blunder and that no interloper will sweep in to disrupt the industry. And stay customer focused.

Agile: it’s time to put it to use to manage business complexity

Stephen Denning

In the emerging Creative Economy, new management models are enabling astonishing growth.

• Highly innovative organizations deploy teams, establish or join networks and ecosystems of people, many of them working outside the firm, who are coordinated horizontally and who deliver new value to customers in an interactive fashion.

• The new models are a better fit for a marketplace in which the value of products and services derives more and more from the delivery of superior customer service and connected consumers are changing every aspect of business.

Agile – the horizontal ideology of enablement

In the Creative Economy, the viability of hierarchical management practices is diminishing and a very different kind of management is succeeding. It is a variety of radical management methodologies for managing software development, including Scrum, Kanban, XP and Continuous Deployment. These share a common ideology sometimes called Agile; its main elements are:

• Work is done by self-organizing teams, networks and ecosystems that mobilize the full talents of those doing the work.

• Work is focused directly on meeting customers’ needs and Interaction with the customer is central.

• A “lens” focuses attention on the customers’ needs (when the lens is a person, as in Scrum, the person is known as a “product owner”).

• Work proceeds in an iterative fashion and progress toward fulfilling the needs of customers is assessed at every stage.

This ideology is a good fit with a business environment that required continuous customer-focused innovation.

What Agile and Scrum offer top management

Agile and its radical management methodologies, such as Scrum, have a reasonable prospect of being more than just an operational process.

• They can deal directly with current business issues by giving an authoritative voice to the customer through the product owner and giving competence a preeminent role over authority.

• Agile teams can be scaled almost infinitely, as Apple, Autodesk and Facebook have proven.

• Executives who understand how Agile and Scrum can manage the extraordinary complexities of software development, will also realize they can use the same management expertise to manage the mounting complexity of the rest of their business.

Bottomline

The ideology of Agile and the methodology of Scrum are a good fit with the business reality of the 21st Century where power in the marketplace has shifted from seller to buyer and the customer has become the real boss. By adopting Agile – a new management model that truly unites those in charge and those doing the work – the organization can prosper by delivering superior customer experiences.

The three laws of business combinations: how to create value by remixing assets

Benjamin Gomes-Casseres

In today’s world of fleeting advantage, combining assets, capabilities, markets and talent pools is even more important than ever. This means looking outside corporate walls for resources: labor and capital, technology and brand, hardware and software. This combining of resources to create new value is the business “remix.” Remix strategy is thus the mixing of resources, assets, and capabilities of one organization with those of another to achieve unique capabilities.

The question is how a remix venture will enhance your company’s competitive position. How will they create value? How to capture that value? Remix strategy gives you a simple but powerful framework to see clearly what the key decisions are and then to navigate those decisions successfully.

Three laws

There are just three laws for all business successful combinations. They must have the potential to: 1) create joint value, 2) be governed to realize this value, and 3) share value in a way that provides a reward for each party’s investment. These three laws apply to every combination and should shape your whole approach to competition.

Remix strategy

As the use of combinations increases, competition is becoming a battle of groups of firms against other groups. These “constellations,” composed of firms and their allies, have boundaries and structures that shift continually. Because of this, remix strategy has implications for all of the big questions in strategy. This new perspective propels a rethinking of strategic decisions in five key areas:

1. The unit of competition in strategy – because the combinations of resources compete, not the firms.

2. The discovery of which “right” combination of resources yields competitive advantage.

3. The scope of governance – for acquisitions, partnerships and ecosystems.

4. The management of change and innovation, given that business remix creates its own new form of competition, and sometimes new industries.

5. The determinants of return on investment, by acknowledging that value is earned at two levels, the combination and the member firms.

Required: a change in perspective

Remix strategy thinking requires replacing the concept of the firm as a bundle of resources, with the idea that the bundle of resources that is critical for success need not always be shaped as a firm. Be prepared to rethink how bundles of resources compete, then mix and match assets to make a strong, new business and to remodel an old business into something better. To do this employ the new tools of remix strategy and the three laws of business combinations.

Interview: Continuous innovation: unleashing and harnessing the creative energies of a willing and able community

Brian Leavy

In the recent book, Collective Genius: The Art and Practice of Leading Innovation, a team of authors and researchers offer answers to the questions: How can leaders build an organization that can innovate over and over? And why, in spite of all we know about innovation, have companies not made more progress on this important question to date?

In this interview of the lead author Linda Hill, the answers are discussed in three groupings.

1. Misconceptions stall progress – three significant reasons:

• Myths about innovation inhibit progress – for example, innovation only comes from lone geniuses and/or take-charge visionary leaders. In reality, innovation is a collaborative process of indidivuals with diverse talents and points of views acting their way (vs. planning their way) to find a solution. Furthermore, exceptional leaders of innovation don’t focus on finding the answers or setting the vision, but rather on creating the environment in which others are willing and able to collaborate and innovate together.

• Second, innovation can be quite uncomfortable and unnatural in today’s organizations. Even when people know what they need to do to innovate, sometimes it’s too tough to get it done – and often, that difficulty lies in the organization’s leaders having created an environment inhospitable to innovation.

• Third, leadership for innovation is incredibly difficult. It requires managing a degree of complexity, uncertainty and conflict that few are comfortable with. It requires that the leader be more of a stage-setter than the star performer.

2. Creating the willingness to innovate – getting the foundation right:

• Leaders need to start by ensuring that individuals are actually willing to innovate – to be motivated to take the risks necessary to do the collaborative, discovery-driven work. Building the willingness is about building a sense of community, which means that members of the organization share a sense of purpose, values and rules of engagement.

• Leading innovation is about leading a “volunteer organization.” You can’t force people to innovate, you can only organize for it.

3. Developing the core innovation capabilities:

• The ability to innovate on a sustained basis requires the development of three key capabilities – “creative abrasion,” “creative agility” and “creative resolution.” The three capabilities are interlocked and iterative.

• Top leaders of innovation are individuals who focus their primary attention on shaping an environment in which others can succeed. Look for individuals who are bold thinkers, who truly understand that organizations are complex systems, and who are willing to experiment, rather than over-analyze.

How leading organizations use big data and analytics to innovate

Anthony Marshall, Stefan Mueck and Rebecca Shockley

Leading organizations are investing in innovation that leverages the ever-growing opportunities to collect new data, combine external and internal data and apply big data and analytics to outperform competitors. The formula: analytics yield insights; insights lead to innovations. But not all organizations approach big data analytics the same. The authors’ research has shown that there are three distinct groups:

• “Leaders” innovate using big data and analytics within a structured approach, and they focus in particular on collaboration. They are 36% more likely to beat competitors.

• “Strivers,” while investing in tools that support innovation for specific functions, are less certain about which activities are the most important for innovation.

• “Strugglers” are more risk averse by nature and are the weakest in innovation activities with no formal innovation processes.

What makes “Leaders” distinctive

Leaders follow three basic strategies that center on data, skills and tools and culture (see Exhibit 2):

1. Promote excellent data quality and accessibility to excel at obtaining and gleaning insights from customer, and then derive innovations from those insights. Best practice:

• Evangelize the connection between analytics and innovation. Perpetuate a philosophy that data promotes insights and insights promote innovation.

• Infuse analytical capabilities throughout the organization to spark innovation. Make data accessible and available, and focus on end-user analytic tools.

• Embrace customer insight and opinion. Collect and analyze customer-generated data, and design customer interaction environments.

2. Make analytics and innovation a part of every role. Best practice:

• Use collaborative tools as a platform for enterprise-wide innovation. For example, they re-introduce the (digital) suggestion box, and organize opportunities to share data and ideas.

• Build skills, cross-train and co-locate analytics and innovation teams by creating networks with shared objectives, thus sharing points of view and discoveries.

• Promote entrepreneurialism by championing exploration and innovation and enabling greater openness.

3. Build a quantitative innovation culture. Best practice:

• Support a broad portfolio of innovation. Optimize an innovation mix of incremental and disruptive, and make innovation central to all initiatives and processes.

• Fund innovation separately. Establish a separate funding pool for innovation initiatives, and calculate and report ROI of innovation funds.

• Apply rigorous metrics to the value innovation generates. Devise financial and other metrics to measure innovation, and design learning processes based on successes and failures.

Case: Häagen-Dazs in Japan: leading brand renewal

Kenneth Alan Grossberg

After years of financial success with consumers in Japan, the Häagen-Dazs brand suffered accelerating declines. Clearly, even a strong consumer brand needs to refresh its strategy now and then, and it takes leadership qualities to get those strategic initiatives past the gatekeepers who are best at monitoring the status quo but not quick to sense the need for change. This case study presents the three significant reasons and the solutions developed to successfully reinvent the brand. The key to this challenge was the vision and strength of the leader who was tasked with the turnaround.

More than a single problem

A constellation of pressing decisions had to be addressed, each related to a strategic marketing issue.

1. Retail distribution stores were not well located for growth.

2. Marketing focused on a fickle consumer base, on actions not substantiated with solid data, and on mistaken perceptions of the competition.

3. Low morale of employees resulted from and was propelled by the inconsistent marketing tactics: reactive tactical maneuvering and intramural competition – rather than proactive strategic planning and cooperation.

The solutions

1. Centralized control of all decisions regarding distribution initiatives, product innovations and brand communications was instituted.

2. The staff was re-educated about the brand. The employees had lost their sense of what the brand should be about and this confusion was undermining their motivation to undertake and implement strategic initiatives.

3. The perception of the brand held by the typical younger female customer was realigned by changing the way the brand was communicated.

4. The packaging was refreshed to reinforce the message that Häagen-Dazs was a premium product.

All these solutions were based upon data from surveys and research needed to develop and confirm the new strategic initiatives.

Key lessons to leverage

The major lessons to be gained from this case are:

• Even a strong and popular brand needs good leadership to retain its position in the marketplace.

• That leadership must be open to new ideas, but must also be firm in shaping and directing the internal political cross-currents that can unduly influence decision making and as a consequence dilute a brand’s power.

• As your market evolves you need to reinvent your brand constantly, but that does not mean churning the product. In Japan, product churn is an occupational hazard of consumer marketing and, as in this case, resisting such a tendency was the best strategy.