Quick takes

Citation

Gorrell, C. (2009), "Quick takes", Strategy & Leadership, Vol. 37 No. 2. https://doi.org/10.1108/sl.2009.26137bae.002

Quick takes

Article Type: Quick takes From: Strategy & Leadership, Volume 37, Issue 2

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

Leadership – the five big ideasRobert J. Allio

There are just five big ideas at the center of the endlessly debated and recycled findings and insights on leaders and leadership which have been the source of a constant stream of books for decades. Cutting through the marketing hype promoting the latest entries, here are the five core concepts:

1. Character

Competent (get the right job done) and ethical (act with integrity) are at the essence of character. But, when explaining why some leaders’ “character” becomes corroded, avoid three attribution errors: overemphasizing the personality basis for behavior and underemphasizing the role of the situation; not crediting good leaders for avoiding a potential future crisis; failure to lead versus failure to balance managing and leading.

2. No best way to lead

No single model fits all situations. Today, the favored model for leadership is the self-effacing, humanistic individual; co-creation of unique customer value is today’s mantra for enlightened leaders.

3. Leaders must collaborate

How a leader wields power determines their success. Influence is more effective than coercion. Good leaders design and manage a collaborative process of decision-making and conflict resolution to which all the stakeholders subscribe. In the absence of such a process, implementation of strategy falters or fails.

4. Adaptability is key to longevity

Helping organizations adapt to change is perhaps the single most important leadership competency. Big change is hard; constant change is harder still. To move to a new state, leaders must first unfreeze the system, move it to a new position, and then apply appropriate forces to stabilize it; the process of managing change is one that few have mastered.

5. Leaders are self-made

Today’s popular “everyman theory” – that all men and women can make themselves into leaders – is a dubious thesis. The reality is that although leadership theory and principles can be taught, effective leadership behavior must be learned. Individuals evolve into leaders as they experiment with alternative approaches to new challenges and slowly integrate the successful approaches into a personal leadership style and strategy.

Four research challenges

The author offers outlines the leadership research challenges in four areas – selection, training, followership, and metrics.

Five prescriptions for improving leadership quality

In sum, though there are still many components of leadership that we don’t understand, we can make five generalizations about the path to becoming an effective leader:

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  Integrity is an essential leadership virtue.

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  Leaders develop a personal style that balances managing with leading.

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  Leaders win when they commit to collaboration.

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  Leadership entails adroit adaptation.

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  Good leadership requires constant practice!

Using a value creation compass to discover “Blue Oceans”Norman T. Sheehan and Ganesh Vaidyanathan

Blue Ocean Strategy, developed by authors and researchers Chan Kim and Renée Mauborgne, states that corporations can earn greater profit by creating unique offerings for new markets than by competing with rivals in existing ones. In essence, Blue Ocean Strategy asks managers to change their perspective from that of field generals battling competitors head-to-head for market share or repeatedly seeking to grow by endless market segmentation. Instead they should see themselves as explorers, looking to discover new customer demand. Examples are Chrysler’s recasting the family station wagon as a mini-van, Cirque du Soleil’s redefinition of the circus and Build-A-Bear Workshop’s new approach to marketing stuffed animals. Companies that have successfully discovered Blue Oceans enjoy a number of first mover advantages including gaining economies of scale, building reputation and user loyalty, and the ability to fund the search for the next Blue Ocean.

Mature companies benefit most

Blue Ocean strategies are most appropriate for companies whose products are in the mature or decline phase of the product-life cycle. In that cycle, the company is suffering from declining revenues and decreasing customer loyalty. Organizations facing these pressures typically attempt to increase the bottom line by increasing marketing and branding efforts while cutting costs and trying to dodge price wars. These value renovations usually meet with little success as competitors are attempting the same moves in what is largely a zero sum game. Instead of focusing on besting rivals, firms should aim for value innovation by redefining their offerings to invent a new value proposition.

Discovering Blue Oceans

Applying value creation logics helps managers redefine their offerings. Based on extensive work with value creation logics, there are three types of value firms can offer customers:

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  Offer lower prices by employing industrial efficiency logic.

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  Enhance the offering’s fit with customer needs using a knowledge intensive logic.

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  Connect users using network services logic.

Which value creation logic?

Evaluating which offerings have the highest potential to execute a Blue Ocean strategy depends on a number of factors, including the profit potential and sustainability of their attributes. Furthermore, by combining parts of two or more of the value creation logics, managers may construct innovative bundles of attributes. They will have the highest potential to enjoy long-term profitability sailing in a Blue Ocean market of their own creation.

How to distinguish smart big moves from stupid onesPaul Strebel and Anne-Valérie Ohlsson

Corporate performance does not simply conform to the traditional S-curve of the product life-cycle model. This is because performance curves result from the interplay of many different external and internal growth drivers. The timing for when a company moves from one point on the curve to another (makes a “big move”) is not predictable. What can be known in advance are 1) what each big move entails, and 2) the requirements for success.

The five big moves

Our research indicates that there are five classic types of big move, each corresponding to a different position on the corporate performance curve:

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  Finding a new game.

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  Going for growth.

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  Getting into shape.

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  Relaunching growth.

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  Restoring profitability.

The critical six questions to ask

1. What is the key to success in your move?

A common error, especially in larger companies, is instigating too many strategic projects that drain resources away from the activities that are critical for the success of the big move. The critical success factors for each big move are cited.

2. Will the move exploit/enhance competitive advantage?

The aim is a clear and sustainable competitive advantage that cannot be easily copied. Therefore it is essential to cautiously not underrate the adaptability of competitors.

3. How big is the value creating opportunity?

Before making the big move, smaller bets will likely be needed to test the market potential.

4. Will the result be a better-balanced business model?

Success requires that the “what, who and how” are mutually reinforcing. If not, another move will be needed to restore the balance.

5. Will the move complement existing capabilities?

The amount of experience with the new needed capabilities, will dictate the chances of success or failure. Most big moves require smaller moves to develop the experience needed to close the capability gap.

6. Do you have the right implementation process and leadership?

Choosing the right approach depends on internal forces: bottom-up process that creates commitment versus a top-down process that a breaks through obstacles.

Ego traps of each big move

Making a big move requires leadership ambition and self-confidence, but too much of either means that managers are likely to overestimate their abilities and underestimate the challenges involved. Pointed checks and balances are required to off-set hubris. Two are cited.

Leading the transformation to co-creation of valueVenkat Ramaswamy

Leading businesses are learning how to use the engagement experiences of individuals and communities as the new basis of their value creation for customers. To initiate and implement this co-creation model, especially in established organizations, requires management to adopt a new mindset. For example, for a consumer product company such as P&G, value has traditionally been a function of their products, because those are typically seen as the endpoint of the activity (value) chain. However, in the co-creation paradigm, value is a function of experiences other than the product itself, such as web platforms and environments for consumer interactions with the product and with a community of other users. Intuit’s www.intuitlabs.com is another good illustration; there, Intuit’s internal engineers get a fast, direct connection to customers, and the community of customers connects to the “makers” of Intuits offerings.

Migrating to be interaction-centric

Once leaders recognize the “interactions among individuals everywhere in the system” as the new locus of value creation, it stands to reason that organizations must be designed to function around them. The challenge is that organizations have been designed around their internal activities, which is where value was thought to lie. Changing this requires beginning internally:

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  All co-creative management processes must be enabled and supported by interaction-centric capabilities.

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  The company establishes organizational linkages between employee/internal co-creation, customer/community co-creation and partner/network co-creation. Three business examples (HCL, P&G and Intuit companies) are presented.

The migration towards the co-creation model may–in truth–happen by “muddling through,” by “evolutionary experimentation,” by “rapidly learning and de-risking,” and by “navigating with foresight through the fog of uncertainty,” all based on some form of “inside-out employee co-creation” that links with co-creation externally.

Leading the co-creative organization

Top management’s role is critical in developing the capacity to co-create value, reinforcing the co-creative mindset and skill set of managers, fostering internal collaboration, and supporting and nurturing co-creation initiatives inside the organization. However, becoming a co-creative organization is impossible without the active involvement of:

1. 1.

   managers at all levels; and

2. 2.

   every employee who interacts with customers – from the call center operator to the service mechanic, from the sales representative to the logistics manager, from the software engineer to the product developer.

Co-creation has the power to energize the whole organization in support of the customer.

Exploring and learning from the future: five steps for avoiding strategic surprisesDoug Randall

The reason most organizations get blindsided by market transformations is not that their planning methods are bad. The problem is that they undertake strategic planning processes – like scenario development – without seeing them as a unique opportunity for learning about and exploring multiple futures.

Exploring multiple possible ways the future could unfold gives decision-makers the ability to look in the right place for game-changing events, to rehearse the appropriate responses and to systematically track indicators of change.

Five mindsets for managing uncertainty

Use five discrete steps to make scenario planning more effective. In the process, each step should be undertaken with a distinct mindset; and it is important to take these steps one at a time and in order, rather than skipping right away to decision-making.

1. 1.

   Action: Create scenarios – Mindset: unleash your imagination.

2. 2.

   Action: Determine required capabilities for each scenario – Mindset: give your creativity free rein and objectivity.

3. 3.

   Action: Assess current capabilities – Mindset: be painfully realistic.

4. 4.

   Action: Identify gaps – Mindset: provide honest analysis.

5. 5.

   Action: Consider options and make choices – Mindset: decision-making. What would be the risk if a scenario happened and we didn’t have this capability? And what would be the risk if a scenario didn’t happen and we did have it?

Managerial principles to enhance the process

1. 1.

   Embrace multiple scenarios rather than early focus on a favored one.

2. 2.

   Challenge the official future, or the conventional expectation, with rigorous fact-finding.

3. 3.

   Incorporate diverse perspectives.

4. 4.

   Capture the imagination so as to inspire leaders to prepare for real-life implications of the scenarios.

The benefits of a systematic, disciplined approach

Anticipating the future isn’t just about avoiding strategic surprise or minimizing the downside risk. There’s also a huge upside: You can participate in creating the future that you want by making sense of how the world may play out. Understanding your choices can be an empowering process.

When planners follow a process that systematically cuts through the barriers to effective group learning and decision-making, and combine that process with principles that give discipline and robustness to the entire endeavor, the future, and the company’s place in it, comes into a much sharper focus.

Stop improvising change management!Hans Henrik Jørgensen, Lawrence Owen and Andreas Neus

No longer will companies have the luxury of expecting day-to-day operations to fall into a predictable pattern that is interrupted only occasionally by short bursts of change. The new normal is continuous change. But, a major survey finds that most CEOs consider themselves and their organizations to be executing change poorly. In contrast, there are a few out-performers (top 20 percent) who are the change masters and do excel at delivering and benefiting from meaningful change in their companies. How?

Key barriers to change

Respondents identified several of the key barriers to change: changing the mindsets and attitudes (58 percent), corporate culture (49 percent) and underestimating project complexity (35 percent). Project professionals – who typically request more time, more people and more money – reported that these soft challenges are actually more problematic than shortage of resources! The root causes: 92 percent named top management sponsorship as the most important factor for successful change, followed by employee involvement (72 percent), honest and timely communication (70 percent), and corporate culture that motivates and promotes change (65 percent).

Turning insights into actions

Early awareness and actions are critical to address the top organizational challenges inherent in change projects: mindsets, attitudes, culture and complexity. Change masters address them early, plan carefully and execute rigorously. Some practical steps include:

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  Learning from history.

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  Make realistic assessments.

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  Plan and adjust.

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  Take the long view.

Making better use of methods

Putting solid methods into practice begins with allocating resources to enact a change method that is aligned with the organization’s project management approach. Then it must be used consistently throughout the organization. Developing a standard change methodology should include these practical steps:

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  Integration.

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  Focus on the prize.

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  Keep the method consistent.

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  Teach future leaders the method.

Key survey finding

Although many practical insights – about closing the “change gap” – were identified, the real message is that companies can no longer justify or afford an improvised approach to change management. Change management is at a turning point: from an art to a professional discussion; from improvisation to a richer, more systematic approach, based on clear empirical perspectives on what works and what does not.

Catherine GorrellPresident of Formac, Inc. a Dallas-based strategy consulting organization (mcgorrell@sbcglobal.net) and a contributing editor of Strategy & Leadership.