Eyeforpharma interview “Taking the entrepreneurial approach”

Read this insightful “Taking the entrepreneurial approach” interview conducted by Eyeforpharma on the impact of hierarchy and how executive mindset inhibits adapting to the rapidly changing commercial landscape.  It outlines how “intrapreneurs” and internal “angel investors” can get large, mature organizations moving again!

Read Intrapreneuring Case Study “Leading Innovation” by Ivey Business School!

The prestigious Ivey Business School of the Western University in Ontario, Canada, published an insightful new teaching case study on intrapreneuring and corporate innovation titled “Boehringer Ingelheim: Leading Innovation” in which the case writers, Professor J. Robert Mitchell, Ph.D., and Ramasastry Chandrasekhar, follow the footsteps of the newly appointed innovation director.

Meant to raise questions and serving as a learning opportunity for graduate students in academic program around the globe, this case study lifts the corporate curtain a bit to show how innovation through intrapreneuring really happens and decision points along the way.

Outline (by Ivey Publishing)

The newly appointed director of Innovation Management & Strategy at Boehringer Ingelheim, a German-based multinational pharmaceutical company, is finding his way forward in his firm’s new, first-of-its-kind role, which is central to the company’s growth rejuvenation strategy. His job has a threefold mandate: to build internal networks, to establish internal structures and to leverage internal ideas. His biggest challenge, however, may be transforming the organization’s DNA. The blockbuster business model that has characterized the company for decades is no longer appropriate. Instead, the firm needs to develop healthcare products available to end users over the counter. This shift in strategy requires innovative changes in distribution, delivery and customer focus. To accomplish this goal, he needs to institutionalize innovation so that it becomes sustainable. But in doing so, he must also identify the metrics for assessing progress. The case provides an opportunity for students to step into the shoes of an innovation leader, to develop an innovation roadmap for the organization in the face of uncertainty and to understand how to engage in innovation leadership at various levels of a global enterprise.

Learning Objective

This case has two key objectives. First, this case provides students an opportunity to grapple with the difficult decisions associated with innovation in an uncertain environment. Second, this case highlights that anyone has the ability to cultivate an entrepreneurial mindset and to lead innovation. The case divides the attributes of an innovation leader into five components: observing, questioning, experimenting, networking and associating. It shows the real-life experiences of a manager doing seemingly routine activities, who evolved into a leader who transformed the DNA of a global enterprise. The case also provides a template of the tasks, responsibilities and value-added changes as an individual moves progressively within an enterprise from an operations manager to a senior manager to an innovation leader. This case can be used either toward the beginning or toward the end of any course that addresses innovation and creative thinking in a large organization. At the beginning of a course, it illustrates the challenges of acting in the face of uncertainty in a large organization. At the end of a course, the case provides an opportunity for students to apply what they have learned about innovation, entrepreneurial thinking and innovation leadership.

Is Disruptive Innovation a Myth?

When we talk about disruptive innovation, we can easily agree that going from the days of dim candle light and sooty oil lamps to electric light was one of these breakthrough innovations, right?  Its icon, the lightbulb serves as our symbol for a great idea today.

Lightbulb idea (www.istockphoto.com)
(source: http://www.istockphoto.com)

Who invented the lightbulb?

When you ask around “who invented the lightbulb?” the answer “Thomas Edison” first comes to mind – and the answer is wrong!  Truth is that we can give credit closer to 20(!) inventors of the lightbulb! – How so?

Thomas Edison patented the first practical and commercially viable incandescent lightbulb in 1878 and a revised design in 1879.  In addition, he  offered the first efficient electricity supply system for households and businesses, which laid the foundation and cleared the path for mass-producing light bulbs in 1880.  His design was an evolution from previous, inferior designs and enabled by improved technology.

Edison's Lightbulb (source: www.unmuseum.org)
Edison’s Lightbulb (source: http://www.unmuseum.org)

 

Sitting in the dark without Edison?

No worries, we would not stay sitting in the dark.  It appears safe to say that even if Thomas Edison was never born, the practical incandescent lightbulb would have been developed around the same time – by someone else.

Looking back in history, Humphrey Davy invented electric light in 1802; more than 75 years before Edison.  His “arc light” was unsuitable for mainstream application though it found specialty uses even today. Many more designs for incandescent light and lightbulbs were developed by several inventors, but neither were they practical nor suitable beyond demonstration stage. Prominently, Joseph W. Swan built a working prototype of a “light bulb” in 1850 – well before Edison.

Entrepreneurial Competition

Edison had access to improved technology such as a better vacuum pump for his breakthrough design. This technology was not available to previous inventors.  Edison also developed an efficient and economical way to distribute electricity when earlier designs drained batteries quickly.  (A nice example, by the way, on how a product can go a long way when bundled with a complementing service.)

On the flip-side, Edison knew of his limitation too.  He made carbonized Japanese bamboo glow as filament between two electrodes knowing that carbonized Tungsten was the superior material.  However, the technology was not available at the time to produce a thin Tungsten thread.  We had to wait for William D. Coolidge to produce the Tungsten filament for General Electric in 1910, which is still the preferred material to illuminate our modern incandescent lightbulbs today.

This situation is typical and comparable to many big ideas that entrepreneurs work on today.  There is much competition among entrepreneurs, so every good idea usually has a handful of teams working on it independently and head-to-head at the same time.  Thus, it is highly likely that, if not Edison, another inventor would have come up with the lightbulb design we are so familiar with today.

R&D as a Legacy

Perhaps, the even more impactful and lasting heritage of Thomas Edison are not his inventions, useful as they are.  His products such as the lightbulb, phonograph, quadruplex telegraph, mimeograph, etc., have been replaced over time by more advanced technology.

Nonetheless, Edison has changed the way we discover concertedly today. Until his time, inventors matched the stereotypical image of a lonely genius experimenting and inventing in their lair burning the midnight oil over some ambitious idea.  Edison established the first research and development (R&D) organization in his famous Menlo Park lab, where a large number of researchers worked together in an orchestrated way to find solutions to specific problems coordinated strategically and systematically concerted.  Edison has industrialized research!

Until today every research-driven company or organization worldwide follows in Edison’s footsteps!  What an impressive legacy!

Summary

Disruptive innovations tend to have their origin in incremental steps and competition among inventors. First working individually and now increasingly in teams or even distributed R&D organizations across country borders.
A key success factor here is building trust and incentives within the team in order for all individual contributors to share information and findings freely.

The broader, cross-functional approach to research helps to identify ideas and technologies from other disciplines that can serve as stepping stones.  Edison used a better vacuum pump, which made his design possible.  Later, the capability to manufacture a thin Tungsten wire allowed General Electric to take the lightbulb the next level.
As the saying goes, “innovation happens at the intersections of disciplines.”  The development of the lightbulb serves as a nice example proving it to hold true once again.  Thus, innovation benefits by drawing from advances in other disciplines.

So, is disruptive innovation a myth?

Back to our original question, the story of the lightbulb is a great example for a breakthrough innovation with vast ramifications that disrupted and shaped the we live and work around the globe.

It can, however, not be seen as just one big and isolated scientific step but rather a series of many little steps in combination insights from other disciplines including manufacturing, economics and marketing leading to broad adoption that changed the world.

Lightbulb evolution (source: www.thewirelessbanana.com)
Lightbulb evolution
(source: http://www.thewirelessbanana.com)

Only when it all comes together you have a disruptive innovation like Edison’s famous design.  And it was still not the end.  The journey continued to evolve with a Tungsten wire and later fluorescence, halogen and LED lights.

In this light, every disruption seems as yet another incremental step, doesn’t it?

Innovation drives Diversity&Inclusion 2.0

The traditional world of corporate Diversity and Inclusion (D&I) is being disrupted by a new take on D&I and combining it with innovation and talent management.  What some perceive as a threat to the D&I establishment may just be the next step of evolution that could invigorate and drive D&I to new heights.

Though not an entirely novel approach (see also How to create innovation culture with diversity!) the new thinking gains traction.  As this could play out in different ways and only time will tell what worked, here are my thought on where we are heading.

Struggles of the  Front Runner

Many traditional D&I programs, let’s call them “version 1.0” of D&I, struggle transitioning beyond a collection of affinity groups, tallying corporate demographics and competing for D&I awards to post on their webpage.  In these traditional D&I programs ‘diversity’ is often understood to be reflected by more or less visible differences among individuals at the workplace while ‘inclusion’ translates to supporting defined sub-populations of employees through, for example, establishing affinity groups.

The United States is seen as the front runner of the D&I movement.  D&I has been around in the U.S. corporate world for decades.  For historic and demographic reasons it hones in on removing obstacles for minorities at the workplace supported also by strict legislature and execution; exercising Affirmative Action, for example.

This legacy in the U.S. lends itself to an inside focus on organizations that became the backbone of the traditional D&I programs.  It comes down to the question ‘what can or should the organization do for specific groups of people’ defined by ethnicity, gender, age, sexual preference, faith, disability, war history and so on.  Apparently, it still is work in progress as, for example, Silicon Valley just recently got on the public radar, which stirred up the debate afresh along the lines of D&I 1.0; see Google releases breakdown on the diversity of its workforce.

Stuck in the ‘Diversity Trap’?

The inside focus and minority messaging of D&I 1.0, however, can be limiting when D&I erodes to a process of ‘doing things right’ by pushing for quotas, ‘checking boxes’ and inflating variations of terminology perceived as ‘politically correct’.  This can in fact be different from ‘doing the right thing’ for the company overall, its employees as well as the affinity groups and their constituency.   It should not surprise that Affinity groups can be (and often get) stigmatized and perceived as self-serving and self-centered social networks without significant and measurable business impact.

Under this paradigm these D&I 1.0 programs struggle to get serious attention, support and funding from executives beyond operating on a minor level to ‘keep the lights on’ more for public image purposes than business drive.  The fundamentals seem to get forgotten: in the end, a business exists to generate a profit, so less profitable activities are likely to be discontinued or divested.  It’s a symbiosis and to say it bluntly: without healthy business there is no D&I program and no affinity groups.  When this symbiosis get lopsided, D&I 1.0 gets stuck in the trap.

D&I 2.0

“Diversity” is catching on beyond the United States in Europe, for example, where many countries do not have share a highly heterogeneous demographic composition, for example.  Here, companies can start with a fresh approach jumping straight to D&I 2.0 – and many do!  It reminds me of developing countries installing their first phone system by skipping the landlines and starting right away with mobile phones.

The 2.0 internal focus corresponds to hiring workers that truly think differently and have different backgrounds and life experiences some of which overlaps with D&I 1.0 affinity roots.  In addition, there is also an external focus putting the staff to work with a clear business proposition and reaching even beyond the organization.  So here a candidate would be hired or employee promoted for their different thinking (2.0) rather than more visible differences (1.0).

While need remains for affinity groups to tend to their members needs within the organization, the “new” D&I 2.0 opens to shift focus to go beyond the organization.  It goes along the lines of a statement President John F. Kennedy became famous for and that I tweaked as follows: “Don’t ask what the COMPANY can do for you ask what you can do for the COMPANY AND ITS CUSTOMERS.

D&I 2.0 gears towards actively contributing and driving new business results in measurable ways for the better of the employees as well as the organization and its customers.  A visible indicator for D&I 2.0 affinity groups helping their constituency beyond company walls is affinity groups identifying and seizing business opportunities specific to their constituency.  They translate the opportunity and shepherd it trough the processes of the organization to bring it to fruition.  For example, affinity groups are uniquely positioned to extending and leveraging their reach to relating customer segments in order to identify ‘small elephant’ business opportunities; see How to grow innovation elephants in large organizations.

The D&I 2.0 approach demonstrates sustainable business value which is why D&I 2.0 sells much easier to executives. It makes a compelling business case that contributes to new business growth, the life blood of every company.

Challenging Transition

U.S. companies stuck in D&I 1.0 are hard pressed to keep up with the D&I 2.0 developments and overcome their inner struggle and resistance.  With decades of legacy, D&I 1.0 programs in many organizations lack the vision and ability to make a compelling business case, to develop a sound strategy as well as capability and skill to implement it effectively.  This is the requirement, however, to truly see eye-to-eye with senior executives and get their full support.  This can become a serious disadvantage in the markets relating to products and customers but also in attracting talent.

In the end, the saying holds true that “talent attracts talent” and all organizations compete over talent to compete and succeed.  Therefore, a D&I 2.0 program combines business focus and talent management while tying it back to the core of diversity and inclusion: Fostering diverse thinkers and leveling the playing field for all employees.  This requires a level playing field that offers the same opportunities to all employees, which is the real challenge.

How do you level the playing field effectively in a large organization?  How this will be implemented becomes the differentiating success factor for companies transitioning to D&I 2.0!

Here is a example 2.0-style for a level playing filed that has its roots in the D&I affinity group space yet opened up to include the entire workforce.  It empowers and actively engages employees while leveraging diversity, inclusion and talent management for innovative solutions with profitable business outcomes.  It may take a minute or two to see the connection between D&I, talent and disruptive innovation but it is at work right here in the School for Intrapreneurs: Lessons from a FORTUNE Global 500 company.

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Previous posts relating to innovation and employee affinity groups / employee resource groups (ERG) / business resource groups (BRG):

“Better before Worse” – are you dropping off the cliff?

Most change initiatives fail.  Statistics from MIT research suggest that for leaders managing change the ‘capability trap’ is the single major failure mode.  So, what is this trap, how is it set up and, more importantly, how to avoid it?

As a quick disclaimer, the charts and examples are schematic and simple to get my point across.  This is a blog, not a textbook.

Under pressure

New leaders get appointed to solve a business problem such as improving poor results of sorts.  So from the start the new guy or gal is under pressure to perform and succeed.  In politics the common public expectations are to see result or bold actions within the first 100 days – and business is not known for being less demanding.

Tough Choice

So, soon enough the new leader faces a tough decision. Which choice do you favor?

  1. “Worse before better” means doing “the right thing.” However, this approach may not deliver sustainable results fast and is a hard sell to impatient or less reasonable superiors.
  2. “Better before worse” is a less stellar route to reap short-term benefits and lessen the immediate pressure but it comes at a price:  knowing that the this choice is not sustainable and will cost more later down the road.
By the way, this is really not rocket-science but straight-forward logic yet many executives still get seduced by the low hanging fruit, namely “better before worse”… so stay with me for a moment to see what happens next.

“Better before Worse” 

It starts out easy: you cut cost all over the place and look like a hero immediately.  For example, you could reduce machine maintenance or cut the employee training budget.  Schematically it looks somewhat like this:

Cutting costs equals savings
Cutting costs equals savings

What happens is that not only your balance sheet looks better quickly, you also increase productivity short-term.  The machines keep running and people keep on working, so in the short-term you produce the same output with less input.

After short-term gains, productivity plummets
After short-term gains, productivity plummets

Productivity and the Capability Inertia

The problems arrive with a delay when ‘capability inertia’ starts kicking in.  So here is what happens:  You didn’t maintain the machines yet the machines keep working – for while. Then, they break really bad and it takes a lot more money to get them fixed than having them maintained.  It’s like not putting oil in your car’s engine and driving on – somewhere down the road the engine will die on you.  You will have to spend money to fix it and live with the downtime while fixing the machines.

With a delay, the organization's capabilities suffer and are very costly to regain later
With a delay, the organization’s capabilities suffer and regaining them later proves very costly

At that time you find yourself in deep water and all your previous savings go up in smoke together with what else you didn’t budget for.

On the people side with employee training, for example, the effect is quite similar but often less obvious: You save the money for keeping them up-to-date with new technology, skilled, etc. and saved short-term.  The real problem is your staff losing its professional capabilities to continue to perform on a high level in the face of competition or adapting to changing markets and environments.  External focus comes with a cost of doing business – that you just eliminated, thereby fostering group-think and internal focus.  Getting the crew back in shape later on takes effort and is expensive: not only will you have to train them but also they are unproductive during the training period.

Furthermore, shortsighted cost-cutting inhibits seizing business growth opportunities such as ‘small elephant’ projects (see also How to grow innovation elephants in large organizations), which can jeopardize the business foundation for the future.

With it comes the ‘leaky pipeline’ effect where valuable talent leaves.  It is the best people who leave first (see How to retain talent under the new workplace paradigm?) if they see sweeping cost savings affecting critical investments in the company’s future capabilities and not surgically cuts.  Talent does not wait it out on a sinking ship.  If you are unfamiliar with the horrendous costs of turnover, check with your Human Resources person to get a sense for your burn-rate!

Despite all of this, many managers still embrace “better before worse” as the scenario of choice and believe they are “doing it the right way”.

Rewards for all the Wrong Reasons?

Unfortunately, performance and compensation frameworks in mature organizations usually support this easier approach.  ‘Success’ is typically measured quarterly or yearly as a basis for bonuses, raises or promotions.  The typical incentive systems don’t take long-term sustainability into account enough (other than stock options for publicly traded companies, for example) to change behavior.

Instead, rewards keep getting handed out on a short-term basis of evaluation.  Research showed many times over that this approach simply doesn’t work for more challenging jobs of the 21st century.  Don’t believe it? – Check out Dan Pink’s famous 18 minute TED talk “The Puzzle of Motivation” relating to the candle problem and motivation research.

As a bottom line, if don’t plan to hang around to ride out the consequences of your choice (or even have a golden parachute ready), “better before worse” appears an attractive shortcut to short-term success.  Deep down, however, you know it was not the right thing to do.  Your staff, your successor, and sometimes the entire company will suffer and face the consequence when you are gone. – So what could you do instead?

“Worse before Better” 

There is an alternative choice: the stony road of “worse before better” by doing what is right.  For leaders accepting responsibility this may be the only choice.

Right from the starts is gets tough: you increase cost to invest where things need to change most, be it people or technology. For example, invest in getting the best people to do the job and train them as well as you can for the challenges to come and step out of their way.  Establish or overhaul technology, processes and managerial framework needed to deliver results reliably.

Invest in future capabilities
Invest in future capabilities first
This takes time and money, so as you would expect, productivity suffers at first but then, if the change is executed well, recovers and quickly exceeds the additional costs by far while you deliver outstanding results reliably.
It is important here not to address all problems at one time but to prioritize and tackle change in smaller steps.  Mind that change is a development process that doesn’t lend itself to shortcuts.
With a delay, productivity recovers sustainably
After dipping down at first, productivity grows sustainably
While this is clearly the more sustainable strategy the tough part is getting your stakeholders and superiors to buy in (especially if they are looking for short-term “better before worse” results) by setting realistic expectations.  After all, “worse before better” is a sustainable basis for a business model where “better before worse” is not.
You may also have to accept not receiving the short-term performance incentives for doing the right thing if your incentive system does not reward building capabilities.  However, there are other kinds of meaningful rewards to consider.  They range from feeling good about withstanding the temptation, doing good for the company and its employees, as well as possibly getting attention from more forward-thinking parties who may want to hire you in the future as a leader with guts and brains.

Balancing Risk of Innovation Project Portfolios

Risk of Disruption

Innovation projects are risky explorations.  Disruptive innovation projects even more so, and individual projects can be quite a gamble.  So, how can you limit the risk across your portfolio of innovation projects?  The goal is to increase the likelihood for the portfolio to succeed overall even if individual projects fail.

(Quick note for project management professionals: I am deliberately not differentiating terms like “portfolio” and “program” here.  My goal is to get the basic idea across.   More particular definitions don’t add value here.)

In mature organizations, incremental improvement can easily be and often is interpreted as ‘innovation’, which makes sense when optimizing a production environment, for example. Here, at the back-end of operations, big “elephant” projects tend to bind the organizations resources (How to grow innovation elephants in large organizations).  The innovation project portfolio I am referring to, in contrast, aims at the disruptive end: the “small elephant projects” with higher risk but the potential of extraordinarily high returns if they succeed.

Why to manage risk

In large organizations you hardly get a “carte blanche” to manage just highly risky projects.  With a corporate focus on predictable, short-term results there is too much concern of the portfolio easily becoming an unpredictable money pit.  You are likely to get shut down after playing around a while without demonstrating clear success in terms of return-of-investment.  Thus, you will need to come up with a strategy on how to compose your project portfolio to keep your stakeholders happy and your experimental playground open.

Risk Categories 

Managing risk across a project portfolio comes down to finding the right blend of high-risk/high-return projects and lower risk projects that come with less impressive potential for revenue or savings.  You also want to include a few projects that produce returns short-term to demonstrate you are making progress and reap some quick wins for impatient stakeholders while the longer-term projects need time to mature.

A common way to approach categorizing projects into into Core, Adjacent and Transformational based on their risk and return profiles:

  • Core projects are merely optimizations to improve the existing landscape of systems, processes, assets or products in existing markets and with existing customers.  These incremental improvements are the “safe bet” and “next small step” that, typically, comes with low risk, predictable outcomes but also limited returns.  They do not need high level sponsorship, are easy to predict and plan resources for, and so they are the favored playing field of mature, large organizations.  These can often be ‘large elephant’ projects seen as ‘necessary’ that the organization more easily buys into.
  • Adjacent projects come with more uncertainty and risks as they usually extend existing product lines into new markets.  Though not an entire novelty it is may be new territory for your company.  Sometime, ‘imitating’ a successful model in a different industry does the trick (read also: Imitators beat Innovators!).
    Adjacencies add to the existing business(es), which requires a higher level sponsorship (such as Vice President level) to move forward, to allocate resources and to accept the risk to fail.
  • Transformative projects are experimental and risky.  They create new markets and customers with bold, disruptive “break-through” products and new business model.  While the risk to fail is high, the returns could be huge when you succeed.  Highest level (C-level) sponsorship and support is crucial for this category not only to persist and get resources during the development phase but also for the mature organization to adopt and support it sustainably.

Finding the balance

When you manage a portfolio of disruptive (read: transformative) innovation projects, you should expect projects not to succeed most of the time.  Instead of calling it “failure,” see it as a learning opportunity.  As Thomas Edison put it so famously referring to his experiments leading to the invention of the light-bulb: “I have not failed. I’ve just found 10,000 ways that won’t work.”

The common rule for playing a safe portfolio is a 70-20-10 mix, i.e. 70% core, 20% adjacent and 10% transformative projects.  This way, many low-risk/low-return core projects keep the lights on while you play with few high-risk/high-return transformative projects.

Experiences

From my personal experience with the portfolio I manage, I leans towards accepting more risk, so you would expect and be comfortable with a lower success rate as a consequence but also higher returns.  To my own surprise, we completed 55% of our projects successfully and ended up discontinuing 26%.  Fortunately, also the average ROI from our “small elephant” projects is substantial and pays the bills for many years out.  Thus, for my portfolio, the 70-20-10 mix is too conservative.

As for how we select projects and fund projects, read also Angel Investing within the Company – Insights from an Internal Corporate Venture Capitalist and School for Intrapreneurs: Lessons from a FORTUNE Global 500 company.

Before re-balancing your portfolio in favor of a majority of risky transformative projects, however, make sure you have continued high-level sponsorship and alignment with strategy and organizational culture of your organization.  – If culture, strategy and sponsorship don’t align to support your innovation portfolio efforts, your risk increases for painful learning without sufficient business success.

> Interested in Project Management? – Don’t miss VASA’s historic project management lesson!

 

SOX for Snowden?

Quick Recap

Edward Snowden, a former member of the U.S. intelligence community, released classified government data to the public in 2013.  He faces prosecution under the U.S. Espionage Act, remains on the run from the U.S. government and ended up seeking asylum in Moscow, Russia.

The 1.3 million documents he released are the largest known security breach in U.S. history.  They also unveiled highly questionable if not outright illegal action by US intelligence agencies relating to widespread spying domestically and abroad.

Traitor or Patriot?

In the light of an exclusive interview with NBC News on May 28, 2014, the popular NBC “Today” show asked its viewers in a polarizing poll to decide for themselves whether Snowden was a “Traitor” or a “Patriot.”  The morning before the interview aired, 53% of viewers saw Snowden as a “traitor”. The morning after, 61% found him a “patriot.”  Though the responses do not necessarily reflect a representative sample of the U.S. population, let’s go with it for now, since an interesting majority swing took place in favor of Snowden’s action.

We are not going deeper into whether or not Snowden did the right thing or not.  His disclosures spurred and continue to fuel a worldwide discussion on where the boundaries are for covert operations and government surveillance programs.  It’s not a new question and comes down to the ancient question the Roman poet Juvenal famously raised:  “Quis custodiet ipsos custodes?” or “Who guards the guards?”

Apparently, the continued decisions of U.S. secret courts approving intelligence programs of the disputed nature did not resonate with the viewers.  If Snowden was tried under the U.S. Espionage Act, the public may never hear of Snowden again nor details of his prosecution with most certain conviction.  The covered surveillance programs may continue without meaningful oversight.

It makes Secretary John Kerry’s strong request sound weak and questionable for Snowden to face U.S. authorities and trust the legal system.  Continued messages from high-ranking politicians up to President Barack Obama himself depict Snowden as a “low-ranking analyst” and “high school drop-out.”  – Doesn’t this makes you wonder how such an acclaimed  ‘bum’ got access to such large amounts of sensitive government information in the first place and who else is granted ‘Top Secret” security clearance, which is shared by 1 million(!) Americans?

SOX for Government Employees and Contractors?

Countering illegal practices by companies let the U.S. Congress to pass the Sarbanes-Oxley Act (SOX) in 2002.  While SOX overhauls regulatory standards for record keeping practices, it -perhaps- became more known to the public for protecting employees of publicly traded companies from discrimination who report violations of regulations by the company.  Every major business now has a process in place to ensure SOX is enforced effectively.

However, SOX only covers publicly traded companies in order to protect shareholders from fraud.  What about the public sector, namely the government?  Shouldn’t there be a similar ruling that effectively protects government employees and contractors, such as Edward Snowden, when they witness and wish to report apparent illegal actions by government institutions?

Check and Balances? (source: en.wikipedia.com)
Where are the “Checks and Balances”?
(source: en.wikipedia.com)

Checks and Balances

Snowden claimed that he repeatedly approached his manager raising concerns and was told to shut up.  Certainly, national security interests must be protected and safeguarded by the clandestine functions of government.  But then, again, who guards the guards, when “national security” becomes an obscure blanket excuse without an effective system of checks and balances that the U.S. Constitution mandates and the United States are founded on?

The Snowden affair made painfully clear that the existing legal parameters for governmental “whistle blowers” are insufficient to non-existent.  How else would the public have found out about the abuse of governmental power?  Going public and risking prosecution, currently, appears to remain the only viable option to truly allow and push for effective checks and balances until legislation catches up with a SOX for future Snowdens in order to keep our democracy working for the people.

Meet me at HxRefactored 2014 in NYC on May 13-14, 2014

HxRefactored 2014 in NYC on May 13-14 at the New York Marriott at the Brooklyn Bridge.

HxRefactored is a revolutionary design and technology conference that will gather over 500 designers, developers and leaders in health for two days of thought provoking talks, workshops and discussions on how to improve the quality of the health experience. The conference fuses the technical and creative elements of Health 2.0’s Health:Refactored and Mad*Pow’s Healthcare Experience Design Conference.

School for Intrapreneurs: Lessons from a FORTUNE Global 500 company

The earlier post “How you become the next Steve Jobs!” relies on an innovation ecosystem of sorts that already exists in your organization – but what if there is none?

What if you find yourself in a place that struggles with Why mature organizations can’t innovate and Overcoming the Three Big Hurdles to Innovation in Large Organizations?

It is not easy and takes time turning an organization’s mindset from what is into what if.  It’s a great and rewarding achievement, though, if you can pull it off!

Building an Ecosystem

So, let’s continue there:  If you find yourself in a company which does not provide an environment that supports intrapreneuring, you may need to build an innovation ecosystem within a large organization.  Practically, you choose to become a midwife helping ideas of your colleagues getting a chance to come to life.  This enables other aspiring intrapreneurs to step up, unite and act together.

It’s a bold step and disruptive approach but necessary to induce ability to meaningful and fundamental “10x” change again to an organization (see also 10x vs 10% – Are you still ready for breakthrough innovation?) as part of an ambitious Innovation Strategy: Do you innovate or renovate?

Based on my personal experience, here are some key ingredients to succeed following words of Steve Jobs that “Creativity means connecting things.”

sustainable environment consists, at least, of

  • A safe-haven for employees to  experiment
  • perpetual pipeline  of ideas from all areas of the organization,
  • A  process to develop them without triggering the “organizational immune system” early on and
  • A  transition mechanism to feed these ideas back into the regular organization to become funded and implemented with strategic alignment to company goals
  • Preparing management how deal with intrapreneurs. You will need to build or teach
  • A set of relevant  intrapreneurial  skills for employees
  • A  supportive team  and for you to maintain
  • A  positive attitude that you will need to persist and push on.

The “School for Intrapreneurs” (SFI)

A very powerful approach and critical puzzle piece in the ecosystem is the School for Intrapreneurs.  We achieved to build this school successfully together with help from like-minded and supportive colleagues that I was fortunate to meet along my crooked intrapreneurial career path, if you want to call it that.  The underlying premise of the SFI is that innovation skills can be taught, as mentioned in  “How you become the next Steve Jobs!”  – So, we teach them in this program.

In the end, results count or in the words I adopted from Accenture’s advertisement:  “It is not how many ideas you have.  It’s how many you make happen.”

Program Focus

Building intrapreneurial skills systematically, however, is only part of the deal. The real value of the program for the participants lays in experiencing the obstacles an intrapreneur faces in an organization themselves: the rocky road of rejection trying to get an idea on its feet.

We prepare our fellow employees in a process where they form supportive teams to collaborate in order to develop their ideas together and experiment.  This includes ways to communicate with management in constructive and non-threatening ways on How Intrapreneurs avoid “No!”, for example.  It culminates in pitching ideas to experts and potential sponsors for funding, implementation and support.

Executive sponsorship ensures strategic alignment of ideas with company interests.  It also increases the chances dramatically for idea transitions into the established processes of the regular organization, i.e. the idea becoming a project to be implemented.  This is why special emphasis needs to be put on preparing management how to support and benefit from intrapreneurs; after all, there are risks involved with intrapreneuring for the individual (see also  The Rise of the Intrapreneur).

This SFI program design addresses How to grow innovation elephants in large organizations and deliver big results along the lines of 10x vs 10% – Are you still ready for breakthrough innovation?. In fact, the return of the SFI program so far is a 1:10x return-of-investment (ROI), so we are right on 10x.

Building the School for Intrapreneurs together: Stephan Klaschka (left) and Gifford Pinchot III
Building the School for Intrapreneurs together: Stephan Klaschka (left) and Gifford Pinchot III

The three courses build upon each other; we named them DOORWAY, PATHWAY and JOURNEY:

  • DOORWAY is a two-hour awareness course that outlines how innovation happens in large organizations, what typical obstacles are, what is an intrapreneur and already hints towards what is offered in the succeeding courses, PATHWAY and JOURNEY.
  • PATHWAY is in its core an incubator and accelerator over a 12 weeks with a mix of training and group work.  Research suggests that approx. 5% of the workforce have the intrapreneurial spirit, which is consistent with our school’s enrollment numbers.  At the end of the course, the teams pitch their developed ideas to a panel of experts and managers representing different business functions for in-depth feedback and advice how to improve the ideas. – Think “Shark Tank” but without bloody teeth.  Teams with the most promising ideas then pitch to high level executives for sponsorship and support to turn their idea into an implementation project that enters the regular development processes in the organization.  Receiving executive sponsorship is another level of validation that confirms strategy alignment with company interests.
  • JOURNEY is a six-month course designed to accompany the team implementing their ideas by providing a mix of skill-building and team-customized coaching.  – Why is this needed and important?
    Even with executive sponsorship the project has neither been budgeted for nor are other resources planned and available for its implementation; so, the project still disrupts the establishment and may trigger resistance.

Shaping company culture

We also ask JOURNEY participants to connect with the next group going through the PATHWAY course to network, share their experiences and help guiding the “next generation” of graduates.  The goal is to achieve sustainability of the program by growing the number of like-minded, experienced and connected employees over time.

Over time, an increasing number of graduates keep the perpetual pipeline of fresh ideas open.  They also grow to become a powerful, far-reaching and growing network of active change-makers across all parts of the organization as they connect and pass on their knowledge to the next class going through the School for Intrapreneurs.

These are the self-identified leaders of change that share a common innovation terminology, skill-set and experience while they help shaping the organizational culture and mindset on the way towards a sustainable environment, an innovation ecosystem.

Lessons from the School for Intrapreneurs

My key learning from this challenge in a nutshell is as follows:

  • The personal journey and ‘intrapreneurial experience’ is of utmost importance for the School’s participants – a theoretical training alone does not do the trick.  It has to be hands-on and all the way to implementation.
  • This is why the participants value the safe space to operate and experiment in.
  • Typically, talent in large organizations is selected top-down by management.  In contrast, talent self-identifies bottom-up and based on –intrapreneurial- merits though the School for Intrapreneurs.
  • Alumni are hardened by their experience and become part of a growing community of capable and engaged change agents.
  • Successful pitches to executives validate the alignment with company strategy – not only for the individual idea but also broader for the entire program of the School for Intrapreneurs.
  • The program allows gives more disruptive, risky and outside-the-box ideas a chance that otherwise would not have been brought to executive attention, or so our executive sponsors said.
  • The School for Intrapreneurs is part of a larger framework to change company culture over time by cultivating discovery and 10x innovation capabilities once again.

 

Related Links:

Join me at the Customer Experience Summit 2014 in Princeton/NJ on March 6, 2014

Pharma Customer Experience Summit 2014 at The Nassau Inn Hotel, 10 Palmer Square, Princeton, NJ on March 6, 2014

Pharma Customer Experience Summit 2014 at The Nassau Inn Hotel, 10 Palmer Square, Princeton, NJ on March 6, 2014

Join me for the SAPA-CT Milestone Celebration Meeting at Yale University on Feb 22

“Bridging between US and China in Current Pharmaceutical World – Strategies, Innovation and Implementation”

Join me at 11:15am at the Sino-American Pharmaceutical Professionals Association‘s new Connecticut Chapter (SAPA-CT) Milestone Celebration Meeting held at Yale University (N107 The Anlyan Center, 300 Cedar St, New Haven, CT, 06511), 9:00 AM to 5:00 PM, Feb 22, 2014.

SAPA-CT Milestone Celebration Meeting, "Bridging between US and China in Current Pharmaceutical World - Strategies, Innovation and Implementation"
SAPA-CT, Boehringer Ingelheim, BMS, and Association of Chinese Students and Scholars at Yale (ACSSY) will co-sponsor this event

How open offices kill productivity – and how to make it work

Open offices are not a new invention.  They have been around for a long time as hallmark of start-up companies that simply cannot afford glitzy corporate skyscrapers with plush corner offices (yet). Open offices emerged less by deliberate design than driven by need.

Start-ups typically run on a vibrant culture of passionate people wanting to spend time together to create something great, everyone works together closely in the tight space available.  Information flows fast and freely.  Recreational elements and other services offered remove the need or motivation to leave.  Employees hang out to work maximum hours as a team in a fun, inspiring and supportive environment.  Productivity is up and work gets done.

Start-up open office (source: theepochtimes.com)
Start-up open office (source: theepochtimes.com)

Growing pains

Large companies are attracted by this powerful value-proposition for open offices – or so it seems.  Mature organizations struggle with their increasing size that, over time, entails increasing specialization and complexity with a stifling system of red tape and inertia.

While jobs are large in small companies and come with broad scope and high accountability, which are diluted when jobs narrow in large companies by increased specialization over time.  Functional silos emerge and sub-optimize often to the detriment of other business functions.

This siloed corporate world only contributes to a climate that works against diverse collaboration and inhibits breakthrough innovations; and business results degrade from 10x to 10%.  (See also 10x vs 10% – Are you still ready for breakthrough innovation?)

Cutting costs is a questionable driver

The reasons for large organizations moving to an open floor plan are often glorified and communicated as a measure to increase creativity and productivity in an appealing modern working environment: employees connect casually and spontaneously at the ‘water cooler’ to network and innovate together again.

The true and paramount driver for tearing down the office walls, however, is often more sobering: it comes down to simply cutting costs by reducing the expensive office footprint.  Fitting more people into less space comes at a price for the workforce.

Cost savings only get you so far.  It’s an easy approach but not a sustainable business model for productivity.  What do you really save if productivity goes down?  How sustainable is your business then?  Sacrificing productivity for cost savings is a narrow-minded approach lacking long-term perspective and, therefore, not worth it.  That is unless your goal is to achieve short-term gains without consideration for the future of the business, which is a disqualifying business perspective altogether.

The popular phenomenon in large companies is a move for the wrong reasons (the better driver being increased productivity) and entails serious consequences that jeopardize the company’s productivity, workforce satisfaction, and even the bottom line.

Design constraints

It gets even worse when the new environment is retrofitted space with structural limitations, founded in the legacy of existing buildings and investments, and if no flanking measures taken to enable effective collaboration needs.

A design from scratch has the potential support the collaboration needs and flow of the workforce best.  This is an advantage start-ups have when they can shape and rearrange loft space to their immediate needs without limitations carried forward.

Size matters

Controlling cost is necessary and reducing office footprint is an effective business measure.  Aetna, for example, has nearly half of their 35,000 employees working from home already, which saves ~15% to 25% on real estate costs – that’s about $80 million saving per year.

Do not get me wrong, there are undeniable benefits to open office spaces – when applied for the right reasons in the right context, with right priorities and proper execution.  The point I am making is that cost reduction alone is not a worthwhile driver if it sacrifices productivity.  There comes a point where a hard decision has to be made and if you prioritize cost savings, you sacrifice productivity and other aspects automatically.

Open Office Plan (source: Foundation 7)
Open Office Plan (source: Foundation 7)

What does it take?

Unfortunately, the start-up company model with open office space and its agile and enthusiastic does not scale for large organizations.  The corporate one-size-fits-all approach does not do the trick for several reasons.

Let us look at aspects that make the open office work:

  1. Tear down cost center walls
  2. Make presence easy
  3. Level the (remote) playing field
  4. Embrace work style differences

1.  Tear down cost center walls

Proximity favors who needs to work together closely.  In a start-up company, staff is few and jobs are big.  This ratio flips in large organizations where many employees work in highly specialized functions.  With increasing specialization comes complexity that leads to functional silos.  The employees become separated by every rising departmental and organizational walls.

In large organizations, work space is typically paid for by department and charged to cost centers.  Staff gets corralled this way and kept separated in functional clusters that are easier to administer but counteract productivity, streamlined workflow, and diverse collaboration cross-functionally.  After all, it wouldn’t make sense to have any department operating completely independent from the rest of the organization.

These artificial and structural boundaries make no sense (unless you are an accountant, perhaps).  Therefore, trade the urge for financial micro-management for what makes the workforce more productive, as this is the most important aspect of collaboration and, ultimately, the bottom line.

2.  Make presence easy

Make it easy for your employees to go the extra mile.  Now here is where large companies can learn from how start-ups: offer incentives for employees to hang out and remove reasons for them to leave to maximize time to work and collaborate.

The list seems endless: free beverages and food, services such as laundry, hair dresser, spa or receiving deliveries, exercise equipment, healthy snacks, child and pet care, and other useful perks that cost-cutting companies often omit.

Sounds like a waste to many large companies.  But is it really?  You get more out of your employees’ carefree working along longer than by pinching the free coffee and have them leave during the day or early to run their necessary errands.

3.  Level the (remote) playing field

It may sound counter-intuitive but when cost saving rules, the open office space often only works when not all employees are around at the same time.  If all employees showed up on the same day there may not be enough room and resources (seating, access to power and networks, etc.) to fit and accommodate everyone, since the physical office footprint is now too small ‑ a Catch-22.

When only a subset of employees can be present in the office at any given workday, the rest has to work remotely forming an –at least- virtual organization.  Consequently, the random personal connection “at the water cooler” becomes less likely as does spontaneous cooperation by “pulling together a team” since your pool of physically available staff is limited.

Management needs to take deliberate and determined measures to level the playing field for remote workers by giving them the same opportunities as colleagues present in the office.  Why?  “Out of sight, out of mind” is a powerful and human nature.  If not managed effectively, it only becomes worse when remote staff easily is continuously overlooked when it comes to projects staffing, development opportunities and promotions, for example. The resulting inequities undermine workforce cohesion, effectiveness, and talent development.

Read more on virtual teams at Why virtual teams fail, and how to make them work (part 1) and How to make virtual teams work! (part 2).

4.  Embrace work style differences

There are too many individual work styles to list them all – for example, just think of

FastCompany recently came up with a list of reasons by workers arguing against open offices, which is a good indicator where the pain-points are.  Representative or not, the list tends to resonate with people that experienced first-hand working in a corporate open office environment.

The key complaints are about

  • Distraction – hard to concentrate with surrounding noises of all sort; loud speaking coworkers; interruptions of coworkers stopping by at any given time
  • Discomfort – no privacy; by-passers looking at your screen and documents; food, bodily and other odors; white-noise generators blamed for headaches; spreading contagious illnesses; having to talk to people when you don’t feel like it; “hiding” by wearing earphones
  • Workflow obstacles – competing over quiet spaces, conference rooms or other rare resources; no place to store personal items or personalize the space.

In summary

One size does not fit all and it does not do the trick for large companies, in particular.  So if you have to downsize office space or accommodate more employees, take a sound and sustainable approach by making productivity the driving priority and not cost.

After all, we are human beings that work best when we have control over our work environment and schedule.  When we perform at our best, it is also for the better of the company as a whole.  Flexibility, empowerment and inclusion go a long way – otherwise, mind FastCompany’s warning: “What was supposed to be the ultimate space for collaboration and office culture was having the opposite effect” – also for the bottom line.

Join me in Boston for the Corporate Venturing in the Life Sciences conference this week!

Join me at the Corporate Venturing in the Life Sciences conference this week!
Join me in Boston this week: Corporate Venturing in the Life Sciences conference

Top 10 Innovation posts

Here are my Top 10 posts on innovation:

Can strategic innovation rely on creative chaos?  To make a long story short, the answer is: No!  Read what it takes to consistently innovate and give you a very cool example too.

2.  How to become the strategic innovation leader? (part 2 of 3)
What is an innovation leader? Is this role similar to an innovator? (The answer is ‘no’.) – Recognize the three key roles in innovation, how to find an approach and avoid critical pitfalls.

Not everything new is an innovation and some is more renovation than in innovation.  Here is a framework that helps to distinguish an innovator from a renovator and works for entrepreneurs and intrapreneurs alike.  It is important to understand which role to play and when; it all depends on what you need to achieve and what is critical to reach your goal!
Creating value through new products is not enough. Capturing the value requires equal attention on the innovation process. Focusing on creativity and neglecting execution along the value chain is a costly mistake.

5.  Why too much trust hurts innovation
Most managers understand that trust is a key ingredient to effective collaboration and innovation.  Yet, few actively try to cultivate and nourish trust in their own organization to achieve the right mix between trust and constructive tension.

6.  Imitators beat Innovators!
You thought Facebook was the original? Or YouTube? Or LinkedIn? – Get ready for your wake-up call! Break-through innovations are over-rated! Imitators are successful by combining someone else’s innovation with the imitator’s advantage and by doing so they can become innovators themselves!

7.  Boost ‘Group Intelligence’ for better decisions!
Group intelligence can be increased and lead to better decision-making – or why not to rely on a group of geniuses!  New research breaks the ground to understand collaborative intelligence and the – but how to apply it to the workplace?

8.  Collective Intelligence: The Genomics of Crowds
Group intelligence beats individual brilliance – and businesses are willing to pay for the crowd’s wisdom in the social sphere.  The MIT’s ‘genetic’ model allows  combining social ‘genes’ to harness the collective intelligence of crowd wisdom successfully and sustainably; areas of application are scientific research or business/employee resource groups, for example.

9.  Can movies innovate with only seven stories to tell?
How innovative are movies really – if at all?  While AVATAR and THE ARTIST appear polar opposites, they share a similar story; so where is the innovation?

10.  ‘Complexity’ is the 2015 challenge! – Are leaders prepared for ‘glocal’?
What is the key challenge in the coming years and how to prepare future leaders.

Don’t miss my Top 10 posts for Intrapreneurs!

VASA’s historic project management lesson

Vasa’s historic project management lesson
Building a battleship is a huge project today as it was hundreds of years ago.  Yet, as project managers, do we learn from the past or stumble into the same pitfalls over again? ‑ Learning from the ‘Vasa’ project disaster, the grandest battleship of its time sank just minutes into her maiden voyage!

Sweden’s Great Power period

In the 17th century, Sweden was at the top of its game.  It emerged as a leading power in Europe during the so-called ‘Great Power period’ (1561–1721) characterized by a constant state of war with its neighbors in the Baltic Sea.

King Gustav Adolphus of Sweden
King Gustav Adolphus of Sweden

When King Gustavus Adolphus (1611-1632) inherited the Swedish throne, he was out to change naval warfare entirely earning him the later title “father of modern warfare” for revolutionizing naval tactics.

In those days, boarding was common practice, i.e. pulling side by side to an enemy ship, enter it, and fight man-to-man to take over the ship.  The King found these tactics outdated.  It was time for a new era of large battleships, which demand the enemy’s respect, serving as firing platforms for mighty cannons to fight from a distance, and project Sweden’s power even beyond the Baltic Sea.  The firepower of its guns would now decide the outcome of the battle at sea and bring victory.  Thus, the ambitious Gustavus Adolphus needed a new class of heavy ‘ships-of-the-line’ to exchange devastating salvos from afar.

Setting sails to a new era!

After severe setbacks in the war with Poland, Sweden’s naval superiority in the Baltic Sea was in jeopardy.  In 1625, the King commissioned the Royal War Ship ‘Vasa’ as the first and grandest of four ships of the new era.  The Vasa was planned with an overall length of 69m (226ft), 1,210 tons displacement, 10 sails, dozens of cannons and the capacity to hold 450 men (150 sailors and 300 soldiers).  It was a bold statement:  the Vasa was the most powerful battleship of its time, no expenses spared!

Vasa model
Vasa model

Spoiler alert, the unthinkable happened:  Three years later, on 10 August 1628, the Vasa sank just minutes and a mile into her maiden voyage with over 100 men aboard; over 50 sailors perished.

Putting on the Project Manager’s hat

From a project management perspective, building the Vasa was the most expensive project ever undertaken by Sweden and it was a total loss.  – What had gone wrong?

Humankind throughout history has undertaken large and innovative construction projects many times and with success.  It is safe to assume that the people in charge applied the best project management practices known at the time to increase the likelihood of project success, i.e. delivering a product to the sponsor’s satisfaction.

Naturally, it is easy for us standing on the ‘hill of the presence’ and look back down into the ‘valley of the past’.  Today we have access to sophisticated and detailed procedures for project management, which are generic and serve as a guide to run projects of any nature and size successfully.  For example, the Project Management Institute’s Body of Knowledge,  PMI’s PMBOK is such a general and proven framework that everyone can learn and follow.

Starting a project

In my experience, it is important for a project manager to have strong sponsorship commitment and ability to control the project scope.

The king himself was the principal stakeholder and sole sponsor of the projects to construct the Vasa and the other three ships to follow with all power and wealth concentrated in the sovereign’s hands.  What a great prerequisite to getting the project moving!  On the downside, however, this powerful sponsor can also take more influence over the project than is good for the end product, the Vasa.

Therefore, managing the scope is crucial.  It includes clarifying the project scope up front and controlling possible changes to the scope throughout the project.  Controlling scope does not mean that no changes are possible after the project starts – this would be unrealistic.  It means that foreseeable risks and impact on resources, time, quality and other factors need to be evaluated and made transparent to the stakeholders for their approval.  It means avoiding ‘small’ changes finding their way into the scope without evaluating risks and adjusting for impact. This communication is a major aspect of the project manager’s job.

As a rule, changes late in the project will increase the cost dramatically, so avoiding ‘scope creep’, i.e. uncontrolled changes late in the game, is crucial.

Stakeholder influence and Cost relation
Stakeholder influence and Cost relation

Scaling up

In January 1625, King Gustavus Adolphus commissioned four new ships over the next years in two sizes, the longest keel length measuring 41m (135ft) and shorter one still an impressive 33m (108ft) keel.  He entrusted Admiral Fleming to oversee this program, as the King himself chose to tend personally to the ongoing wars abroad instead.  Hybertsson, a competent and experienced shipbuilder was put in charge to manage the Vasa project as the first ship to be built.

The wood for Vasa had already been cut to size when a devastating storm destroyed 10 Swedish ships.  Facing his losses and struggling to fill the gap, the King changed his order:  He now wanted the smaller ships first to replenish his fleet faster.

This way the Vasa started out to as a smaller ship with a 33m/108ft keel in 1625 but -as we will see- became as a scaled-up vessel again with a long 41m/135ft keel over the course of the project.  This was just the first of the King’s frequent and profound design changes during the construction phase and after the keel for the Vasa had been laid.  Like the foundation for a house, the keel is a most critical part of a ship’s design; it sets and limits many following structural and other technical characteristics.

Building up to the tipping point

Time pressure from the King and a constant stream of significant alterations continued.  Hybertsson did not seem to find time to get the plans for the ship adjusted and re-drawn every time anymore.  With the ship’s dimension increasing again over time and adding innovative specifications, Hybertsson left his known terrain and ventured into the unknown of ship-building.  Faltering under time pressure, the layout for a smaller ship was simply scaled up to become a larger frame to house the newly specifications. Changes hardly found their way into documentation anymore.

The changes affected not only the length but also the width of the ship.  It had to be widened to accommodate more superstructure, another innovation that shifted the ship’s critical center of gravity higher making it less stable at sea.  Given the original shorter keel layout, there was simply not enough space to add ballast to give the ship the stability it needed to counterbalance its increasingly heavy top.

Bringing in heavy artillery

The situation got worse.  Sweden struggled to win the upper hand in the ongoing war when news arrived that rivaling Denmark planned a large battleship too.  The King swiftly ordered adding a second gun deck to triple the armament from initially 24 to now 64 heavy guns plus some smaller guns!  The center of gravity rose even higher with the second gun deck, the widened hull, and the added weight of the heavy cannons.
Only 48 of these guns were on board during the maiden voyage ‑ because the gun manufacturer was running behind schedule as were the shipbuilders.

Next, the King ordered hundreds of artisan outfitting sculpted in heavy oak wood and painted lavishly to impress with splendor.  It made making the Vasa not only the most impressive and expensive ship of its time but also added more to its instability at sea.

In summary, frequent change orders were issued under time pressure.  Changes remained undocumented and without deeper consideration of their consequences.  The project schedule and milestones slipped, while the Vasa became larger and heavier than her layout could safely support.

From bad to worse

By now, the project was in serious peril.  ‑ But wait, it gets even worse!

One year before completing, the shipbuilder Hybertsson fell ill and died.  His assistants, Jacobsson and Ibrandsson, would share the responsibility to continue but only after a period of confusion on who was in charge and direction the workforce of now 400 men.  The project management was already poor but suffered even more in the vacuum of accountability and the continued absence of reliable plans and documentation.

Stability is critical for the seaworthiness of every ship.  Unfortunately, knowledge and underpinning for reliable calculations for stiffness and stability were not yet developed.  The only way to find out if a ship would heel over and sink or not was to try it out in as so-called ‘lurch’ test:  30 men ran from one side of the ship to the other back and forth to make it rock.  It took only three runs for the Vasa to rock so violently that the ship risked tipping over – the test was discontinued.

Now, due diligence was obviously applied as good as possible by conducting the stability test as an experiment with observable outcomes.  – Having a previous post in mind, “How to apply metrics?”  this experimentation deserves a heartfelt “Bravo!”

The circumstances of the test, however, also tell the story of lacking communication and coordination within the project team and with stakeholders: While Admiral Fleming and Hannson, the future Captain of the Vasa, were present during the test, while the shipbuilders, Jacobsson and Ibrandsson, were not present.  They were not even informed about the outcome!  It raises the question if the builders even knew the test was conducted in the first place.  Yet, the Admiral insisted the ballast was too heavy, as it pulled down the hull with the gun-ports coming dangerously close to the water line.
Modern calculations confirmed that the ballast was only half of what was needed to stabilize the ship, but proper ballast would also have drawn the lower gun-ports under water.

The impatient King did not come in person to inspect the Vasa project progress (or its issues) but simply demanded challenging results from afar:  He set the deadline for the Vasa launch to late July 1628 and threatened subjects who would not comply with his royal demand ever increasing the pressure.

The bitter end of a prestige project

The day of the maiden voyage came in mid-August 1628, several weeks after the King’s final deadline had run out.  The outcomes were horrifying for the King’s prestige project:  Just a mile or so into her voyage a light gust of wind caught the sails.  The Vasa heeled over on its side and water poured in through the gun-ports.  The mighty ship sank on the spot in Stockholm’s harbor ‑ a total and tragic loss of ship and lives.

Vasa capsizing
Vasa capsizing

From a project manager’s perspective, just about every error imaginable was made over the course of this doomed project:  ‘Scope creep’ from frequent change requests, no process to address the consequences of the changes, a distant yet overpowering sponsor, intense time pressure on the project schedule, poor communication all around, a lack of documentation, unclear responsibilities, ignorance of risk and impact of unfamiliar innovations, disregarding (or covering up?) results from the failing stability test, and so forth.  The absence of project documentation leaves many details in the dark to date.

Following our human nature, whenever a project fails the search for a scapegoat begins: Captain Hannson was jailed immediately.  However, the following investigation concluded that nobody was to blame!  No reasons were specified for the sinking of Vasa.  Perhaps even more interesting, the question was never raised during the investigation why Vasa became top-heavy.  It reflects a negligence to learn from past failures for future success, so the fate of ships and crews were left to trial-and-error.

Scope, Change, and Communication

Coming back to the earlier discussion on what is most important to control as a project manager, major issues in the Vasa project arose specifically from:

  • Stakeholder (dis)engagement – The stakeholder’s perception from afar is prone to dis-align with the situation the project manager faces on the ground.  This gets amplified easily by poor communication between sponsor/stakeholders and the project manager, whose primary task is actually communication over anything else – quite contrary to common belief.
    The King gave orders from afar without visiting the construction to connect with key players and make more informed decisions; apparently, also his communication with the Admiral, the King’s representative ‘on the ground’, was not effective either.
    Admittedly, in those days consequences for failure could be severe and go far beyond what we can imagine today in a corporate environment.  The pressure felt by the Vasa‘s project manager and reluctance to speak up may be hard to fathom today.
  • ‘Scope creep’ – The project plan for Vasa was established with a schedule and a projected timeline by when the product would be available; in this case, when the Vasa would swim and be ready for battle.  Typically, early estimates found on or favor best-case scenarios.  They are outdated only a few weeks into a project of the Vasa size.  They need to get updated periodically taking account of changes requested and unforeseen obstacles encountered.  A specific finishing date should not be offered at the beginning of the project without careful communication about the associated risks, so as not to nurture unrealistic expectations by sponsor and stakeholders.   It needs to be closely managed, adjusted and communicated transparently by the project manager.
    The King demanded significant changes throughout the project’s duration that translated into time and money lost.  Bear in mind that the King does not know every task that goes into each change and the risks it induces.  It demonstrates, even more, the importance of a controlled change management process that reflects the impact of each change transparent and realistically.  This gives the sponsor or stakeholders a chance to reconsider whether the change should then be approved or not.  As an iron rule, you cannot have it all:  cheap, fast and with high-quality, so it is important to choose accordingly.
  • Unrealistic expectations – The common belief prevailed for several hundred years that a bigger ship, tall and impressive, carrying more guns, etc. would also be ‘more indestructible’.  – Too much ambition and the deceiving belief of ‘too big to fail’ sank also another world’s largest ship marking a superlative disaster in 1912: the Titanic.
    Nowadays, a project management office (PMO) can help to define project management standards and processes to achieve consistency across projects, which also helps to educate the sponsor on risks and help them set expectations realistically.

After the Vasa disaster

Today, scientific methods, as well as refined and formalized project management methodologies, exist, such as the PMI’s PMBOK, which prepare project managers to deliver the project results reliably and with satisfying scope, time, and quality.  However, there is no silver bullet for project success since we are all humans prone to make mistakes often based on assumptions, beliefs, and unhealthy ambition.  Even the best method is only as good as the degree to which it is applied and enforced!

In the end, large and heavy double-deck gunships were built and launched successfully.  They ruled the seas for a long time, among them the USS Constitution.  This ship was launched in 1797 with firepower comparable to the Vasa but nearly twice the displacement of 2,200 tons.  This well-measured ballast made the ship safe, seaworthy and successful.  With reconstruction completed in 1995, the USS Constitution is on display in Boston today as the world’s oldest commissioned naval vessel still afloat.

USS_Constitution
USS_Constitution

The Vasa today

The Vasa lay in the shallow waters of Stockholm harbor for centuries.  Early attempts to salvage it remained fruitless.  The wreck was located in 1956 and finally raised in 1961, a full 333 years after Vasa sank.

Usually, organisms such as worms eat away the wood of ships over time but not so the Vasa.  It remained in the same condition it sank due to the inhospitable waters off Stockholm.  The adverse environment preserved the Vasa so well that it was even able to float with its gun-ports sealed and after water and mud were pumped out of the hull!

Vasa salvaged
Vasa salvaged

The Vasa is on now display in Stockholm and housed in a dedicated museum specially built for it.  Around 30 million people visited the Vasa as one of Sweden’s most popular tourist attractions – a late glory for the grandest battleship that never saw a battle.

What does it take to keep innovating? (part 1 of 3)

Can strategic innovation rely on creative chaos?To make a long story short, the answer is: No!
Read here what it takes to consistently innovate and give you a very cool example too.

Creativity ≠ Innovation

Let’s first be clear about what we talk about when we use words like ‘innovation’ and ‘creativity’.

In this context, creativity refers to the novelty or ‘newness’ of a product idea. However, novelties can exist without a real-world application. There is usually no shortage of new ideas in your organization but merely generating ideas alone does not lead to tangible innovations. Most creative ideas do not come to fruition because they are not feasible, too far ahead of their time or just not developed effectively to take the next step towards realization.

This is where an innovation is different from a novelty: it is the combination that translates a novelty into a marketable product (or service), so an innovation brings together the newness, the value it creates and the adoption to something marketable – or as my professors calls it: “where the rubber hits the road!”

The application gap

Some people believe that new ideas can only emerge and take shape in an environment of creative chaos or in an anarchic workplace. This may bear some truth; nonetheless, it takes more than that to propel an idea through the organization to develop it to become a marketable product.

This is where so many organizations fail and the bigger the company the bigger the challenge: good ideas emerge from employees but they get stuck and starve somewhere in the middle layers before making it through to the decision-makers in executive management. Too often there is a disconnect between ideas, decision-making and implementation.

So, what does it take to bridge the gap? What is needed to ensure ideas with potential make it through to the top to become the innovations that will drive an organization’s future success?

Bringing structure to the creative chaos

It comes down to creating a balance between the creative space and focus on the future application. Innovative organizations manage to establish a rigid process or ‘production system’ that allows their staff to be creative by harnessing the process in a way that it delivers innovations reliably, continuously and within a specific time frame. – If you don’t believe that creative chaos generates cutting-edge ideas and leads to tangible output in a clearly defined productions system: here comes the example!

The IDEO shopping cart example

A company that masters this balance between creativity and structure consistently is IDEO, a successful company and innovation leader that makes its living by developing products for others. IDEO’s successful strategy is actually quite simple and straight forward; it focuses on innovation, speed and tangible prototypes.

To get the most out of this, watch the video first before reading on. It takes 8 minutes or so and your time is well spent! In the example, IDEO’s challenge of the week is designing a new shopping cart – a product that we all know and hardly anyone seems to give a second thought about how it could actually be improved much…

While you are watching, see if you can make out how IDEO’s process works in what they call ‘the deep dive’. The guy that reminds me of Groucho Marx is actually the boss of IDEO.

So, please watch this video before you read on: http://www.youtube.com/watch?v=M66ZU2PCIcM&feature=youtube_gdata_player

Learning from IDEO

What did you observe about how IDEO works?

Let’s compare. Here are some elements of IDEO’s process that you might have noticed and that are essential to their innovation process:

  • The team runs one project at a time. There is focus and no distraction by other projects or interferences.
  • The creative work is done in a playful environment that helps to getting to fresh ideas faster. The staff has the freedom to design their working environment themselves, the creative space.
  • All customer interactions take place outside this creative space and don’t interfere with the creative process.
    I bet some customers might be quite shocked to see how IDEO actually works if they could walk around and observe the process.
  • There is no hierarchy, no ‘boss’, just a commitment to follow the given creative process or framework.
  • The accepted attitude within the company is to dare and ask for forgiveness afterward rather than asking for permission upfront. It invites to trying out things instead of being reigned by (real or assumed) constraints from the beginning.
  • The team first identifies several critical dimensions then splits up to build several separate mock-ups in parallel before consolidating and converging to the final product. Trade-offs come late in the game after basic requirements have already been incorporated.
  • The team goes out to meet experts to learn from about relevant facts faster and shares all insight and findings they come across with the others.
  • The discussion or ‘deep dive’ of a team is focused and non-judgmental to allow for creative ideas to surface in a safe and trustful environment. Only one person speaks at a time and the team members support each others’ ideas while deferring any judgment.
  • Chaotic as it may look, the team actually follows a strict protocol or process with much discipline. One person, called the facilitator, keeps the team moving forward and was selected for the ability to be good with people, not for expert knowledge. This facilitator ensures the team remains on track, focused and follows the framework of the creative process.
  • There is a strict time constraint for the project to force teams to produce results. Occasionally, the facilitator acts somewhat autocratic by forcing group decisions to keeping the team on schedule.
  • Teamwork and trial-and-error succeeds over the plans of a lone genius.
  • Every team needs to produce a tangible product like a prototype or mock-up. A merely ‘theoretical result’ does not suffice. The prototypes are tested in real-life environments by the end users.
  • All team members vote for the best and feasible ideas while everyone contributes working towards the final product.
  • ‘Adults’ coordinate the overall process to ensure the teams meet customers’ expectations in the end.

What you do not see in the video but you might be interested in is how IDEO selects its people, the company’s most important asset and success factor. The teams are deliberately composed of members with mixed backgrounds and expertise. Much effort is put on the recruiting process and it takes 17 or so interviews before one gets to work for IDEO. These interviews focus on the culture fit and attitude of the interviewees. Performance evaluations found on peer reviews.

Oh, and don’t miss this one: IDEO deliberately hires people that would not listen to their boss!
Imagine that in the places you and I work!

So, what does it take to innovate?

What are the essential and generic characteristics of the innovation process?
Here is what it comes down to in summary to systematically and continuously innovate in an organization:

  • Open and conductive environment and company culture.
  • Carefully selected, highly motivated and diverse teams
  • Process aligns creativity and discipline
  • Leaders who demand and promote innovation.

As IDEO puts it, they are experts of the process, not of the product they start working on. – This is the (open) secret of IDEO’s success.

Still want more?

There are more free videos on IDEO and how they operate as well as on their shopping cart project publicly available on YouTube, for example.

In case you want to get involved yourself in innovating with IDEO, check out their open innovation network!

I plan to discuss more aspects of strategic innovation soon such as what it takes to be the innovation leader in your organization…

– Stay tuned and please share your comments!

References and additional information

Generation Y for managers – better than their reputation?

GenY for managers: look beyond the labels! Understand the drivers and grasp opportunities that Generation Y brings to your workplace!

It’s a long list to describe Generation Y with a commonly unfavorable preconception. This  youngest generation at the work place (born after 1980, also called Millennials) is said to be: lazy, impatient, needy, entitled, taking up too much of my time, expecting work to be fun, seeking instant gratifications, hop from company to company, want promotions right away, give their opinion all the time and so on. But is it really that easy to characterize a new generation?

Generational clash has changed
Clashes between generations were always present to some degree: Young people want to prove themselves, probe the boundaries and seek opportunity. The older are in power, hold the wealth, make the decisions and are typically reluctant to change and letting go of their well-established and comfortable status quo.

However, something significant has changed: Where in the past three generations used to live at the same time, we now see that four generations are working together simultaneously.  A conflict that used to predominate the homes is now also present in the workplace (as a result of several factors that include demographic change, geo-economical impact, longer life expectancy and increasing retirement age).

While in our personal lives we may be able to avoid or by-pass some areas of generational friction these same ways may not be possible in the workplace. Here you have to get along and collaborate with your co-workers. This is challenging not only for the multi-generational workforce but also for the managers facing the new need to mitigate generational conflicts, integrate the staff, and provide a constructive and collaborative work environment.

Why managers struggle with the mysterious Generation Y
For managers it is important to take a close look at GenY, since GenY outnumbers the significantly smaller GenX (born 1965 to 1980) and is the largest workforce generation. The Baby Boomers (born between 1946 and 1964) retire from the regular workforce leaving a gap. Nonetheless, given the typical career progression, higher management positions are still firmly held by Baby Boomers or their preceding Pre-Boomer generation (born before 1946) – the generations farthest apart from GenY.

Ignoring the differences between generations or addressing them in a ‘one-size-fits-all’ manner backfires. It also misses to leverage particular traits of the young generation that become critical for an organization to sustain in the face of change coming at ever faster pace and with increasing complexity (see my earlier blog: ‘Complexity’ is the 2015 challenge! – Are leaders prepared for ‘glocal’?).

It is Generation Y that people seem to have the hardest time wrapping their heads around. Simply pigeon-holing GenY does not do them justice and doesn’t help understanding and managing them either.

‘Kids’ entering the workplace?
It is even a common misconception that GenY have not yet arrived at the workplace and that they are ‘kids’ just coming out of school or college. If you consider the demographics, however, the early GenY’ers are 30 years old now, so they are hardly ‘kids’ anymore. They come well educated and already gained some experience at the workplace for several years now. They are not ‘out there’ anymore but ‘in here’ now!

Instant gratification and fast promotions?
It is true that GenY seeks fun (who doesn’t?) and grew up with high-end video games in which the players typically rack up points in fast progression opening up new levels or challenges to continue the game. But that’s only one side of the coin. It also forms a mindset to figure things out, address challenges with optimism in a playful way, master technology, compete in ever-changing surrounding as well as hooking up with a network of friends to play and succeed together – don’t be fooled, these are the critical basic skills in the world we live and do business in!

Entitled?
Look at GenY’s parents that determined the up-bringing: The generation of Baby Boomer parents indulged in perks and benefits like only few before them; the succeeding GenX only saw these goodies going away when they started entering the workforce. Fortunes were racked up or inherited by Baby Boomers.

GenY kids often grew up in a world of abundance; nothing was too good for them or out of reach – and sponsored freely by the parents with enough cash in their pockets to offer their kids any imaginable aspect of a ‘better life’.

Instead of flipping burgers during summer holidays to earn their own money, many GenY kids had spare time on their hand to learn and have fun while ‘helicopter parents’ took (and continue to) care for their well-being and even professional advancement as adults. Who would say ‘No’ if you are young and your parents offered to pay for your car, your shopping dreams or set you up for a prosperous and promising career?

This way many Baby Boomer parents did their part to breed a generational culture of entitlement or at least high expectations while reinforcing the message “You can do anything and succeed!” – It does not seem fair to hold this upbringing against their kids.
(Instead, it provokes the questions why Baby Boomers, in particular, seem to have such a hard time letting go to let their kids live their own lives without excessive parental hand-holding? – But that is a topic for another time…)

GenY is prepared, assertive and speaks up. They know what they want and how to get it. Don’t underestimate them as customers either, since GenY is a serious economic power and probably even more so than any previous young generation in history!

Lazy, impatient and needy?
Let me share with you my first-hand experience with GenY at the workplace. I gain my insight as the founder and chair of a generation-oriented employee resource group (ERG) which gives me ample opportunities to work closely with GenY’ers on various projects. It made me probe my own biases and assumptions based on practical work experience (which, by the way, I don’t always see reflected in articles written about GenY).

What I learned is quite different from most preconceptions: The GenY’ers work hard and with ambition, they are not a bit lazy.

When we coin GenY ‘needy’ or ‘taking up too much of my time’ we are actually ignoring that they want to contribute to a meaningful cause in the most effective way. What they are asking is to understand the ‘why’ before going to work. This questions and challenges the status quo in a constructive manner – which is good! If we cannot answer their question satisfactory or insist that we already know the best way ‘how-to’ then it is us (the non-GenY’ers) standing in the way of innovation and change. As a general truth it is not their questions that can be compromising but rather our answers.

Some tasks require not only book-smarts but also experience (including managing people) that many GenY’ers cannot have made at this time in their careers. Therefore, they can be over-confident and over-estimate their abilities and effectiveness; support them and offer them learning experiences as a reality-check and growth opportunity.

Empower GenY to put their specific inherent qualities to best use given that they tend to be natural networkers and solvers of complex problems, they user modern technology effectively and approach different ethnicities and cultures with an embracing ‘color-blindness’. – Are these not exactly the qualities that we need in the world we live and work in today and tomorrow?

If you plan to start an ERG that addresses generational differences, you can find great research for free:  Next-generation ERG learn from U.S. Army recruitment!

Engagement and empowerment drives loyalty
A short while back I wrote in this forum about How to retain talent under the new workplace paradigm? It comes down to approaching the workforce differently by offering flexible career paths, support staff to remain employable and accommodate benefits to their needs instead of hiding behind archaic one-size-fits-all models.

As managers we need to consider GenY’s particular needs and expectations to attract, engage and retain them. We need to leverage their unique talents and skills for the better of the company while helping them to development and grow. Empowerment includes guidance and creating opportunities for GenY to make mistakes, learn and get active ‘their way’ in areas that wakes their interest and that are meaningful to them as well as to your organization. – Then relax, sit back and see beautiful surprises unfold!

Leverage employee resource groups (ERG) as an opportunity
Some managers may ask on how to get started, what could be a first step to engage and leverage GenY? One way of doing it is by founding an inclusive ERG to focus and organize your emerging workforce.

As an example, I founded the Next Generation at the Workplace (coined ‘NxGen’) ERG that has already changed the company’s perception of employee engagement, increased ERG credibility and raised the business value seen in ERGs among managers. Our NxGen approach is to address opportunities in business-relevant projects with measurable results for the business (such as return-of-investment, ROI). Our projects often focus on relevant topics are outside our immediate field of work but are always sponsored by an executive to ensure governance and strategic alignment. These projects provide an excellent and safe training ground for up-and-coming leaders. NxGen supports the organization directly through the project’s immediate deliverables as well as indirectly by establishing a free and hands-on management development program that comes with networking, coaching, and skill development already built-in. Everyone wins!

No matter if you have a dedicated ERG or not, don’t discount GenY based on labels. Dig deeper to find the treasures that this generation has to offer. Your organization’s future relies on them!

* * *

Additional information
NxGen was nationally recognized as a ‘cutting-edge’ approach to employee resource groups by the Network and Affinity Leadership Congress 2010 (NALC), a national conference focused on training ERG leaders to align with the business goals of their organizations.

Please leave a comment and, if you are interested in ERG topics, feel free to join our ERG Leaders group on LinkedIn.com to discuss, share and learn!

‘Complexity’ is the 2015 challenge! – Are leaders prepared for ‘glocal’?

In IBM’s 2010 CEO study, the high-profile interviews revealed a game-changer for the next 5 years: mastering the increasing ‘complexity’. Yet, less than half of all CEOs feel prepared for the challenge! – Read what is meant by ‘complexity’ and what the CEOs look for in successful future leaders!

‘Complexity’ is the 2015 challenge! – Are leaders ready for ‘glocal’?

What is the key challenge in the coming years and how to prepare future leaders.

IBM released its high-profile annual CEO study with interview results from 1,541 CEOs worldwide. The focus is on ‘complexity’ as newly identified challenge that CEOs face increasingly over the coming years.

(Note: the study results are no secret and available in the public domain:  http://www-935.ibm.com/services/us/ceo/ceostudy2010/index.html)

Complexity is what develops when a company tries to make their product and services easier to use for their customers and clients. – Why? Look at what we customers expect of the products that we buy these days:

Example – let’s take cars: New cars these days are highly integrated products that go far beyond only ‘taking you from A to B’. As added features we find WiFi and DVD players installed for entertainment. The radio receives traffic reports feed into the car’s navigation system to guide you around heavy traffic. There are distance sensors that automatically sound alarms and engage the brakes should we get too close to an obstacle too fast. Collision detection systems adjust your seat belt and deploy airbags to keep you safe and then call help through the car’s mobile phone system automatically while directing emergency rescuers to the car’s crash scene.

Integration entails inter-dependencies
These technological marvels in a car are integrated to run smoothly ‘behind the scenes’. They also pose significant challenges for the manufacturer that needs to keep the features as easy to use as possible for the customer or run even completely invisible to the customer. Nonetheless, all these components must work together seamlessly in an integrated way that create complex inter-dependencies among them.

This requires the manufacturer to integrate services and products outside their typical ‘automotive’ spectrum and ability. They need to collaborate with other suppliers that may not even have established ties to the car industry.
Note that the traditional product ‘car’ has undergone change to become an integrated ‘mobility and lifestyle’ product.
This increasing technological complexity at an increasing speed translates into the manufacturer’s organization and challenges its leadership.

Is there a ‘magic bullet’?
“The vast majority of CEOs anticipate even greater complexity in the future, and more than half doubt their ability to manage it.” – This fundamental statement strikes me most IBM’s 2010 CEO Study though it does not hold true though for a minority of outstanding organizations, which found ways to deal with complexity and produce 20% profits over their competitors nonetheless!

The ‘magic bullet’ facing unpredictable uncertainties seems a mix of

  • Creativity (it’s the highest ranked leadership quality by all CEOs!) that allow to react fast to a changing environment
  • Integrating customers into their processes
  • Simplifying what organizations do and produce.

Perspective of CEOs in Life-Sciences
Now, how does this translate into our daily work? Most of my professional life I spent in different areas of the Life-Sciences industry in Germany and the USA that I chose as an example. What caught my eye here are the responses by CEOs from Life-Science organizations in Germany and the USA in comparison. – How do they rate the upcoming complexity challenges, how prepared do they feel and what do they look for in future leaders over the next few years?

The 3 Needs
US CEOs (86%) more than German CEOs (81%) expect higher complexity in the years to come but only 45% (in both countries) feel that they are prepared to cope with this new challenge successfully. This opens a larger-than-ever ‘complexity gap’ reflecting the uncertainty on how to operate in the volatile and murky waters of the new business environment.

1. Creativity
Interestingly, the German CEOs rely confidently on creative leadership making decisions quickly (over thorough decisions) in the future by 18% above all CEOs sampled. The US CEOs, in contrast, seem more pessimistic by relying on quick decisions slightly less that CEOs overall. Both, the German and US CEOs equally make integrating customers to better understand the customers’ needs their highest priority

2. Simplification
The CEOs take different approaches to how and how much to simplify: While the Germans seem more radically simplifying products and operations more than CEOs overall, the US CEOs focus on reducing fixed costs willing to increase variable costs to allow for up-scaling ability as need arises.

3. Focus in Emerging Markets
The study including all CEOs proves that 76% aim at the rapidly developing markets. It is not surprising that market factors is their #1 external focus followed by technological and macro-economic factors.

Key Attributes of Future Leaders
What kind of leadership we need to manage complexity successfully over the next 5 years?

The CEOs agree on the following three attributes:

  • Creativity (60%) ranks highest overall followed by
  • Integrity (52%) and
  • Global thinking (35%).

What CEOs are looking for are leaders that understand and collaborate closely with the customers, show strong people skills and have a deep business insight with intelligence data.

The future leaders are innovators able to think on their feet and open to experiments when speed needs to rule over correctness. The capacity to simplify for the customer is crucial. This entails reducing the resulting complexity by stripping what matters down to the core and focus on that. Sound planning may have to give way to situational yet strategic management to avoid information paralysis and gain competitive advantage.  – The coined term ‘glocal’ means to integrate globally using all resources available worldwide while doing locally only what is necessary.

What do you think – are we ready for the complexity challenge? Any suggestions how to prepare?