This video addresses the question: How can the pharmaceutical industry reskill representatives to be knowledgeable consultants to physicians?
Today, sales expertise is not enough. The pharmaceutical representative needs to be a broker of information. Physicians now have very limited time – and dictate when they can meet with representatives, from whom they need comprehensive information that they can pass along to their increasingly educated patients.
In this video, Jo Ann Saitta, Chief Digital Officer of the CDM Group, Stephan Klaschka, Innovation and Healthcare Consultant, and moderator, Richie Etwaru, Chief Digital Officer at Cegedim, examine this shift and the challenges pharmaceutical companies may face in properly retraining their people. These challenges include: adopting a culture of learning agility; integrating silos of information; having the ability to serve up dynamic content; and training representatives to utilize technologies that will maximize their brief but demanding visits with physicians.
Use this linkto watch all 10 videos in the series on YouTube directly – enjoy!
10 Inevitable Changes in Pharma 2015 – Communication moving to Collaboration
10 Inevitable Changes in Pharma 2015 – Content moving to Context
10 Inevitable Changes in Pharma 2015 – Care moving to Cure
10 Inevitable Changes in Pharma 2015 – Compliance moving to Culture
10 Inevitable Changes in Pharma 2015 – Supply Chains moving to Supply Constellations
10 Inevitable Changes in Pharma 2015 – Customization moving to Configuration
10 Inevitable Changes in Pharma 2015 – Customer moving to Consumer
10 Inevitable Changes in Pharma 2015 – Calls moving to Consults
Jo Ann Saitta
10 Inevitable Changes in Pharma 2015 – Cloud moving to Crowd
10 Inevitable Changes in Pharma 2015- Charity moving to Cause
One juror, for example, believes the Boehringer Ingelheim School for Intrapreneurs adds value beyond the pill to patients and customers: “Great program that ensures that the company keeps up to date and a competitive edge. I also like that everybody has the opportunity to contribute and participate.”
The winners will be announced on April 7th during the upcoming eyeforpharma Philadelphia 2015 conference (from April 7-8th, 2015, Hyatt Regency Philadelphia at Penn’s Landing, Philadelphia, PA.), so join the conference and stay connected via Twitter at #efpPhilly
About the Awards
The eyeforpharma Philadelphia Awards recognize those in the pharmaceutical industry who are driving pharma forwards not just with higher short-term profits, but with better customer innovation, value and outcomes leading to longer-term success.
eyeforpharma’s mission is to make the pharmaceutical industry more open and valued, which means these awards are a literal translation of why we exist. It is our responsibility to shine a light on where pharma does well, to inspire others into similar or better action.
The awards will be held at an inspiring new venue, 7 World Trade Center, and include the opportunity to explore some of the top corporate innovations in North America, network with innovation leaders, and hear from our guest speaker from Virgin Galactic.
The awards recognize and celebrate the achievements of individuals and teams who are working within large companies to deliver game changing innovation and growth.
The awards will be held at an inspiring new venue, 7 World Trade Center, and include the opportunity to explore some of the top corporate innovations in North America, network with innovation leaders, and hear from our guest speaker from Virgin Galactic.
The awards recognize and celebrate the achievements of individuals and teams who are working within large companies to deliver game changing innovation and growth.
Why successful innovations get shut down. WhIle we expect unsuccessful initiatives and projects to get shut down, what sense does it make to stop hugely successful ones?
Punished Despite Success
It doesn’t make sense to shut down profitable programs – or does it? It happens all the time when the current yet wilting business model still tastes sweet. Investing in building a disruptive, future business model appears less palatable as it takes uncomfortable transformation that comes with investment cost and lower profits initially. The sobering reality is that short-term gains often win over long-term investments, sustainability and bold moves to explore uncertainty and white space.
Here is a quick example from the fossil oil and gas industry straight out of Bloomberg Businessweek, “Chevron Dims the Lights on Green Power” (June 2-8, 2014): Chevrons renewable power group successfully launched several projects generating solar and geothermal power for over 65,000 homes. Despite margins of 15-20%, the group was surprisingly dissolved earlier this year after they had just about doubled their projected profits from $15 million to $27 million in 2013, the first year of their full operation. – Why would you kill a profitable new business?
Clashing Business Models
As for reasons for the shut-down, a former Chevron employee and Director of Renewable Energy notes that Chevron’s core businesses, oil and gas, still remain more profitable than renewable energy. This development signals that Chevron’s leadership is willing to experiment with renewable energy but does not seem fully committed – it makes Chevron’s slogan “Finding newer, cleaner ways to power the world” sound like lip-service.
Instead, Chevron continues to hold on tightly to their old business model to squeeze out the last drop of oil. Chasing short-term profit margins may prove not only a questionable path for long-term company sustainability but also from a business model perspective. While oil and gas prices have been on the rise for the past decades, it is well-known that these natural resources become scarce, so extraction from more challenging locations becomes increasingly expensive. It cuts into the company’s profits and the consumers’ pockets. To date, Chevron already pays a higher cost for extracting oil compared to competitors.
Chevron focuses on the upper tail of the S-curve of the current technology instead at the expense of preparing for the disruptive jump to the next technology platform. (See section “Technology S-curves” in 10x vs 10% – Are you still ready for breakthrough innovation?)
The risk here is to lose out on developing and acquiring new technologies that will be the make-or-break competitive advantage in the industry’s future.
Interestingly, Chevron’s competitor and largest oil company, Exxon-Mobil, takes a different approach. Even after initial setbacks where proof-of-concept did not scale to industrial size, Exxon-Mobile now partnered with Craig Venter’s Synthetic Genomics to produce oil from micro-algae at industrial scale. Hopes are high that this bio-tech and bio-agriculture approach proves more practical, profitable and sustainable to replace fossil fuels in the future.
Sounds risky? It sure is, but with profits from oil and gas still in the tens of billions this is the time to invest heavily in the jump on to the next technological S-curve. You may recall Craig Venter as a most successful entrepreneur and also the first to sequence the human genome, so there is no shortage of top bio-brainpower, which opens the flow also for more investment capital.
Truth being told, several other bio-fuel ventures of this nature exist all around the world. Neither made it to produce in industrial scale needed to satisfy the world demand for crude oil – yet. There is no question, however, that the world is running out of affordable oil and gas at accelerating speed. Disruptive technologies will emerge to fill the gap and redefine the energy sector.
The learning here is that even profitable disruptive ventures get shut down at times when the leadership is comfortable and holds on tightly to the existing business model they are familiar with and doing what they always did rather than taking transformative steps to prepare the organization for the future. Even with the writing clearly on the wall, the way of how profitability of a new venture is measured and the (still higher) margins of the established business (fossil fuels) make short-term focus attractive despite concerns over business model sustainability. So often enough there is little patience to further develop even successful, transformative ventures of tomorrow in favor of enjoying the sweet but wilting fruits of today.
Somehow this short-term mindset painfully reminds me also of the established car industry who, obviously, had little interest to bring electric vehicles to market at scale over the past decades until a Tesla comes around to show them how it can and should be done.
As for our example, time will tell whether Chevron or Exxon-Mobil made the better choice in the long run to win the new business model race leading us into the post-crude oil era – or if they both get disrupted by an even different new technology altogether.
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.
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 intrapreneurialskills for employees
A supportiveteam 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.”
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).
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 perpetualpipeline 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.
Books teach us how to say “No!” – they fill up entire shelves in bookstores to help us achieve professional success and personal freedom. Rejecting requests from others helps us de-clutter our busy day and protect us from time-suckers and commitments we immediately regret.
On the other end, we are asked to delegate more to boost our productivity. This comes easier for your client or boss, who has a mandate or authority over what we work on and what process to follow. And then there are Intrapreneurs: champions of ideas they want to turn into reality within large organizations without mandate or authority. (Read also The Rise of the Intrapreneur)
The “No” trap for Intrapreneurs
Intrapreneurs are driven by their passion and belief in the idea they develop and seek support for. They also often stand outside the ordinary structure and processes of the organization. Intrapreneurs need to pull voluntary favors from people they have no control over in order to find support, funding, protection, expertise or whatever else their project requires to get off the ground or move forward.
For Intrapreneurs, avoiding the “No” becomes even more crucial: once they received a “No” to their proposal or request, it is hard to change their mind no matter how much sense the project makes.
– Why is that?
Why it’s hard to say “Yes” again
Put yourself in the shoes of a potential sponsor, lets say a manager, executive or technical expert: this Intrapreneur, a person you may or may not know well, walks into your office and requests resources, money, time, or whatever to fuel an uncalled for project with an uncertain outcome that was not budgeted for and that disrupts your operations.
The safe and easy thing is to say “No.” When rationalizing in retrospect, you just saved the company diverting and possibly wasting resources on this crazy project that may even have felt like a surprise attack! – And so you feel good, right?
Now, when the Intrapreneur comes back later to try his or her luck again, perhaps equipped with more data, what can you do? If you said “Yes” this time around, wouldn’t you be inconsistent with your previous position and possibly even undermine your own authority?
Subconsciously, you may already be biased and seeking a face-saving way to get over this discussion. So it’s safe again to stay with “No,” and remain consistent – and feel good! After all, it’s human nature!
“No” doesn’t turn to “Yes” easily
As an Intrapreneur, coming back to ask for a “Yes” again is an uphill battle, a double sell. You are basically wasting your energy fighting human nature rather than helping your cause effectively. Chances are you will not be able to turn around a previous “No” into a “Yes,” no matter how much more data and other good arguments you throw at the aspired sponsor. When seeking voluntary support from others, hearing a “No” is a huge obstacle that is hard to overcome.
So, for an Intrapreneur, the million-dollar question (perhaps literally!) is, how to avoid the “No” in the first place and get support for the idea.
How to avoid “No” and thrive your project
For an Intrapreneur, it is most important to listen closely and be open to the questions and concerns the sponsor to-be brings up: they may just as well uncover valid flaws or complementing areas to be addressed to make the idea succeed in the end.
Gifford Pinchot, the author of the best-selling book Intrapreneuring, suggests these nifty tactics for Intrapreneurs to approach helpers or sponsors in a non-threatening or overly demanding way that would trigger the negative response. A small step forward is better than a full stop of the “organizational immune system” kicking in. Don’t ask bluntly for resources of sorts. Instead, ask for advice or a reference to a co-worker!
People love to talk about themselves and being asked for their expertise and opinion. This works with employees on all levels of the hierarchy no matter if you seek a sponsor or advice from an expert.
By asking for advice, there is no Yes-or-No dead-end involved. It’s just a factual discussion among professionals about an idea and what it would take to improve it and to move it forward. Even softer is the question for help to find someone else, who could help or whom the Intrapreneur should talk to next. Even if not interested in the idea themselves, it allows the potential sponsor or expert to refer to another person, who is possibly better suited or more interested without losing face or appearing unsupportive.
Thumbs up all around
In case the idea or project tanks, as the expert/sponsor you didn’t waste any resources nor will you be held accountable. If, in contrast, the idea has a positive outcome down the road, you may even claim having supported it at an early stage or have made a key introduction that led to the project’s success. Now, that feels good no matter what happens with the Intrapreneur’s idea or project, right? That’s human nature too.
From the Intrapreneur’s perspective, for starters, you achieved to avoid the “No” kiss-of-death. You may have even got another lead or hint on what to improve or consider, something you overlooked or were not aware of before. Addressing this may require some more research, data or conversations, but for now, it drives your idea forward to take the next step, which is good and helpful.
It’s not really rocket-science but rather dealing with human nature in a resourceful and constructive way that keeps the intrapreneurial project moving forward.
This second part of the blog post looks at how to make virtual teams work. Don’t miss the first part: “Why virtual teams fail“
Telecommuting is on the rise. It leads to more ‘virtual teams’, which means co-workers collaborate separated from another by location and often also time.
There is a bright side and a dark side to telecommuting.
Here is the upside: According to Staples Advantage’s study (see “Employers say work from home works“), 93% of employers found programs that allow employees to work from home benefits employees as well as companies. Half of the employers report more productive employees and 75% agree that telecommuting makes their employees happier. No wonder that the amount of telecommuters has roughly doubled in the US over the past 10-or-so years (http://www.globalworkplaceanalytics.com/telecommuting-statistics).
The stubborn tendency remains that work may get done at home, but careers are made in the office. The benefit of control over one’s work place and time comes at a price for the career as a recent study by Stanford University revealed: working from home cuts the chances for a promotion in half!
Obviously, there is a disconnect between where the professional world is moving towards rapidly and our mindset that seem to adapt slower and less flexibly to change using digital interaction for effective collaboration.
Because the world is not flat…
Even the most advanced and latest ‘virtual presence’ technology does not offer the same bonding with senior management as face-time does. The ones working from home can be overlooked or -when opportunity knocks- forgotten, even though they often work harder compared to in-office workers and their productivity is higher, as the study showed.
When it comes to telecommuting the world is not flat. Simply put, the playing field is not level between in-office and at-home workers, explains the gap between the positive perception of remote working by employers and employees alike, and the sobering reality of career crunch.
Furthermore, it is not the remote workers alone that require attention and need to be managed differently. It is also the staff remaining in the office (if there are any), since both parties are affected and need to perceive the same leveled plain.
It is human nature to favor those whom we feel close to and whom we work and spend time with in close proximity. To make working-from-home (or from anywhere else outside the office) work successfully, it is the management’s responsibility to level this playing field effectively and sustainably.
Achieving this is anything but easy; in particular, if managers are used to working out of an office. For them it means to break with their habits for the better of the organization. – It’s not impossible though: our habits of sitting at a table in front of a computer all day is just as unnatural for humans; yet we get used to it.
Cover the bases
There are some key aspects to make remote working work:
1. The work itself
First, the work must lend itself to be conducted remotely. Quite a no-brainer: other than in a factory setting, the necessary tangible tools and resources to collaborate cannot be concentrated in one place but must be accessible to the remote staff where ever they work from. For example, remote working is not possible for a factory assembling gadgets along a conveyor belt, where each worker contributes to some part of the process assembling the product. Tools are expensive and immobile, so resources need to be concentrated in around the tools to allow for efficient collaboration.
Not much different from factory workers, the collaboration of knowledge workers is enabled by tools to communicate and to share data and information. The difference is that technology allows information to be transmitted, so we can collaborate effectively and efficiently from all corners of the world. Choosing the most suitable collaboration tools can become a differentiating competitive advantage; you don’t want to lose quality or effectiveness when collaborating remotely.
2. The workers
Working from home is not for everyone for different reasons. It does require continued motivation and self-discipline to work from home as if in the office among co-workers. It takes establishing a new work-day routine in the isolated home environment that is invisible to co-workers. It becomes just as import for the home-workers to take regular breaks: Burnout can easily become an issue when home-workers over-compensate because they either feel under scrutiny by management and/or co-workers in the office. Also less interruptions at home can lead to missing breaks and working longer hours continuously than in the office.
When I introduced remote working as a pilot project in my department several years ago, one of my staff reported in the beginning that he felt guilty taking a bio-break at home, so not to appear unavailable to staff from other departments who remained working from the office.
3. The management
Managing a remote workforce requires a different management style. Managers need to become more pro-active, use communication channels that the staff is comfortable with and adopt ways to communicate with their staff transparently and effectively. Key points for managers are to:
Establish shared team goals
Establish communication best-practices together with the team; this also helps to mitigate timezone, language and cultural differences as well as choosing the proper communication channel depending on content
Manage by performance, not by face-time or physical presence
Actively create equal opportunities for on-site and off-site staff
Set clear rules for management and staff alike aiming to show transparency and leveling the playing field by incentivizing favorable behavior (a matter of organizational justice)
Remain flexible and ask your staff for ideas on how to improve knowledge-sharing and collaboration.
4. The performance metrics
Leveling the playing field comes down to truly embracing a performance culture that incentivizes results – not face-time. Managers need to articulate clear and measurable goals for the team and its individuals in advance and sometimes also more frequently than they used to. Acting transparently and objectively can be a serious challenge for managers and requires leaving the personal comfort zone.
To achieve this, training may be necessary to shift the culture of the organization and prepare management and their staff alike.
As an example, when I first introduced remote working, I asked my managers to establish and document weekly goals with each staff member and to review them for completion the following week. After a couple of months, I left it to the managers to use any other way to set and track performance with their staff. When some managers wanted to put away with the weekly goal agreement sheets, it was their staff who asked to keep them, as they valued the clear and documented goals in their hand. The staff also found them helpful to discuss facts during their following periodic performance reviews. Though not planned for, the weekly goal setting contributed measurably to increase trust of staff in their managers.
Plan for the “soft factors”
Interesting are the “soft factors”, which are the real make-or-break but often tend to get overlooked, forgotten or just not taken into account seriously. What it boils down to is the relationship (trust) and interaction (communication) between managers and their staff as well as among the members of a virtual team. These soft factors are subtile and often require behavioral changes or adaptation, more for managers than their staff.
Do you trust?
Take the time to ask yourself two questions honestly:
Do you trust yourself to be as productive working from home as in the office?
Do you trust your coworkers or your direct reports to work as productive from home too?
My own experiences are consistent with the research: we trust ourselves more than others. – And this is where the problem starts.
Why trust matters
A trustful personal connection is unsurpassed to build trust as a foundation for robust and sustainable business relationships and collaboration. Individuals trusting a person we don’t want to work or do business with this individual.
Trust also makes up much of the ‘social glue’ that holds together teams and organizations. Trust is critical for the success of virtual teams. With lack of trust also the willingness to share information dwindles and so does productivity.
When this happens, our energy gets wasted every day with concerns and redundant or counterproductive work. Workers focus to avoid perceived threats from others, which takes over more and more of their work time, focus, and productivity. In contrast, for people we trust we happily go the ‘extra mile.’
Trust (or the absence thereof) has been identified as the pivotal element ranging from detailed investigations in hundreds of organizations (by Virtual Distance International) to recent bestsellers like “The Five Dysfunctions of a Team” by Patrick Lencioni.
Coming back to the two earlier questions, it proves hard turning the mirror towards ourselves and to accept that also we need to build trust with our co-workers to build and fuel our most robust and valuable business connects and relations.
What is trust?
Let’s take a closer look – what makes up trustful work relationships? Trust is an interpersonal phenomenon. It comes down to three factors that make up trust at the workplace as Karen Sobel Lojeski, NYU professor at Stony Brook and CEO of Virtual Distance International explains:
Benevolence – our co-workers have your best interest at heart
Ability – our co-workers have the knowledge and ability to get the job done
Integrity – our co-workers will do what they promise.
Innovation needs trust
High trust correlates with more successful innovation – why?
When colleagues trust another they open up and share information. Besides the obvious benefit of cross-fertilization that leads to more ideas and creative approaches, by giving away our views and knowledge we become vulnerable as an individual and even more so in a competitive professional environment. This openness comes with a risk to fail that people are only willing to take if failure is acceptable and does not come with repercussions.
Sharing ideas alone is not enough though. Asking thoughtful questions, constructive criticism and mutual support lead to better solutions while curbing hostility and competitiveness. Opening up happens when a task-related conflict will not easily deteriorate into a personal conflict. Innovation within an organization relies on trust among colleagues as a key ingredient that cannot be substituted otherwise.
How we build trust
Trust requires communication and is built most effectively face-to-face with another person, which offers the broadest information channels. An MIT study found a 47% higher performance in companies that are highly effective communicators. Team success is consistently tied to robust team communications. (I wonder if this communication-related increase in performance was ever considered by companies focusing on saving cost…)
Customer-facing business knows that no technology today can offer the same quality and trust-building dialog as in person face-to-face.
Thus, travel to meet business partners and team members remains essential at least in the beginning. Traveling more to meet in person is out of the question for organizations who boarded the ‘cost-cutting’ train: it is considered too expensive. Saving cost here, though, does not pay off over time when it cuts into building trust for good working relationships.
Even more important is trust-building when on-boarding new staff. It is a challenge if most or all work is done remotely by team members who already know and trust each other. It comes back to human nature that we tend to rely on the same people we worked with before, which puts newcomers at a natural disadvantage. Here, management must intervene to level the playing field and provide opportunities also for the new staff.
Perhaps, women are at a natural advantage to connect with others given a higher social sensitivity, i.e. the ability to ‘read’ other people’s emotions face to face better than men. This is also one of the three criteria that increases group intelligence (see “Boost ‘Group Intelligence’ for better decisions!“)
Investing in trust and technology
Since it is not possible (and defeats the purpose) to meet in person especially in virtual teams, we use digital technology to bridge the distance. Consequently, we need to invest in effective tools to remove communication barriers and open broad, information-rich channels of communication among all team members.
Rather than relying on one channel or system, it is more effective to enable the team to communicate by offering many channels that cater to the individual team member’s preferences; for example, phone, instant messaging, video chat, email, etc). For example, waiting more than one minute to establish a video-conference connection is too long and already poses a significant communication barrier.
‘Tele-presence’ seems to be the gold-standard for remote communication but sadly often remains reserved only for executive use if the technology is invested in at all.
Nonetheless, enabling technology can also enhance performance and add value by
Indicating if people are online and available to communicate
Finding experts or collaborators easily within large organizations
Share and exchange information to relevant audiences directly and without delay.
In contrast, here are some examples for communication barriers of organizations with a cost-saving focus that tends to include also ‘technological disablement’ such as
Using slow or time-delaying communication or productivity equipment
Users spending more time trying to connect than actually communicating
Information-poor channels or poor call quality
Resolving technology-related problems consumes a long time or is a cumbersome process.
The Deep Dive
Virtual Distance ™ is a powerful framework to identify and quantify barriers within virtual teams. This methodology helps not only to evaluate existing teams, but to anticipate barriers in future teams. Virtual Distance makes for a superb strategic forecasting and planning tool to build effective virtual teams.
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.
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!
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.
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.
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 whyVasa 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.
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!
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.
Can movies innovate with only seven stories to tell?
How innovative are movies really – if at all? While AVATAR and THE ARTIST appear to be polar opposites, they share a similar story, so where is the innovation?
Following my passion, I happened to visit the ‘Berlinale’, the international film festival in Berlin/Germany last week: Over 20,000 accredited participants from around the world share their professional passion and trade movies in one of the world’s biggest market places for films.
In midst the bustle, I couldn’t stop my mind from wandering off and asking myself this question:
Is a movie an innovation?
Each film is an entrepreneurial venture, a financial and personal risk that filmmakers take and often sacrifice years of their lives for. As the audience, we enjoy to immerse in ever-new stories and characters to touches our minds and emotions.
However, is a movie really an innovation? One can argue.
The generic definition of innovation from the “What does it take to keep innovating? (part 1 of 3)” post states: “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”.
Therefore, also a movie would have to demonstrate these same three requirements in order to be innovative. So let us look for a match along the lines of:
Creating a value
Capturing value in a marketplace.
Seven stories to rule the world
First, is a film a novelty? Of course, you may think. Every film is new and different, even a re-make!
What I find interesting though is that many experts agree there are “seven stories that rule the world” as Matt Haig lays it out. It means that there are only seven plots, which are being re-told in different ways over and over again. ‑ How can this be innovative?
AVATAR – a high-tech pinnacle
AVATAR, for example, took 3D cinema to a new technological level and colorful experience for the audience just a few years back. James Cameron made this movie “with the intention of pushing the boundaries of what was possible with cinematic digital effects (…) blending live-action sequences and digitally captured performances in a three-dimensional, computer-generated world.” (Read more: James Cameron’s Avatar – 3D and CG Movie Technology With Avatar – Popular Mechanics)
The humongous $500 million total investment was a huge risk to take but the gamble of this big Hollywood production worked out: AVATAR broke the sales record (formerly held by TITANIC) by earning nearly $2 billion within 39 days at the box-office. Not a bad 1:4 return of investment (ROI) ratio!
Looking at our definition for innovation, AVATAR meets all three requirements by inventing new technology and processes for an enhanced viewing experience and by meeting an audience demand as we proven by its commercial success. It is not surprising to see the sequels AVATAR 2 and AVATAR 3 already on their way.
Nonetheless, the AVATAR story is based on the ancient ‘rebirth’ plot of the protagonist and put little emphasis on artistic performance of its characters.
THE ARTIST – so old, it’s new again?
Now look at the ongoing award season: THE ARTIST keeps racking up one trophy after another. Both movies, AVATAR and THE ARTIST could not be more different: THE ARTIST comes in black-and-white and is a silent movie from France!
Neither the story line of an artist’s comeback (yes, it’s the ‘rebirth’ plot again, just like in AVATAR) nor the century-old cinematic format bears any news. Is this really an innovative movie? One can argue.
Let’s look at value creation and value capture first; this is an easy one: The commercial value of THE ARTIST reflects $60 million or so in box-office sales the last time I checked. It draws crowds of paying audience and proves to be a very successful production (with the same 1:4 ROI return ratio as AVATAR) on the original $15 million investment! It is also the runaway winner converting nominations into awards internationally. Check.
Certainly, producing a silent movie for theatrical release these days is an enormous risk and considered unthinkable before THE ARTIST came along. In fact, it came at a high risk for the filmmaker, Michel Hazanavicius. He was not even taken serious and was laughed at when he presented his idea to raise funds for the project. It looks like a hopeless project from the Stone Age compared to AVATAR!
Let’s face it; movies have become a commodity that is available anytime and anywhere and on every gadget like smart-phones or gaming consoles. As mass-marketed products, movies often don’t even make it to the theater screen anymore; instead, they go directly on DVD or on-demand channels with only little returns for the filmmaker and investors.
What is new about an old concept?
With THE ARTIST, we have a movie that follows a plot line known for centuries and shot in the old-school and boxy 1.33 celluloid format about as old as the movie industry itself. Yet it became a smash success overnight as the first theatrical silent movie release in 35 years. Remember Mel Brooks’ SILENT MOVIE comedy in 1976? ‑ Something must be different! What has happened?
What it comes down to is the question whether a black-and-white and silent move has innovative potential in the ‘novelty’ category.
THE ARTIST gave ‘rebirth’ to this narrow and thought-dead category of silent black-and-white movies at a time where technology over-kill ruled the house!THE ARTIST brought back the glamor of the old Hollywood to present day: A glitzy world of the famous and the beautiful, celluloid dreams on the silver screen. It reminds us that movies can be special and not just a commodity.
Thus, the plot may not be new, but the way it is presented can very well be original. This is where we find the novelty of innovation or, as Matt Haig puts it: “It comes from style and voice and the imagination that brings language and characters and settings to life (…) It’s how you carry these universal plots into the present age that’s the challenge.”
It is not the plot alone that attracts the audience but the unique way to tell a story with high artistic quality and at the right time, when the audience matured and is ready for it. THE ARTIST re-discovered the glamor, elegance and artistic focus that seemed lost and brought it back to life. It answers to the silent yearning of its audience and lets us feel the magic of movies once again.
The Bottom Line
No matter if you agree or disagree with me that movies can be innovations, if you have not seen THE ARTIST yet, watch it and enjoy. It is just magical and delightful like movies are meant to be!
While many companies demand creativity and innovation from their staff few companies seem to know how to make it work. – Is your organization among those hiring new staff all the time to innovate? The hire-to-innovate practice alone is not a sustainable strategy and backfires easily.
An alternative and sustainable way to tap deep into your employees’ creative potential and turning it into solid business value is by forming an employee resource group (ERG). A well-crafted ERG serves as a powerful and strategic innovation engine for your organization!
Losing the innovative edge?
It is the large companies that seem to struggle with innovation most. When companies grow they tend to become less innovative. When this happens we see great talent turning into under-performing employees. – Why is that and is there a way out?
Stuck in mental models of the past?
Remember the heavy dinosaurs that finally got stuck in the pre-history tar pits and starved, too heavy to move themselves out of the calamity? Mental models are the tar pits that companies grow to get stuck in – unless they find a way to shed (mental) weight and think nimble again to survive.
The mental models often originate from days past when the business started and flourished with initial success. The models worked when the company grew back then but models out-date easily over time. At some point the company began to work harder to standardize its processes to ensure the output is delivered reliably and predictably and costs are driven down: the focus shifted from innovation to efficiency. Specialized and refined business functions create increasingly complex and bureaucratic processes, ‘standard operating procedures’ rule the course of action. Things don’t move fast here anymore. Improvement ideas from employee on the floor hardly make it to the top executives and starve somewhere in between, probably in the famous ‘idea box’…
This focus on incremental efficiency also traps R&D departments to a point where true creativity and innovation get stifled, the innovative output drops. In short, the larger a company the less it innovates. Sounds familiar?
Many companies chose the dangerous and seemingly easy way out in buying new ideas from the outside through acquisitions and hiring ‘new talent’. The danger lays in applying this practice too broadly and becoming reliant on this practice, i.e. getting trapped in a vicious and reinforcing cycle. This practice also alienates and frustrates the more seasoned employees who feel underutilized and –quite rightly so see their career opportunities dwindling. Soon enough the sour side of the hire-for-innovation practice for employees becomes transparent also to the newer employees and drives them away in frustration. This organization just found the perfect recipe to turn top talent into poor performers!
Don’t waste your human capital
Bringing in fresh brains to an organization may justify mergers, acquisitions or hiring at times – but not as a strategy for continuous innovation and without also at least trying to tap into the innovative capacity that lays dormant within the organization.
Don’t write your staff off easily by following blindly the common yet wrong assumption that an employee loses the creative spirit after a few years and that new hires would be more innovative than whom we already have working for us. Haven’t we hired the best and brightest consistently in the past? Well, then this logic doesn’t add up, right?
Ask yourself: have you lost your innovative edge? Will you personally be more innovative once you change to another employer? – I don’t think so either. The good news is that even if you don’t believe it, changes are that managers and human resource experts of your new employer do, at least the ones who follow the outdated mental model! – But then, how long can you expect to last there before you get written off? It’s like getting on a train to nowhere.
Derailing the train to nowhere
But seriously, the seasoned employees’ intimate knowledge of the organization and its people can hold enormous potential for innovation not only under financial considerations but also as a morale booster for staff. Getting personally involved more and engaging them in driving change again actively leads the way to measurable and favorable results for the organization. These employees are the people who know your business, your markets, your customers and where to find resources and short-cuts if needed to get things done! Remember the “Radar” character in M*A*S*H who creatively procured whatever his unit needed by knowing how to play ‘the system’ and navigate the cliffs of bureaucracy on unconventional routes?
So, how can you motivate and (re-)activate your employees to come forward with brilliant ideas and getting them implemented to boost the organization’s profitability? How can you spread new hope and direct the enthusiasm to practical and meaningful outcomes for the company and the individual employee alike?
Facing organizational barriers
There is no shortage of good ideas in the heads of employees. Too few of them, however, actually get picked up and implemented since organizational barriers have many dimensions the need to be overcome first. Here are some examples:
A vertical barrier effectively disconnects employees from the executive level which hold the (financial and other) resources to make things happen. Penetrating this barrier means to connect the people within the organization closely and effectively again.> Readers of my previous post What does take to keep innovating? (part 1) will recognize that an executive champion is needed who brings together the technical and business champions. If you feel intrapreneurial and consider becoming an executive champion, check this out: How to become the strategic innovation leader? (part 2)
The horizontal barrier separates business functions and operating units that evolved to become silos or manager’s ‘fiefdoms’ of sub-optimized local productivity often with lesser concern to the overall performance of the organization. What you are up against here is often enough beyond specialized deep expertise but also defensive egos and managerial status thinking that led to a comfortable and change-adverse local equilibrium. As an intrapreneur you bring a much needed yet disruptive element to the organization. Since you are rocking the boat you can get caught up in ‘politics’ easily. Functional managers and their staff may perceive you as throwing a wrench into their well-oiled and fine-tuned machine that could jeopardize not only their unit’s efficiency but also their personal incentives for keeping operations running smoothly.> For more insight on the tension field of management vs. leadership check out Leadership vs Management? What is wrong with middle management?
Another barrier relates to the perceived value that your work creates for the organization, so let’s call it the value barrier: When you start acting intrapreneurial, you may be seen as someone wasting resources, incurring additional cost or generating questionable value (if any value at all) in the eyes of executives and other managers.
Therefore it is of critical importance to clearly demonstrate the business value your work adds to the organization. Based on an unambiguous success metrics the value proposition needs to be communicated clearly and frequently especially to executive management to gain their buy-in and active support.
These and possibly more barriers are a tough challenge. Now, I assume you are not the almighty ‘Vice President of Really Cool Stuff’ (that would be my favorite future job title!) but hold a somewhat lower rank. Perhaps you got stuck in the wrong department (the one without the Really Cool Stuff).
So, where do you start to innovate and ‘rescue’ your organization from a looming train-wreck scenario?
Breaking down barriers by innovating from within using ERGs
A vehicle I tried out quite successfully over the past years was forming an employee resource group (ERG). This grassroots approach has the power to crash right through the vertical, horizontal and value barriers while driving change effectively and sustainably through the organization as a strategic innovation engine.
Here are the first steps on the way to founding an ERG:
Identify a business need and build a business case, i.e. a clear value proposition aimed at executive management convincing them of the need and benefits of forming an ERG within the limits of company policies. Attracting an influential executive sponsor to gain buy-in is a key requirement for instituting an ERG successfully. The sponsor serves as a political and resourceful ally, an experienced advisor and advocate but also ensures strategic alignment of the ERG’s activities with the broader goals of the company.Since executives value their time more than yours, keep it short and to the point. Think executive summary style and offer details separately for those who chose to dig deeper and to demonstrate that you thought this whole thing through. If your organization already has a distinguished officer or departments with a vested interest in employee engagement for example then connect, collaborate and leverage your joint forces.> More on how to build a case study for an ERG at: Q&A – Case study for founding a business-focused ERG
Get organized! Seek voluntary members and reach out to future constituency of the ERG. Active members are needed as the driving force and source of ideas that the ERG turns into business projects aimed to innovate and energize the organization.
The first ERG I founded was “NxGen”, which stands for the “Next Generation at the Workplace”. The NxGen ERG has a generational orientation but is open to all employees regardless of their age or workplace generation. Nonetheless, from the start mostly the youngest employees (Generation Y) drove NxGen. In many cases they did not know of each other as the GenY-ers were spread thin across the various business functions of the company.The GenY-ers, in particular, found a forum in the NxGen ERG to get to know each other in the first place. We then focused on goals based on shared values or needs to build a strong support network within the company. At all times we kept the ERG open and inclusive to interested employees join from other workplace generations.
The ERG offers its members a safe environment to discuss issues and ideas. It also serves as an informal forum to find coaches and mentors for personal development or specific projects and initiatives. Active ERG membership allows less experienced employees to quickly acquire new skills and test them in real-life by running a project hands-on even in areas outside of their job description or business function to address needs close to their heart with tangible business value. Here, the ERG serves as a very practical leadership development pipeline and safe ground for experimentation within the organization.
Get active by launching business-focused projects. Again, you are targeting management and executives in particular to build credibility and thereby become more effective over time.Start with feasible projects of high visibility and short duration that address a significant business need with a clear and quantifiable success metrics. For each project seek executive sponsorship at the highest level you can attain from the business area that the project affects. Make sure to communicate your successes broadly and frequently to kick-start the ERG. Stick to a clear, specific and unambiguous metrics for your success; if you can tie it to a monetary ROI the better, as this is the language of business.> More on establishing a success metric under: Driving the ROI – where to start your projects metrics?
Showcasing and celebrating your successes as an ERG motivates the already active members, keeps attracting new members and builds credibility among executives to keep the ERG wheels turning as a strategic innovation engine for your organization.
On a personal note
The example of the NxGen ERG is very real. NxGen was nationally recognized as best-practices ERG within 5 months (!) of its founding and became a valued and frequent sounding board for C-level executives within one year. The ERG has no funds of its own yet runs projects and initiatives nationally and internationally that already shifted the company culture and opened it more for change.
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.
Typically, the innovation leader is not the innovator but there are exceptions such as founders of innovative companies that start out as innovators and remain innovators; think Steven Jobs of Apple, for example. However, let’s focus on more common organizations that need innovation leaders often more than they are aware of…
Conquering the world from your garage?
We all heard the stories of the sole genius inventing in a garage and a few days later they run one of the most influential companies in the world like Apple or HP. However, strategic innovation cannot rely on a one-time-wonder hoping to be repeated over and over again. Organizations become too large, technology too complex and the competitive clock-speed ever faster to leave innovation to a single genius sitting in an ivory-tower coming up with all the good stuff for the rest of the organization. Nobody is an expert in everything or savvy enough to cover all necessary angles. Even more so, many people have great ideas that can contribute to better innovative products, so make use of this critical resource!
Strategic innovation requires governance and collaboration to succeed continuously. What it takes is a process, a framework, a ‘system’ that delivers innovations consistently, timely and sustainably. ‑ Unless you believe that Steven Jobs developed your iPad all by himself, right?
He understood how to turn Apple into an ‘innovation machine’ and –over time‑ how to effectively capture the value it generates.
What organizations need when they ‘grow up’ beyond the ‘innovation garage’ stage is many innovation leaders in different functions. You can distinguish different innovation leaders or ‘champions’ in an organization by how they contribute to the innovation process.
In general, there are three essential kinds of champions:
The technical champion holds the technical know-how for innovations.
The business champion comes up with the funding to develop an innovation into a product of sorts.
The executive champion “follows the fellow who follows a dream” as a professor of mine put it, and this is what we will focus on shortly.
The roles of the technical and the business champion need little explanation. Let’s assume for now we have identified or (perhaps more likely) unidentified technical champions in our organization somewhere (try the R&D function) and will also find a business champion (in the C-level suite) to fund a great idea that has potential to produce a significant return-on-investment.
Are you an executive champion?
As the leaders we are or want to become, let’s focus on the executive champion as the critical and most complex ingredient in the continued innovation process. Perhaps, this is where you can shine as an executive champion in your organization!
The good news is that anyone can be an executive champion and propel the organization forward! Yet few are aware of what it actually takes to be an effective executive champion. I found it surprising that even people in professional jobs with fancy ‘innovation’ job titles often simply don’t know this! So let’s move on.
Executive champions focus on the value
The executive champion understands the difference between creating value and capturing value of innovations. No worries, it took even Apple years suffering through the consequences of bad decisions to finally get it right…
Creating and capturing value are not the same. A company can create value by developing new technologies, for example. However, at this stage this novelty by itself has no value for the organization unless it can also reap the profits from the novelty.
It takes innovation leaders to ensure this crucial step is taken deliberately and effectively. They ensure the idea or prototype makes it all the way to a marketable product and the company rakes in the profit.
Steps to success
How does the executive champion operate? What does an executive champion do to succeed?
First and foremost the executive champion promotes an innovation broadly, which includes to
Articulate a clear vision
Develop an actionable strategy
Develop capabilities that power the innovative thrust of the organization such as capabilities to build and foster specific skills, behaviors, creativity, values or a mindset.
Steer execution to not only generate the newly created value but also capture it throughout the value chain. This may include analysis of the value chain and its players, initiating projects, controlling project portfolios, driving the commercialization of creative products or services, establishing entry barriers for competitors, measuring performance, etc.
Fuzzy values? – Here are some how-to examples
Do you find all this ‘value talk’ too abstract? Then let’s look at an example how ‘capturing value’ works in real life where Apple, for instance, controls each layer of its vertical value chain to a point where it ‘owns the customer’:
Let’s take the phone and data network for iPhones in the USA: iPhones come only with the AT&T network which is inferior to the Verizon network. ‑ Trust me, I know and experience it every day!
Why would Apple chose AT&T over Verizon? Because customers want an iPhone so badly that they will literally walk out of a Verizon store and straight to AT&T to get the iPhone that Verizon cannot offer. Customers don’t pick another Verizon phone and use the superior Verizon network. Instead, they are willing to swallow the (AT&T) toad because Apple owns the customer! This way Apple holds a much stronger position over AT&T than it could ever have over Verizon, i.e. Apple controls this tier of the value chain. Too bad only for the iPhone customers stuck with AT&T like myself *sigh*… the gamble worked out nicely though for Apple.
The simple rule here is that if you don’t own the customer you don’t make the money!
The message is clear: It is not enough to have an innovative product like an iPhone. You need to know how to capture the value and this goes far beyond a fancy piece of technology! This can be the most challenging task of the executive champion to consider and figure out. And, yes, I know there are mobile phones out there with better technology and features but they don’t have the same ‘love factor’ that continuously attracts Apple customers and locks in their loyalty.
Why innovations fail
We have seen many times that when even the most promising innovation flopped, a flabbergasted management falls short to explain why. Therefore, let’s take another perspective and a quick look at what can go wrong (and did go wrong in Apple’s past too but Apple learned over time).
Innovations can fail for many reasons. Here are the basic pitfalls to look out for in reality:
1. Failure to create value that the customer recognizes.
Often the inventor or manufacturer sees a value in an innovation that is not shared by the customer because the customer does not recognize the value, i.e. the customer is not willing to pay premium for the special feature but only spend for what they clearly see and value.
This is a frequent trap for a technology champion and can lead to products with incremental improvements towards a state of perfection that the future target customers just don’t value.
Also business champions can make the mistake to get inspired too much by the technology and fund the product development without thinking through the value chain.
You have guessed it: the technology champion and the businesses champions are the ones that lack the explanation for the failure – that’s why we need the executive champion!
2. Missing to erect effective entry barriers for competitors.
Entry barriers are an interesting chapter on their own and widely discussed, so I’ll keep this short. Since Apple is such a rich source for examples, here is another one:
The iTunes store sells apps and other content like audio and video in proprietary formats. This is a great example how Apple established an effective entry barrier for its competition by establishing itself as the sole source. It can even control the content while raking in the profits. Other companies try the same approach but find it hard to compete with Apple’s dominance.
Victoria’s Secret, the successful lingerie company, took a different approach: They fended off competition by creating apparently competing lingerie stores under a different brand in the vicinity of Victoria’s Secret stores; this led competitors to believe the market was saturated and entering it was not attractive and attracted more customers to shop in either store adding to Victoria’s Secret bottom line – smart!
3. Failure to capture the value with vertical channel innovation.
Honestly, this is a complex and tricky topic that I might dedicate a future post also extending into strategic marketing. What it comes down to is this: how you can control the vertical value chain with the question to answer at each tier ‘who owns the customer?’ ‑ The right answer is: ‘it better be you!’
For now, let’s just say it requires cooperation and offering incentives for your channel partners to remain loyal and supportive to your strategy. The iPhone network example gives you a flavor or think of the apps providers for iTunes that engage in a symbiosis with Apple.
Leading without mandate
Bottom-line, more innovation leaders tend to be better for an organization than less. An organization cannot leave innovation to individuals or an ‘innovation department’ somewhere. Everyone can and should contribute to innovation! – Take your chance and drive it, it’s fun!
The proposed business model for ERGs forms a foundation for continued innovation, strategic alignment and measurable results. It turns an ERG into a true and sustainable business resource for its members as well as the hosting organization.
Summary – The increasing diversity of employees at the workplace led to employees gathering along affinity dimensions like birds-of-a-feather to form networking groups within organizations. The next step goes beyond affinity and establishes employee resource groups (ERGs) strategically as a business resource and powerful driver for measurable business impact and strategic innovation bottom-up.
Limited to social?
Employee resource groups (ERGs) emerge for various reasons. They tend to start with a social underpinning that naturally unites and organizes like-minded employees. ERGs come in different flavors mostly along the traditional lines of diversity characteristics such as ethnicity, skin color, age, gender, physical (dis)ability, sexual orientation, military veterans, etc.
For ERGs, a ‘social stickiness’ is important and can be the key integrating factor of employee populations within organizations. It may also influence the choices of ERG goals and activities to a large extent. This may result, however, in possibly limiting the ERG and its members to be seen as a ‘social club’ of sorts by others. Management, in particular, may not see the direct (or even indirect) positive business impact that an ERG can have.
This is where ERGs can fall short: when they fail to tie a strong business-focused bond that ensures continued support by leadership that in return ensures the ERG can sustain and proper for the better of its members as well as the hosting organization.
Becoming a business resource
From a management perspective, ERGs can provide social ties within the workforce that are mostly seen as favorable ‑ at least as long as it does not affect the employee performance; whether perceived or real.
Better off is the ERG that demonstrates an unambiguous contribution to the bottom line. A clear business value proposition sets a solid foundation that makes it easy to communicate with and convince executives securing their continued support. The company benefits from positive business outcomes as a direct result of the ERG activities, while it engages employees broader and deeper. This uses more of the employees’ true potential to ‘maximize the human capital’ as an important element also of employee engagement, development and retention.
This approach serves not only the company but has advantages also for its employees and the ERG in return. The ERG members benefit directly in many ways such as by interesting work outside the immediate scope of their job, by developing new skills and by increasing their visibility within the organization and continued ‘employability’, i.e. their personal market value as an employee.
So what is the key to success, how do you ‘build’ an innovation-driven and business-focused ERG?
A ‘business model’ for ERGs
My proposal is to establish the ERG as a self-propelling and sustainable system, an ongoing process that continues functioning quite independently from changes in the ERG leadership and consistently delivers innovations. Individual leaders are important for operations and make valuable contributions, but the ERG must be able to continue functioning even if key players become unavailable and replaced.
The following dimensions are generic and apply to any organization. Here, we use them to describe a general business model for the ERG:
To illustrate the model and making it more tangible I use a generic example. It is based on NxGen (for Next Generation at the Workplace), a generational-oriented and business-focused ERG that I founded. NxGen was recognized in early 2010 as a best-practices approach by the National Affinity Leadership Congress (NALC).
The strategy brings to the point the ERG’s goal and objectives. A well-thought-out value proposition is a foundation for the ERG.
For example, NxGen is a forum to develop leadership skills, networking and problem-solving that aims to open up cross-functional/cross-disciplinary opportunities for its active members through strategic business projects with measurable results. As a goal, NxGen aims to become a sounding board for management as a valued business resource.
2. People practices
People, active volunteers, are the life-blood of every ERG. Staffing and selection are crucial and continued activities to induce fresh ideas and prevent burn-out of established ERG members. What you are looking for are active volunteers who are passionate and energetic. You want members who become active change agents, role models, within the organization. Value a diverse set of backgrounds and capabilities that can complement another.
Rather than trying to recruit new members, focus on how to attract new members to engage and actively participate (in contrast to the ones signing up to receive email updates or a periodic newsletter, which is a passive form of membership). NxGen membership is open to all employees.
There is a broad range of benefits for active ERG members that can include (but are definitely not limited to):
Insight and work in other business functions and departments
Members lead a relevant project possibly in another business function
Experiment and learn in a safe and nurturing environment
Develop and apply skills like leadership, consulting, problem-solving
Build an open and supportive network with members coaching each other
Increased visibility within the organization
Potential to open new career opportunities
Making a measurable change in the organization here and now.
At NxGen, we see that younger employees (primarily Generation Y also called Millennial, born after 1980) tend to drive the ERG activities most. The explanations I offer is that GenY’ers, in particular, enter the workplace as well-educated professionals, optimistic and motivated to make a difference. GenY was brought up to believe they can achieve anything and are interested to explore lateral career moves. They are used to collaborating in teams to overcome obstacles and network while leveraging technology effectively to this end. At the workplace, GenY typically is not (yet) part of the decision-making bodies due to their junior positions ‑ but they do want to be heard (and should be listed to given their increasing numbers in the demographic shift of the population that has reached the workforce).
The ERG acts through business-relevant projects. At NxGen, the member ‘grass-roots’ identify otherwise un-addressed or under-served business needs that the ERG chooses to pursue. Based on a clear value proposition (return-on-investment, ROI) for the organization the ERG seeks executive sponsorship for each project. The executive sponsor ensures strategic alignment with the organization’s goal, expertise in the functional area, political support and funding for the project (since the ERG has no funds of its own).
The project scope often lays outside of the immediate job description of the ERG-appointed project leader allowing for broader hands-on learning opportunities. Applying professional project management methods to all projects ensures the projects deliver the specified deliverables.
The ERG core team steers and administrates the ERG project portfolio which is documented in an annual business plan and shared publicly. As resources are limited, not all imaginable projects can be conducted at once but are staged. Projects can build upon and leverage each other while making use of synergies whenever possible.
In the beginning, it might be challenging to find meaningful projects that make the best use of the ERG’s resources and capabilities with favorable business impact. It takes time and persistence to develop a trustful relationship with executive management and to gain credibility as an ERG to attracts more complex and important projects from management in return.
NxGen works and communicates openly, it acts transparently and leverages (social) media to inform and connect with its members and non-members displaying operations and result of the ERG’s work.
The NxGen ERG operates within a general framework set by a company’s office to ensure all ERGs abide the company policies. This office also provides an organizational home for ERGs within the company. It generally coordinates and supports the different activities across ERGs and ensures each ERG has a distinguished executive sponsor to connect the ERG with senior management.
A charter defines the basic roles and processes of the NxGen ERG in more detail and is posted publicly. A core team of active members guides the ERG activities and ensures ERG operability. The core team is lead by the ERG’s elected chair and co-chair(s); it further comprises the project leaders, distinguished role-holders, and liaisons to key functions in the organization. The core team members support and advise each other. The ERG provides a safe and social environment that relies on trust among the members to connect, to build relationships, to network and to run projects.
NxGen actively reaches out to other ERGs, innovative groups within the organization but also other operating units and companies to cooperate, share, benchmark and collaborate on common goals.
5. Metrics and rewards system
How do you measure success, i.e. the effectiveness of an ERG? An annual business plan covers the portfolio of ERG projects. It serves as an instrument to measure the ERG performance across all ERG activities that the ERG chair is held accountable for.
What are the rewards for active ERG members? Besides the benefits listed in the above section ‘People’, accountability and success for individual members derive from their projects or their input to other ERG activities that all have clear objectives and a success metrics attached. Driving the change and making a difference is a reward in itself.
NxGen and individual members received several awards and recognition for their work inside and outside the company which the ERG celebrates in public. Some members list their ERG involvement and experience proudly on their résumé which is an indicator that the ERG’s value proposition is effective for its members, i.e. the members value the ERG membership, projects, recognition and awards as means of their ‘employability’.
Building the ERG as an innovation incubator
The business model positions the ERG clearly as a powerful business resource for the organization but it can be even more. The ERG can serve as an ‘innovation incubator’ by combining an attractive system with creative space in an effective governance framework. The processes create measurable value for the individual and the organization that can significantly contribute to process innovation and also drives product innovation.
In an empowering bottom-up movement, the ERG directly connects its active members from any level of hierarchy with the decision-makers high up. This bears the potential to cut right through established or perceived boundaries such as hierarchy, bureaucracy, and red-tape or functional silos that may severely limit the effectiveness and innovative effectiveness of other units that were created top-down within the organization.
Herein lays the deeper potential of ERGs as a true business resource and going beyond possible self-inflicted limitation to social affinity. ERGs can well be the means that contribute to driving the future success of an organization for an organization that understands and value how ERGs open opportunities to tap into its workforce and unleashes hidden potential.
ERGs rely on active membership to succeed while the ERG in return can also provide the symbiotic grounds for personal and professional development and careers of its members.
“What’s in it for me?” (WIIFM)
What every new employee resource group (ERG) requires most are people: the life-blood for ideas and activities! But how do you reach out to employees, help them understand the value of the ERG and get them involved to engage actively?
Communicating the benefits they have from joining and becoming an active member. Give them solid answers to their question: “What’s in it for me?” (WIIFM).
From my experience, there are people in every organization that actively seek an opportunity to challenge and prove themselves, who want to develop new or apply acquired skills, make a significant difference even outside their immediate job requirements, impact the business results, going the ‘extra-mile’ and being recognized for it.
Take a look at the volunteers, the activists, the silent experts, the social connectors around you that show positive ‘organizational citizenship behavior’ within your organization. What are they interested in, what troubles them, what makes them ‘tick’? What opportunities does your ERG provide for them?
Now, ERGs may offer different benefits to its members. In general, fulfilling motivators can include:
Exposure to other business areas and insight to departments outside their day-job
Doing meaningful, interesting and business-relevant work
Solving a problem that many people share
Making a difference – directly, here and now
Personal growth and professional experience and development opportunities
Developing skills such as presentation, organization, negotiation, etc.
Meeting like-minded people to connect and network with
Visibility to management, leaders, and decision-makers within the company and possibly also outside the company
Receiving appreciation and recognition for achievements
Aiming for new career opportunities.
Find the driver and aim to form a symbiosis between member and ERG to the better of the organization, the individual member and the ERG.
A business focused ERG may even serve as a real-life ‘leadership development pipeline’ for the company where more experienced members support and coach the less experienced ones to reach a shared goal. This way an ambitious ERG member can gain hands-on experience in relevant business projects, lead increasingly larger projects and take on more responsibility over time while establishing a credible and professional track-record for themselves.
Now, those are achievements an employee can proudly point out in their next job interview, while the company and the ERG benefits from unleashing the employees full potential!
Effective executive sponsorship is a key success factor for ERGs. This posting discusses the benefits of executive sponsorship and how to attract and recruit an executive sponsor.
How to attract an executive sponsor?
All right, I take it you started building you ERG business case, as this is the first step to getting executive support to move on. (See the previous posting.)
You want to make sure the ERG’s goals are not only aligned with the company’s business strategies and are measurable! Having a clear and unambiguous success metrics at hand is the best basis for argumentation, to check your progress and finally document your success. It makes it so much easier to build credibility and trust as well as to communicate success clearly to get support throughout the organization. (Metrics will certainly be a future topic here!)
So look at the business areas, the strategic goals and high-level projects that your CEO communicates. Consider thinking along those lines to flesh out the need for your ERG, to set goals and getting ideas for projects that your ERG could work on in support of the business.
What you aim for is attracting a powerful executive sponsor that serves you and your ERG in several ways:
Support and promote the ERG’s activities actively
Help you navigating through the deep waters of corporate politics to keep you and your ERG out of trouble
Point out opportunities and
Provide some basic funding to run the ERG
Offer advice when you need it (or when you think you don’t need it but then find out you were blindsided and now are happy you sponsor picked up on it!)
Look at your executive leadership team for a sponsor that has a vested interest in your ERG and its goals. Go out and talk to them, pitch your idea! Be creative how to approach them (this is actually a nice future topic by itself!). – You may be surprised how willing executives listen to compelling business logic that you unfold in front of the.
What are the business needs of the executive sponsor? Build them into your business plan. Consider synergistic ERG projects that will also help your sponsor achieving their goals. You may even ask what you could do for them and make sure to find out what the sponsor’s expectations are.
Be very respectful of their (valuable) time. Make it easy for them to follow you (give an informative summary, for example) and prepare for them what you want them to do (such as drafting an email you want them to send out).
Remember, from the executive sponsor down to each recruit each person wants to know: “What’s in it for me?” – Prepare to deliver!