VIEWS: 15 PAGES: 57 POSTED ON: 11/6/2010
Leadership Scenarios for Europe’s Future Innovation as a Base for Europe’s Future Udine,14/02/08 + TODAY: NEW SCENARIO Fractured oligopolies ... Competitive "anarchy" Heightened customer power ... Reduced pricing power Disaggregated value chains ... Diminished control Deregulation & de-scaling ... Falling barriers to entry Ultra-low cost competitors ... Margin pressure Disruptive technologies ... Risk of obsolescence Distracted & fickle consumers ... Rising novelty premium Cynical & wary customers ... Demand for authenticity Splintered markets & media ... Inaccessible customers Knowledge leveling ... Commoditized capabilities Collapsing value chains ... Shrunken industry profits Digital distribution ... Threats to property rights Easily available capital ... Well-funded challengers Anti-globalization ... Challenges to legitimacy 1 Accelerating change Physical Biological Cultural Technological Intellectual Getting Getting Better Different Creating Creating Learning Balance Learning of Time Executing Executing Music companies Phone companies Broadcast TV Department stores Pharma companies Airline operators Advertising Newspapers French vintners Cinema operators The world is becoming more turbulent faster than companies are becoming more resilient. IBM’s Net Income ($ millions) 8000 6000 4000 2000 0 -2000 -4000 -6000 -8000 90 91 92 93 94 95 96 97 Automatic Spontaneous Reflexive Leadership Challenge 1 How do you create a company that is as nimble as change itself? 1 Accelerating change 2 Intensifying competition Falling entry barriers Deregulation Digitization Venture capital Low-cost competitors China, India Legacy-free cost structures New business models Customer power Zero search costs Neutral information Falling transaction costs Ignorant consumers Neutral data High search costs Froogle, etc. Transaction costs Zero spreads Knowledge arbitrage On-line know-how Captive attention Ad-skipping Distribution monopolies Digital delivery Leadership Challenge 2 How do you create a company capable of everywhere, all-the-time innovation? 1 Accelerating change 2 Intensifying competition 3 Diminishing differentiation Offshoring IT Outsourcing Contract manufacturing Industry consortia Consultants Leadership Challenge 3 How do you create more value per capita than any of your competitors? 1 Accelerating change 2 Intensifying competition 3 Diminishing differentiation How do you build a company that is significantly more Resilient Innovative Engaging than its competitors? Engaging Passion 120 % Creativity 100 % Initiative 80 % Intellect 60 % Diligence 40 % Obedience 20 % Passion Creativity Engaged Initiative Intellect Diligence Present Obedience "A business is a community of people working together to create value for other people-- customers, team members, shareholders and communities." John Mackey, Founder and CEO, Founder and CEO, Whole Foods Market Whole Foods Market Meaning Interdependence Radical decentralization Openness Fellowship Egalitarianism Passion Creativity Initiative Intellect Bureaucracy Diligence Obedience Aggregating Effort Bureaucracy Community Exchange Contractual Voluntary Loyalty Dependency Affiliation Supervision Managers Peers Control Policies & MBO Goals & Values Coordination Role Definitions Meta-Rules Contribution Prescribed Unbounded Rewards Extrinsic Intrinsic Innovative Innovation myths: 1. Innovation is optional. The only thing that really matters about a strategy is how it’s different from every other strategy. 1. Does it have the power to change customer expectations? 2. Does it have the power to change the basis for competitive advantage? 3. Does it have the power to change industry economics? Innovation myths: 1. Innovation is optional. 2. Innovation is risky. Critical Decision Zone Substantial Millions of Millions of Resources $s won’t make it $s won’t let you happen catch up Limited Short Long Elapsed Time Innovation myths: 1. Innovation is optional. 2. Innovation is risky. 3. Innovation can't be taught. How have you been trained as a business innovator? Where do you to get experimental capital to advance a new idea? Where is innovation represented in your personal performance metrics? How do you find an innovation mentor? How do your company's management processes reinforce innovation as a core value? Resilient Cognitive Blind to reality MP3 files are inferior to CDs Dismiss Getting music online is clumsy They'll download only as long as its free Rationalize The whole model is based on theft We're going to sue those college kids Mitigate We'll create an iron-clad DRM regime Digital downloads are the future Confront We can create a new business model Regard everything you believe as no more than a hypothesis. Filter out the filterers. Find the bleeding edge of change. Be alert to strategy decay. Cognitive Strategic Blind to Too few reality options Ideas 1,000 Number of options Experiments 100 Projects 10 Winners 1 Cognitive Strategic Political Blind to Too few Inflexible reality options resources There are no “slack” resources. To lose resources is to lose political power The resource allocation process is biased against new ideas. Gamechanger 1. Idea submission: Anyone, any time 2. Peer review: Within a week 3. Test & mature: Testing hypotheses 4. Expert review 5. First tollgate: Value proposition 6. Technical feasibility 7. Second tollgate: Business logic Management Innovation The work of Management management processes Resources: Capital allocation Accumulating & Allocating Strategic planning Activities: Coordinating & Controlling Training & development Knowledge: Project review/monitoring Acquiring & Applying Hiring & promotion Objectives: Setting & Programming Performance reviews Effort: Product development Motivating & Aligning Knowledge management Relationships: Building & Nurturing Internal communications How do you accelerate management innovation? Commit yourself to a worthy 1 problem. 1. What are the perennial trade-offs that seem impossible to resolve? 2. Where do we see the biggest gaps between rhetoric and reality? 3. How is the environment changing and what new challenges will this pose? Commit yourself to a worthy 1 problem. Deconstruct your 2 management beliefs. 1. Change starts at the top. 2. It takes a crisis to provoke change. 3. Only a strong leader can change a large company. 4. To lead change, you need a clear agenda. 5. Most people are against change. 6. With any change there will be winners and losers. 7. Change management is a disciplined process. 8. Organizations can only cope with so much change. 9. You have to make change safe for people. 10. Changing too early is as bad as changing too late. Commit yourself to a worthy 1 problem. Deconstruct your 2 management beliefs. Search for powerful new 3 principles. DNA Standardization Limits cross-boundary learning and circumscribes opportunities Specialization Forgoes innovation in favor of conformance Hierarchy Over-values experience and under-values new thinking Planning & control Creates a dangerous illusion of extrapolation-based predictability Extrinsic rewards Discounts the power of self- organization and volunteerism Commit yourself to a worthy 1 problem. Deconstruct your 2 management beliefs. Search for powerful new 3 principles. 4 Learn from positive deviants. Freedom Discipline W Foods: Select your team members Performance is very visible Decide on pricing, selection Pay is tied to productivity Control staffing Peer pressure to hit targets Google: 70/20/10 Experiment quick, fail fast Small, self-directing teams Continuous peer feedback Broad span of control Differentiated rewards Commit yourself to a worthy 1 problem. Deconstruct your 2 management beliefs. Search for powerful new 3 principles. 4 Learn from positive deviants. Re-engineer your 5 management processes. Management development: Made innovation a central topic in the company's leadership development programs. Capital spending: Set aside a substantial share of the capital budget for truly innovative projects. New product development: Required that every new product contain "new to the market" innovation. Employee training: Required every salaried employee to get trained as a business innovator. Measurement: Developed a detailed set of metrics to track innovation inputs, throughputs & outputs. Performance review: Made innovation a focal point in all business review meetings. IT: Built an innovation intranet site where employees can post and discuss new ideas.
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