Why do so many strategies fail? Usually the fault lies with the strategy itself and/or how it was formulated, and/or how it was executed. In this book Nilofer Merchant offers what she characterizes as “a different approach that gets everyone to collaborate and create winning strategies.” More specifically, this approach requires that everyone is able to participate in and contribute to the collaborative process, that allows decisions to be made based on insights gathered from throughout the given enterprise, that these decisions be in alignment with the vision, that there be “collective debate” with principled dissent, and that there be on-going, constant communication between and among those involved. Merchant also stresses the importance of taking an approach that utilizes conflict and tension to motivate creativity, one that focuses on what is most important (what “matters most”), and that enables those involved to move faster (i.e. get and better work done sooner) while tapping into (indeed leveraging) everyone’s strengths.
That is the book’s “what,” clearly presented in the Preface. Most of the material that follows explains a “New How” to achieve those and other worthy objectives. Merchant is a passionate empiricist and diehard pragmatist, determined to understand what works, what doesn’t, and why. I appreciate her focus on a combination of processes for strategy planning and execution but only after rigorous consideration of options versus objectives in terms of where and how to compete. Long ago, I began to view strategies as “drivers” and tactics as “nails.” The New How suggests different and, Merchant insists, better ways to decide how to compete, whatever the nature and extent of the given marketplace may be. That is, how to drive high-impact results.
In many of the organizations by which I have been retained to assist with accelerating executive development and performance improvement, I soon realized that the strategies they created were what Merchant characterizes as an “air sandwich”: New “marching orders” are formulated in the C-suite and communicated to supervisors in middle management (viewed as messengers) who are then expected to explain the new strategy and obtain buy-in of it by those at lower levels.
As Merchant explains, “The middle is missing [the substance of the business] a set of understandings [of all that needs to be considered and managed] that would connect the vision of the direction to the reality. By focusing only on the top or bottom, we lose the middle, which is where the value is.” Inevitably, there are systemic problems and Merchant discusses three: “tunnel vision” (i.e. focus only on what serves one’s self-interests) “ahead of yourself” (i.e. focus on doing without sharing), and “It’s not my job,” an attitude whose meaning and significance are self-evident.
Throughout her narrative, she includes content modules of key points. For example:
“The Seven Responsibilities” of a Leader (Pages 81-98)
“Collaborate strategy process framework” or QuEST (103)
“Managing Temptations” (Five)
• Believing That You Already Know What Problem Needs Solving (126)
• Choosing Certainty over Clarity” (Page127)
• Saving Ideas You Personally Like (144)
• Wanting Harmony Instead of Productive Conflict (145)
• Choosing Your Individual Status over Team Results (203)
“Using MurderBoarding” (162-163)
“Turning Around a Big Ship” (165-166)
“The Goal: Selecting a Winning Strategy” (188-189)
Although Merchant devotes almost all of her attention to “how,” she does specify what she characterizes as “first principles” for the New How: Distribute decision making, Demand good follower ship, Reward co-ownership, set clear goals and then improvise, finally, Be students of the game in which the team competes. These are not principles only to be affirmed; they must also be lived each day, by each person, during each transaction.
Near the conclusion of the book, Nilofer Merchant asserts (and I wholeheartedly agree) that, with all dues respect to the value of “eye-catching business results of profits and stock price,” it is important to remember that the organizational systems and processes enable a company’s people to produce those results. They are “the unseen and unsung parts that drive the fundamental health, growth, and results of the system.”
One final point: Hugh MacLeod is to be commended on the superb illustrations he created for this book.
Here is an excerpt from an article written by Sohrab Vossoughi for the Harvard Business Review blog. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.
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As much as the business world seems to admire design innovation these days, very few companies are doing it well.
As the founder of a firm that helps businesses innovate, I’ve watched approvingly as design has gone from a niche topic to the covers of mainstream publications and the keynotes at business conferences. And yet, in 28 years of creative consulting, I have seen far more corporate design efforts fail than succeed.
The arguments in favor of these efforts have been solid: commercial markets are saturated with adequate offerings, consumers are more aware of alternatives and more discerning in their choices, and innovative design is an effective way to differentiate and communicate a brand. But while there are plenty of familiar examples of design-driven market success — Oxo, Apple, Umpqua Bank, Virgin Atlantic and Netflix, to name a few — they are the exceptions, not the rule.
It’s common to hear of companies hiring a creative consultancy, applying its recommendations, and yet at the end of the contract, seeing little or no return on investment. The majority of engagements that end this way have resulted in solutions that were never implemented, or were not implemented to their full potential. The design failed, in other words. My observations of attempts at design innovation in the business world suggest that this track record is typical. It can lead thoughtful executives to view design hype with skepticism, and suspect a case of winner’s bias: magazines run cover stories about the rare design-driven superstar, but ignore the more numerous losers.
But there are strong similarities among companies that use design effectively, and it’s not that they hired the “right” consultancy or believed in the power of design more than their competitors. Design failures are rarely the result of a bad concept or an unwilling client — the companies mentioned above have used a variety of consultancies at crucial junctures in their growth, and most of them still do. What sets them apart is an alignment of expectations. These companies go into the design process with a clear understanding of the role they must play, and a willingness to let their business be transformed by it.
The truth is there’s only so much designers can do on their own to make a company successfully innovative. Companies that misalign their expectations — and many do ignore their own part in becoming more innovative — generally fail. They genuinely want good design, and they want it to impact their bottom line, but they want it to take place externally. Their vision of design as a purely third-party service is doomed.
This misalignment expresses itself in many forms. Here are five of the most common ways to fail at design:
[Here are three of the five. To read the complete article, please click here.]
Refuse to change any other part of your business. Treating design as an add-on can work when a company commissions a “designer series” of products to briefly boost the brand’s appeal, but this is hardly what we mean when we talk about innovation saving your business. The smartest companies foster an internal culture of innovation, which creative consultants can support, but only if other aspects of the business — management, development, manufacturing, marketing — are open to change. More immediately, requiring a design team to propose only solutions that can be realized with your current process ensures more of the same.
Design outside of your innovation space. Designers don’t implement solutions, companies do. For that reason, the most innovative solution on earth won’t work if it’s pursued by a company that can’t properly execute it. At Ziba we call this capability the client’s “innovation space” — the arena in which they’ve already proven themselves willing and able to lead the pack. Some companies are technology innovators, others are product innovators or experience innovators. Learning which you are in order to direct later efforts is a crucial first step that most companies skip.
Try to design for everybody. Design works as a differentiator because it responds to human needs, both functional and emotional. Most of us agree that a Ferrari is beautifully designed, but nobody would say it’s for everyone. The same could be true of a minivan. Each succeeds in its market because it delivers to a tightly defined group of users. In a landscape where consumers increasingly demand tailored experiences, failing to identify a clear strategic target is designing to fail. The most useful tool a client can give a consultancy is a well-considered, focused profile of who they’re designing for. The least useful is a mandate to create something that appeals to everyone.
Good design can indeed lift a company’s performance from lackluster to outstanding, but it’s still just one element in the overall system. The key to getting what you need from design is letting it influence, and be influenced by, the other elements in that system. Only when design considerations are integrated into your company’s culture as thoroughly as quality, schedule and budget are, will you start moving down the path of design-driven success.
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Sohrab Vossoughi is founder and President of Ziba Design. He holds more than 40 patents, has received ten citations in Business Week magazine for Best Product Design, and is the only industrial designer to have been elected a Global Leader of Tomorrow by the World Economic Forum.
Here is an excerpt from an article about John Hagel III featured by the Knowledge@Wharton website, sponsored by Wharton School of the University of Pennsylvania.
To read the complete article, download/or listen to the audio, check out all the other free Wharton resources, and subscribe for Knowledge@Wharton email updates, please click here.
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In the early 2000s, Silicon Valley-based business guru John Hagel III was involved in a high-tech start-up and hired Stephen Gillett, a young man right out of college. Less than a half dozen years later, Gillett was named a senior vice president and chief information officer for Starbucks — the youngest CIO of a Fortune 500 company at that time.
And Hagel thinks he knows a primary reason for his one-time employee’s meteoric rise. Everything that Gillett needed to know, Hagel said, he learned while becoming a guild leader in the popular online game World of Warcraft.
The co-chairman of a tech-oriented strategy center for Deloitte LLP, Hagel told the annual Wharton Leadership Conference that Gillett — just like other top players on the massive online multi-player game, with an estimated eight million participants — reached out independently to build a large team of allies that solved complex problems and developed winning strategies.
Guild leaders in World of Warcraft “require a high degree of influence,” noted Hagel, a successful author and longtime consultant. “You have to be able to influence and persuade people — not order them to do things. Ordering people in most of these guilds doesn’t get you far.”
The look inside World of Warcraft and its relevance for today’s complicated business environment was part of a recent research project and book by Hagel and two co-authors — John Seely Brown and Lang Davison — that examines how companies re-invent and revive themselves by moving away from secretive, proprietary shops and toward a more open, collaborative business model. Their findings resulted in the recent publication of The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion.
The bottom line, they found, is that American companies will continue to fall behind their counterparts in emerging markets such as China or India unless they move toward what Hagel called “the edge,” which is where passionate, change-driven employees collaborate with others on the kind of innovations that prevent a company from seeing its core business model slowly erode. “The only thing that succeeds,” Hagel said, “is to take those initiatives on the edge and pull more and more of the core out to those edges — rather than trying to pull them back in.” He asserted that chief executives who stick to the conventional wisdom and cling to secretive proprietary business systems are doomed to fail.
This year’s Wharton Leadership Conference — titled, “Leading in a Recovering (and Even Rebounding) Economy” — came at a time of increasing focus on corporate executives and the role they play in defining a business’s direction, its image and its accountability. The conference was organized by the school’s Center for Human Resources, Center for Leadership and Change Management and Wharton Executive Education, in partnership with Deloitte. Hagel heads Deloitte’s Center for the Edge, which studies emerging business strategies.
Hagel’s more than 30-year career in the business consulting and high-tech industries also included a stint at iconic 1980s video game firm Atari, as well as launching the e-commerce practice at McKinsey. He said the bad news uncovered by his research team was that the erosion of American business leadership was not so much a function of the downturn beginning in 2008 as it was a systemic decline dating as far back as the mid-20th Century.
In trying to quantify the problems facing American industry, Hagel and his co-authors found little existing data to measure the overall performance of U.S. companies. So they worked up some measurements of their own — and even they were surprised at what they uncovered. Since 1965, they learned, the return-on-assets for all American firms has eroded by 75%.
“The erosion has been sustained and significant. There is absolutely no evidence of it leveling off, and there is certainly no evidence of it turning around,” Hagel noted. Indeed, another measurement showed that survival is also an increasing problem for U.S. corporations. Firms in the Standard & Poor’s 500 in 1937 had an average life expectancy of 75 years; a more recent analysis of the S&P 500 showed that the number had dropped to just 15 years. “When I’m in executive boardrooms, I hear the metaphor of ‘the Red Queen’ and the notion that we have to run faster and faster just to stay in place,” Hagel said, referring to the character from Lewis Carroll’s Through the Looking-Glass. “I would make the case, based on the analysis that we’ve done, that the Red Queen is actually an optimistic assessment of our situation, that we are running faster and faster and falling farther and farther behind.”
What went wrong? Hagel argued that American companies and their leaders were essentially not prepared for a move away from a corporate model of “knowledge stocks” — developing a proprietary product breakthrough and then defending that innovative advantage against rival companies for as long as possible — and toward a more open and collaborative business model that he called “knowledge flows.” The problem, he said, is that because of the increasingly global nature of business competition, the value of a major proprietary breakthrough or invention erodes in value much more quickly than in the mid-20th Century.
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To read the complete article, download/or listen to the audio, and check out all the other free Wharton resources, please click here.
Words that Don’t Work, like… When I go to my “Doctor,” I am a “Patient,” not a “Health Care Consumer”
I intentionally keep politics out of my posts on this blog as much as possible. It is becoming difficult – politics permeates every facet of life these days. But this one was too important to ignore. It comes from Paul Krugman’s New York Times column earler this week, Patients Are Not Consumers. Here’s the key excerpt:
But something else struck me as I looked at Republican arguments against the board, which hinge on the notion that what we really need to do, as the House budget proposal put it, is to “make government health care programs more responsive to consumer choice.”
Here’s my question: How did it become normal, or for that matter even acceptable, to refer to medical patients as “consumers”? The relationship between patient and doctor used to be considered something special, almost sacred. Now politicians and supposed reformers talk about the act of receiving care as if it were no different from a commercial transaction, like buying a car — and their only complaint is that it isn’t commercial enough.
What has gone wrong with us?
First, the obvious: I do not want to think of myself as a “consumer” of health care, I want to think of myself as a “patient” going to see my “doctor.” And, yes, I do have “my doctor,” not my “health care provider.”
We have known for a very long time that the labels, the names, we use, shape so much more than just our vocabulary. The words we use shape our understanding in every part of life, even create reality. And I think Frank Luntz is onto something with his idea that there are words that work – but, there are also words that don’t work. And we need to reject those words, jettison them from our vocabulary, and stand strong against them as they creep in all around us — which I try to do in my own conversations and presentations.
“Consumer” should never replace “patient” when it comes to me and my “doctor.” This is just one example of a word we should jettison. There are a few other words that don’t work for me: like “faith community,” instead of “church, synagogue/temple, mosque.” I do not attend my “faith community,” I go to “church.” In fact, I go to church at the First Methodist Church, not the First Methodist Faith Community.
Words that work, whether fiction or reality, not only explain but also motivate. They cause you to think as well as act. They trigger emotion as well as understanding.
In the book, he quotes Winston Churchill:
“Broadly speaking, the short words are the best, and the old words best of all.”
I agree with this. And “doctor” is shorter and better than “health care provider,” and “church” is better than “faith community.”
Famed rhetorical theorist Kenneth Burke put it this way:
“… language does our thinking for us. Language choices not only reflect individual disposition but influence the course of policy as well… Because the terms we use to describe the world determine the ways we see it, those who control the language control the argument, and those who control the argument are more likely to successfully translate belief into policy.” (quoted by Kathleen Hall Jamieson and Paul Waldman).
I suspect you’ve got your own list of words that don’t work. And I suspect, if we put our minds to it, we could come up with quite a few words that don’t work; words that simply are not working for us.
And let’s start here — let’s remind those making decisions in Washington that we are not “consumers” of “health care providers,” we are “patients” going to see our “doctors.”
Here is another outstanding article from “True Tales of Fortune” series featured by strategy+business magazine, published by Booz & Company. James O’Toole is the author of the article.
To read the complete article, check out a wealth of other resources, sign up for email updates, and obtain subscription information, please click here.
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The Publisher: Henry Luce and His American Century (Knopf, 2010)
Still Surprised: A Memoir of a Life in Leadership (Jossey-Bass, 2010)
Last Call: The Rise and Fall of Prohibition (Scribner, 2010)
For All the Tea in China: How England Stole the World’s Favorite Drink and Changed History (Viking, 2010)
We read biography to better understand ourselves much as we read history to better understand our times. Four engaging new books admirably aid us with both those tasks. As so many things do these days, our review of the year’s best business-themed biographies and histories begins — and ends — in China.
One Man’s Life, Time, and Fortune
Editor and publisher Henry Luce (1898–1967) presided over the golden age of general-interest magazines. He was cofounder of Time in 1923 and, over the next three decades, created Life, Fortune, and Sports Illustrated. In The Publisher: Henry Luce and His American Century, celebrated and prolific historian Alan Brinkley serves up both an insightful account of the creation of those magazines and a brilliant character study of the entrepreneur who created them.
Luce was a complex character, a “striver” who sought a central role for himself on the world’s stage, a man as ego-driven as he was pathetically insecure and lonely. Brinkley suggests that the crucible for the publisher’s many successes — and his chronic unhappiness — was his early life in his native China, where he absorbed his missionary father’s “seriousness, his ceaseless search for self-improvement, his energy, his ambition, his certainty of purpose.” Indeed, the leitmotif of this masterfully crafted biography is Luce’s lifelong search for the higher purpose that would define not only his own life, but the mission (clearly, he was his father’s son) of his magazines and, ultimately, that of America itself.
While growing up in China, Luce had dreamed longingly of his Edenic homeland across the Pacific, a country he would not visit until he was 14 and ready to enroll in Connecticut’s prestigious Hotchkiss School. He turned out to be more conventionally American in his values and beliefs than most of his fellow students at Hotchkiss (and later at Yale) who had been born and raised in the United States. Throughout his life, Luce would be his nation’s quintessential booster, whose cheerleading culminated in his influential essay “The American Century” published in Life in 1941, in which the central thesis was that the United States had a sacred duty to bring democracy, capitalism, Christianity, and modernity to the world. He argued that America was, as it should be, the only world power, and with that power came the responsibility to become “the Good Samaritan of the entire world [with a duty to feed] all the people of the world who…are hungry and destitute.”
Luce wanted America to start to fulfill that mission in China. Even more than his beloved magazines, or his countless lovers, China was the true passion of his life (“Oh brave new world…Oh China!” he wrote with characteristic pomposity and enthusiasm). He, his magazines, and his nation were all required, in his cocksure mind, to help the civilized, Christian Chiang Kai-shek and his Nationalists defeat the godless Communists led by the brutish Mao Tse-tung. When the U.S. “lost” China and Chiang retreated to Taiwan in 1949, Luce went ballistic, and he and his magazines became ferocious cold warriors.
Yet the conservative Luce did not fall into lockstep with Joe McCarthy and the right wing of the Republican Party. Although a prominent and virulent critic of the progressive policies of Presidents Franklin Delano Roosevelt and Harry Truman, Luce was nonetheless a Teddy Roosevelt, Wendell Willkie, Dwight D. Eisenhower, and Nixon moderate; he was not isolationist, and he believed in an active role for government. For example, in the 1950s, he and his magazines were in the vanguard in condemning racial segregation in the South and promoting equality across the nation.
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To read the complete article, please click here.
James O’Toole is the Daniels Distinguished Professor of Business Ethics at the University of Denver’s Daniels College of Business. He is co-author, with Warren Bennis and Daniel Goleman, of Transparency: How Leaders Create a Culture of Candor (Jossey-Bass, 2008), which was chosen as one of last year’s best business books by strategy+business.
Here is the latest post by Joseph A. Maciariello featured in the Joe’s Journal series at the Drucker Exchange (DX) sponsored by the Drucker Institute. The Drucker Exchange (the DX) is a platform for bettering society through effective management and responsible leadership. It is produced by the Drucker Institute, a think tank and action tank based at Claremont Graduate University that was established to advance the ideas and ideals of Peter F. Drucker, the father of modern management.
To check out a wealth of resources and subscribe to its online newsletter, please click here.
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“Bystanders have no history of their own. They are on the stage but are not part of the action. They are not even audience. The fortunes of the play and every actor in it depend on the audience, whereas the reaction of the bystander has no effect except on himself. But standing in the wings — much like the fireman in the theater — the bystander sees things neither actor nor audience notices. Above all, he sees differently from the way actors or audience see. Bystanders reflect, and reflection is a prism rather than a mirror; it refracts.
To watch and think for yourself is highly commendable. But ‘to shock people by shouting strange views from the rooftops is not.’ The admonition is well taken. But I have rarely heeded it.”
–Peter F. Drucker
Peter Drucker’s book Adventures of a Bystander comes as close to an autobiography as anything he wrote. What astonishes me is how many important trends he identified and described in advance of others. He was often ignored and then proven right. When he wrote The Unseen Revolution in 1976 and analyzed the implications of the demographic time bomb, not many people paid attention. As Peter saw it, bystanders are people who see things that others either don’t see or choose to ignore. Policy makers willingly chose not to see this one. The result: Previous generations in the U.S. have robbed future generations—the unseen robbery!
Drucker identified the emergence of the knowledge society and discussed it for 50 years, and some now understand it. Citizens of Wisconsin and Ohio are dealing, however contentiously, with the reality that their economies have changed and that competitiveness for individuals, organizations and states will be based on productivity of knowledge going forward. Productivity and salaries are, in time, linked to each other. Unions can block market forces but only for a time and at great damage to the welfare of citizens. Why? States are in competition with each other to attract the most desirable employers.
The growing Hispanic population raises still other issues such as bilingual education, cultural integration, employment and health care. This population group has low college-graduation rates and must deal with health issues such as predisposition to diabetes. If we as a society don’t tackle these issues head-on right now, we are going to have a significant number of people who are not suited to participate in the knowledge economy and who are going to be dealing with serious health complications like blindness, heart problems and kidney disease. This will further exacerbate problems in our healthcare system.
I remember as a graduate student at NYU when Drucker wrote about certain market trends in his 1968 book Age of Discontinuity: Guidelines to Our Changing Society. I did not believe him—that is not what we were being taught in our graduate classes. Years later I saw that every one of his observations materialized. We would have been better off studying that book than some of the others we studied. His advice was not heeded.
Very early on, Peter was observing how all of these things were headed our way. He spent a lot of time working alone, and I think in this passage he is reflecting on the idea of being a loner — an outsider, observing the world outside his window — and becoming frightened by the implications. Peter Drucker was a social prophet, and the advice of prophets is often ignored. We would do well to pay attention to it.
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Joseph A. Maciariello is the Horton Professor of Management & Director of Research and Education, The Drucker Institute. You can contact him directly at firstname.lastname@example.org.