How Innovative Is Your Company’s Culture?

Here is a brief excerpt from an article co-authored by Jay Rao and Joseph Weintraub for The MIT Sloan Management Review. To read the complete article, check out others, obtain subscription information, and sign up for email alerts, please click here.

Image courtesy of Flickr user reway2007.

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Today’s executives want their companies to be more innovative. They consume stacks of books and articles and attend conventions and courses on innovation, hoping to discover the elixir of success. They are impressed by the ability of comparatively young companies such as Google and Facebook to create and market breakthrough products and services. And they marvel at how some older companies — Apple, IBM, Procter & Gamble, 3M and General Electric, to name a few — reinvent themselves again and again. And they wonder, “How do these great companies do it?”

After studying innovation among 759 companies based in 17 major markets, researchers Gerard J. Tellis, Jaideep C. Prabhu and Rajesh K. Chandy found that corporate culture was a much more important driver of radical innovation than labor, capital, government or national culture. [Note: 1. G.J. Tellis, J.C. Prabhu and R.K. Chandy, “Radical Innovation Across Nations: The Preeminence of Corporate Culture,” Journal of Marketing 73, no. 1 (January 2009): 3-23.] But for executives, that conclusion raises two more questions: First, what is an innovative corporate culture? And second, if you don’t have an innovative culture, is there any way you can build one? This article addresses both questions by offering a simple model of the key elements of an innovative culture, as well as a practical 360-degree assessment tool that managers can use to assess how conducive their organization’s culture is to innovation — and to see specific areas where their culture might be more encouraging to it.

Six Building Blocks of an Innovative Culture

An innovative culture rests on a foundation of six building blocks: resources, processes, values, behavior, climate and success. These building blocks are dynamically linked. For example, the values of the enterprise have an impact on people’s behaviors, on the climate of the workplace and on how success is defined and measured. Our culture of innovation model builds upon dozens of studies by numerous authors.

When it comes to fostering innovation, enterprises have generally given substantial attention to resources, processes and the measurement of success — the more easily measured, tools-oriented innovation building blocks. But companies have often given much less attention to the harder-to-measure, people-oriented determinants of innovative culture — values, behaviors and climate. Not surprisingly, most companies have also done a better job of managing resources, processes and measurement of innovation success than they have the more people-oriented innovation building blocks. As many managers have discovered, anything that involves peoples’ values and behaviors and the climate of the workplace is more intangible and difficult to handle. As one CEO put it, “The soft stuff is the hard stuff.” Yet these difficult “people issues” have the greatest power to shape the culture of innovation and create a sustained competitive advantage.

[Here's the first of the six that Rao and Weintraub discuss.]

Values

Values drive priorities and decisions, which are reflected in how a company spends its time and money. Truly innovative enterprises spend generously on being entrepreneurial, promoting creativity and encouraging continuous learning. The values of a company are less what the leaders say or what they write in the annual reports than what they do and invest in. Values manifest themselves in how people behave and spend, more than in how they speak.

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To read the complete article, please click here.

Jay Rao is Professor, Strategy & Innovation, at Babson College. He earned a B.Engg. degree at Indian Institute of Technology( Chennai, India), an M.S. at the University of Kentucky, and a Ph.D. at University of California, Los Angeles. Joseph Weintraub is the Founder and Faculty Director of the Babson Coaching for Leadership and Teamwork Program. He earned a B.S. at the University of Pittsburgh and M.A. and Ph.D. degrees at Bowling Green State University

Joey Reiman: Part 2 of an interview by Bob Morris

Joey Reiman is CEO and founder of BrightHouse. Over the past 25 years, Joey has worked with leadership at The Coca-Cola Company, Procter & Gamble, McDonald’s and Newell Rubbermaid, and has emerged as one of the nation’s foremost visionaries and leading authorities on thinking and marketing. He is the best-selling author of several books, including Thinking for a Living and, more recently, The Story of Purpose: The Path to Creating a Brighter Brand, a Greater Company, and a Lasting Legacy. He is also a world-renowned speaker who provides listeners with the inspiration and foresight needed to become leaders of the future.

A graduate of Brandeis University, Joey has won more than 500 creative awards in national and international competitions, including the Cannes Film Festival. He also teaches a course on “Ideation” as an adjunct professor of the Goizueta Business School at Emory University. Joey is a librettist, author, soul man, professor, iconoclast, screenwriter, speaker, and jump roper. He is a father, husband and Famillionaire who lives in Atlanta with his wife and two sons.

Here is an excerpt from Part 2 of my interview of him.

To read all of it, please click here.

To read Part 1, please click here.

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Morris: When and why did you decide to write Thinking for a Living?

Reiman: The world was ad rich and idea poor. I was making some if the best ads on the planet, winning hundreds of awards and having a great time. But something was wrong. I was getting paid to execute my ideas rather than come up with them. The advertising model was always based on media spend. Then the creative was thrown in free. What kind if model is that? I thought, what if I were to be paid for raw but vital ideas. Ideas that as Steve Jobs would later say, “put a dent in the universe.” and what if I sold these idea to visionaries rather than ad directors? I shuttered my multi-million dollar ad agency and built a consultancy with nine of the nest thinkers on the planet. Thinking For A Living tells this story and lays down the tenants of great thinking.

Morris: Were there any head-snapping revelations while writing it? Please explain.

Reiman: Yes, that what I was writing about was truly revolutionary. I remember sitting with the head if one of the largest agency group on earth. After I told him about this idea I had called “ideation” he looked at me as if my cheese had fallen off the cracker. He feels very differently about me today as many of his biggest clients seek BrightHouse counsel.

Morris: To what extent (if any) does the book in final form differ significantly from what you originally envisioned?

Reiman: Writing a book allows you to write new chapters in your own life. While writing Thinking For A Living, I realized that some ideas were indeed bigger than others–the largest being purpose. That insight would set my course and career for the next eighteen years.

Morris: I commend you on your skill with regard to formulation of chapter titles. They evoke questions that alert readers to your key points. For example, how did the most money you “never made” teach how to think for a living? (Chapter 1)

Reiman: In advertising, you win business by presenting great ideas but you are only paid when you execute them. The most money I never made was about winning the Days Inn business with a big idea. Though I won the business, the hotel’s leadership wanted a different agency than mine. They asked if they could buy the idea for a lot of money. But my ego got the best of me and I said no. They acquiesced and I got the account. A year later my CFO told me that we had made about 100k on the account. If I had let them pay just for the idea, my agency would have made a fortune. From that day forward I would have no reservations about a hefty idea fee from another hotel company.

Morris: Here’s another: How did the “scariest experience” of your life teach you “thinking is about a lot more than thought”? (Chapter5)

Reiman: As I lay in a hospital room in Rome, I learned about the power of ideas—that thought had wings. My thinking would lead to my first book SUCCESS.THE ORIGINAL HANDBOOK. In this work, I shared my journey to recovery with 5 tenants that correlated with your five fingers. Br THUMBS up. POINT at to your purpose. Give your MIDDLE FINGER to fear. March FORTH and LITTLE things mean a lot.

Morris: And another: How best to create a “thinking company”? (Chapter 7)

Reiman: Here I outline what it takes to build a more thoughtful company. They say that money talks. But people think. And that’s your real asset. I think the term “human resources” is an obscenity. People are not resources to be used up. We should rename our HR function: HUMAN RESOURCEFULNES

Morris: I agree wholeheartedly with you about “the centrality of creative ideas in modern life and how to nurture and foster and create ones that will revitalize” one’s business, family, and being, “and in the most profound way, our whole society.” To what extent is your book a “road map” for that proces

Reiman: THINKING FOR A LIVING is more a compass. The roadmap would come in my next book, THE STORY OF PURPOSE.

Morris: With all does respect to Archimedes, I agree with Isaac Asimov: “The most exciting phrase to hear in science, the one that heralds new discoveries, is not ‘Eureka!’ (I found it!) but ‘That’s funny…’” Your own thoughts about all this?

Reiman: With all due respect to Issac Asimov, I believe in celebration of thought. Yes, all eurekas are preceded with a ‘that’s funny” but the elation I feel occurs when I find that the missing thought is so overwhelming that I have to walk away from what I have just discovered.

Morris: You devote Chapter 2 to a discussion of what your characterize as “The Golden Age of Ideas.” When was it and what are its defining characteristics?

Reiman: Machines ran the Industrial Age. The industrious Age of Ideas will be run by our minds.

Morris: However different great thinkers throughout history may be in most respects, they do share certain characteristics in common. You suggest nine. Which of them can almost anyone acquire or develop? Please explain.

Reiman: BIG THINKERS ARE ON FIRE: Find your purpose and you will ignite your passion. Once lit, fan it and your ideas will catch fire. BIG THINKERS NEVER LOSE IN THEIR IMAGINATION: Worry is a form of atheism. Use your faith. BIG THINKERS BET THE FARM: Creativity is the destination but courage is the journey. What’s the worst that can happen if you take a risk? Whatever your answer, its no where near as bad as not taking the risk. BIG THINKERS MARINATE IN THOUGHT: Wonder? Leads to Wonder! Remember in grammar school when you got the points for how you got to the answer rather than the answer. Life till works that way. BIG THINKERS THINK BETTER TOGETHER: No one has ever done something great alone. You need two people in your life—a soul mate for life and a goal mate for business. BIG THINKERS DON’T TAKE NO FOR AN ANSWER: Meet every no with a yes. It’s a bigger word. BIG THINKERS TURN REALITY INTO FANTASY. Imagine the way the world ought to be. Now move there. BIG THINKERS LIVE THEIR LIVES ON PURPOSE. If you have a why, you can deal with any what, who, where or when. BIG THINKERS THINK WITH THEIR HEART: the brain runs everything but the heart runs the brain.

Morris: In your opinion, what has been the single most significant change in workplace culture since Thinking for a Living was first published in 1998? Please explain.

Reiman: Respect for ideas and the people who have them.

Morris: In your opinion, what will be the single most significant change during (let’s say) the next 3-5 years? Please explain.

Reiman: Today’s currency is the idea but tomorrow’s ideas will be the currency.

Morris: When and why did you decide to write The Story of Purpose?

Reiman: I wrote THE STORY OF PURPOSE so that people would never have to work again. Instead of getting a job they could heed their calling. If enough people did this the world would be a lot happier.

Morris: In the Introduction, Phil Kotler refers to “the societal benefit that organizations are capable of delivering when they believe they have a greater responsibility in the world.” For example?

Reiman: When Sony founder, Akio Morita was presented a strategy for his fledgling company, it read “to be the best technology company in Japan.” He changed it to “Japan being the best technology country in the world.” If you want to find your purpose, look beyond yourself.

Morris: Please explain your reference, in the Preface, to “the most exciting time and place in business

Reiman: For the first time in history, business is part of every human endeavor. As the largest sector on the planet business has a responsibility to protect and nurture those living on it.

Morris: In September of 1978, after Israel’s Prime Minister Menachem Begin and Egypt’s President Anwar Sadat agreed to several accords during meetings at Camp David, they were asked to explain why they were able to reach those agreements, given the fact that their respective countries had been bitter and bloody enemies for thousands 0f years. Prime Minister Begin replied, “We did what all wise men do. We began at the end.” In my opinion, Prime Minister Begin offers excellent advice to leaders of organizations that need to become purpose-driven. Do you agree?

Reiman: Prime Minister Begin is correct in that to begin in the end is to return to the beginning—both are states of peace. As I like to say, “the fruits are in the roots.”

Morris: Throughout history, organizations (what6ever their size and nature may be) have been “purpose-driven.” For example, to become the largest, most profitable, and dominant in their competitive marketplace, etc. In your opinion, are these self-serving purposes and social responsibility mutually exclusive or, in fact, [begin italics] interdependent [end italics]? Please explain.

Reiman: Bigger is better. Google, Apple, Whole Foods and GE are all big companies with purpose whose leaders also believe that better is bigger.

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To read all of Part 2, please click here.

To read Part 1, please click here.

Joey invites you to check out the resources at these websites:

Joey’s website

BrightHouse homepage

Amazon page

Goizueta faculty page

LinkedIn page

Joey Reiman: Part 1 of an interview by Bob Morris

Joey Reiman is CEO and founder of BrightHouse. Over the past 25 years, Joey has worked with leadership at The Coca-Cola Company, Procter & Gamble, McDonald’s and Newell Rubbermaid, and has emerged as one of the nation’s foremost visionaries and leading authorities on thinking and marketing. He is the best-selling author of several books, including Thinking for a Living and, more recently, The Story of Purpose: The Path to Creating a Brighter Brand, a Greater Company, and a Lasting Legacy. He is also a world-renowned speaker who provides listeners with the inspiration and foresight needed to become leaders of the future.

A graduate of Brandeis University, Joey has won more than 500 creative awards in national and international competitions, including the Cannes Film Festival. He also teaches a course on “Ideation” as an adjunct professor of the Goizueta Business School at Emory University. Joey is a librettist, author, soul man, professor, iconoclast, screenwriter, speaker, and jump roper. He is a father, husband and Famillionaire who lives in Atlanta with his wife and two sons.

Here is an excerpt from Part 1 of my interview of him. To read the complete interview, please click here.

*     *     *

Morris: Before discussing Thinking for a Living and then The Story of Purpose (in Part 2), a few general questions. First, who has had the greatest influence on your personal growth? How so?

Reiman: St. Jude. He is the catholic Saint of the impossible. While in Rome, I was a passenger in a car accident where I was paralyzed. In the hospital, I was inspired by his spirit and recovered 100%. From that moment forward, I would know that nothing is impossible. As movie mogul Samuel Goldwyn once wrote, ” I’m possible.”

Morris: The greatest impact on your professional development? How so?

Reiman: The advertising legend, Al Hampel, who made me at 29, the youngest EVP of a billion dollar ad firm. My first big job was to build the Atlanta, Georgia office. I was to spend a year building it up. That was nearly 30 years ago.

Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.

Reiman: Yes in 1994, I realized that any gifts I had were being squandered in advertising selling stuff to people. It was easy because people can’t get enough of what they don’t need. I leveled my 200 million dollar ad firm and built BrightHouse, the world’s first ideation consultancy. Our purpose was to think for a living.

Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?

Reiman: Brandeis University taught me t think large and to be the best Joey I could be, not someone else.

Morris: What do you know now about the business world that you wish you knew when you when to work full-time for the first time? Why?

Reiman: That if we are not in business to improve life, we have no business being in business. Too many organizations are focused on the life of the business versus the business of life.

Morris: Of all the films that you have seen, which – in your opinion – best dramatizes important business principles? Please explain.

Reiman:  The best is The King’s Speech as it teaches consultants that they must lead even if their clients are Kings. If you tell your client only what he wants to hear you are not the King’s counselor but a jester.

Morris: From which [begin italics] non- [end italics] business book have you learned the most valuable lessons about business? Please explain.

Reiman: The Hero’s Journey by Joseph Campbell as it is [begin italics] the story [end] of every company and leader on a quest to bring a boon to society.

Morris: Here are several of my favorite quotations to which I ask you to respond. First, from Lao-Tzu’s Tao Te Ching:

“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”

Reiman: If all teachers took this as an oath, our civilization would be far ahead of where we are today. Modern education pushes aspirations into our heads rather than pull our dreams out from our hearts.

Morris: Next, from Voltaire: “Cherish those who seek the truth but beware of those who find it.”

Reiman: Finding the truth is no less miraculous than discovering the Holy Grail. Though the prize is elusive, the gifts we find along the way are immeasurable. I searched for truth in advertising and could not find it but my journey took me down a path of questioning the basic tenants of business.

Morris: And then, from Oscar Wilde: “Be yourself. Everyone else is taken.”

Reiman: And then from Mark Twain, ” the two best days are the day you were born and the day you find out why.”

Morris: From Albert Einstein: “We cannot solve our problems with the same thinking we used when we created them.”

Reiman: BrightHouse enlists over 300 luminaries–subject matter experts– outside the arena of business to solve the problems of business.

Morris: Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”

Reiman: Many business people are classically trained for a world that does not exist. It is not enough to be precise, we must also be passionate. Passionate efficiency is an oxymoron.

Morris: In Tom Davenport’s latest book, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment. That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” What do you think?

Reiman: Business needs to be capable of more responsible action than it has collectively achieved to date.

Morris: Here’s a brief excerpt from Paul Schoemaker’s latest book, Brilliant Mistakes: ”The key question companies need to address is not ‘Should we make mistakes?’ but rather ‘Which mistakes should we make in order to test our deeply held assumptions?’” Your response?

Reiman: There are mistakes made because we have not learned to avoid them and then there are mistakes made avoiding them. The former gets us fired. The latter gets us fired up

Morris: In your opinion, why do so many C-level executives seem to have such a difficult time delegating work to others?

Reiman: Too many C-Suite leaders are alpha-male, steely-eyed, autocratic-know-it-alls who have been taught leadership means control. Just the opposite. Purposeful leadership is about guardrails for associates to experiment within rather than guidelines to follow as rules.

Morris: The greatest leaders throughout history (with rare exception) were great storytellers. What do you make of that?

Reiman: Human beings are meaning seeking creatures which is what why story tellers Moses, Jesus and Buddha emerged as the world best storytellers. Our greatest American President was also Washington’s best story teller-Abraham Lincoln.  Every business leader today needs a “once upon a time” if they hope for a “happily ever after.”

Morris: Most change initiatives either fail or fall far short of original (perhaps unrealistic) expectations. More often than not, resistance is cultural in nature, the result of what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.”

*     *     *

To read the complete interview, please click here.

Joey invites you to check out the resources at these websites:

Joey’s website

BrightHouse home page

Joey’s Amazon page

Goizueta faculty page

LinkedIn page

The Thought Leader Interview: Henry Chesbrough

 

Here is the introduction to an interview of Henry Chesbrough conducted by Ron Norton for strategy+business magazine, published by Booz & Company. To read the complete article, check out other sources, sign up for email alerts, and obtain subscription information, please click here.

Photograph courtesy of Henry Chesbrough

* * *

To escape the commodity trap — and to compete effectively in a knowledge-based economy — business leaders of all kinds need to reinvent themselves as innovators in services.

Economists debate whether a service-based economy can be truly robust — or whether prosperity depends on having enough of a manufacturing base to support service businesses. But what if this turned out to be a false dichotomy? That’s the question raised by innovation expert Henry Chesbrough. All successful manufacturers, in Chesbrough’s view, need to come to terms with a fundamental change: the accelerating flows of knowledge and information that are shortening product cycles and commoditizing their products. They can do this, he says, only by reinventing themselves, not as pure manufacturers or service providers, but as hybrid product–service companies that design their business models around creating more meaningful experiences for their customers.

Of course, many manufacturers are already doing this. General Motors does it with its OnStar system; General Electric does it with its infrastructure financing; Ikea, Apple, Inditex (Zara), and many others do it with their own retail outlets; and Taiwan Semiconductor Manufacturing Company does it with its co-creation model for helping customers design computer chips, which it then manufactures to order. On the other side, service companies such as Barnes & Noble, Starbucks, and (most famously, with its Kindle) Amazon have found that they must enter the realm of manufacturing to thrive. Chesbrough goes one step further. He argues that successful product–service hybrids embrace a new kind of innovation, combining “open innovation” (moving outside the organization’s own boundaries) and services. Hence the title of his latest book: Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era (Jossey-Bass, 2011).

Chesbrough, professor and executive director of the Program for Open Innovation at the Haas School of Business at the University of California at Berkeley, established himself as a leading voice with an earlier book, Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business School Press, 2003). He was the first major academic champion of the open innovation idea, which has made a great difference at Procter & Gamble, Unilever, and many other companies. Open innovation can be defined as revitalizing a company’s future by tearing down the walls between its R&D organization and outside companies and innovators. Chesbrough recalls that when he first considered the book title in 2003, he Googled the phrase and got only a couple of hundred links, most of them to articles on topics such as the opening of new innovation facilities. “There was no real usage of the term open innovation at that time,” he says. “When I did that same search last summer, I got 13 million responses, and most of them were really about this new model of innovation.”

Now Chesbrough argues that the fortunes of advanced companies — and of economies as a whole — will depend on how well they rethink services. His analysis began several years ago as he considered the fact that service-based industries were rapidly supplanting manufacturing-based industries — in developed economies in general, and in the U.S. economy in particular. Today, he points out, services account for roughly 60 percent of economic activity in the top 40 world economies, and fully 80 percent in the United States.

Services, in this context, doesn’t mean such small-scale activities as providing haircuts or washing cars — or even conventional large-scale services such as accounting and retail businesses. Instead, Chesbrough has a vision of knowledge-intensive infrastructure and product lines that evolve into “the engine of growth for the entire developed world.” Breaking out of the old manufacturing-based, product-centric mold, Chesbrough says, will be challenging for business leaders, because it requires them to think of their customers not as purchasers of goods, but as co-creating partners in an evolving relationship. Companies that master new service innovation models and build or add the requisite new capabilities, he promises, will be able “to reach levels of success they have never before experienced in their market or their industry.”

* * *

To read the complete interview, please click here.

Henry Chesbrough is best known as the “father of open innovation” according to Wikipedia. He authored the book Open Innovation back in 2003, before that term came into general use. Today, there are more than 13 million entries for “open innovation”, documenting the rapid rise of this new model of industrial innovation. Open Services Innovation is his latest book, which extends the idea of open innovation into the services sector. Whether you make a product or a service, open innovation can accelerate your time to market, share risks, and boost growth for your business.

Chesbrough teaches at the Haas School of Business at UC Berkeley, and runs the Center for Open Innovation there. You can find out the latest information about open innovation at www.openinnovation.net. You can find out more about Professor Chesbrough at http://www2.haas.berkeley.edu/Faculty/chesbrough_henry.aspx.

To read my first interview of him, please click here.

To read my second interview of him, please click here.

Rob Norton is executive editor of strategy+business.

The Thought Leader Interview: Henry Chesbrough

Here is the introduction to an interview of Henry Chesbrough conducted by Ron Norton for strategy+business magazine, published by Booz & Company. To read the complete article, check out other sources, sign up for email alerts, and obtain subscription information, please click here.

Photograph courtesy of Henry Chesbrough

* * *

To escape the commodity trap — and to compete effectively in a knowledge-based economy — business leaders of all kinds need to reinvent themselves as innovators in services.

Economists debate whether a service-based economy can be truly robust — or whether prosperity depends on having enough of a manufacturing base to support service businesses. But what if this turned out to be a false dichotomy? That’s the question raised by innovation expert Henry Chesbrough. All successful manufacturers, in Chesbrough’s view, need to come to terms with a fundamental change: the accelerating flows of knowledge and information that are shortening product cycles and commoditizing their products. They can do this, he says, only by reinventing themselves, not as pure manufacturers or service providers, but as hybrid product–service companies that design their business models around creating more meaningful experiences for their customers.

Of course, many manufacturers are already doing this. General Motors does it with its OnStar system; General Electric does it with its infrastructure financing; Ikea, Apple, Inditex (Zara), and many others do it with their own retail outlets; and Taiwan Semiconductor Manufacturing Company does it with its co-creation model for helping customers design computer chips, which it then manufactures to order. On the other side, service companies such as Barnes & Noble, Starbucks, and (most famously, with its Kindle) Amazon have found that they must enter the realm of manufacturing to thrive. Chesbrough goes one step further. He argues that successful product–service hybrids embrace a new kind of innovation, combining “open innovation” (moving outside the organization’s own boundaries) and services. Hence the title of his latest book: Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era (Jossey-Bass, 2011).

Chesbrough, professor and executive director of the Program for Open Innovation at the Haas School of Business at the University of California at Berkeley, established himself as a leading voice with an earlier book, Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business School Press, 2003). He was the first major academic champion of the open innovation idea, which has made a great difference at Procter & Gamble, Unilever, and many other companies. Open innovation can be defined as revitalizing a company’s future by tearing down the walls between its R&D organization and outside companies and innovators. Chesbrough recalls that when he first considered the book title in 2003, he Googled the phrase and got only a couple of hundred links, most of them to articles on topics such as the opening of new innovation facilities. “There was no real usage of the term open innovation at that time,” he says. “When I did that same search last summer, I got 13 million responses, and most of them were really about this new model of innovation.”

Now Chesbrough argues that the fortunes of advanced companies — and of economies as a whole — will depend on how well they rethink services. His analysis began several years ago as he considered the fact that service-based industries were rapidly supplanting manufacturing-based industries — in developed economies in general, and in the U.S. economy in particular. Today, he points out, services account for roughly 60 percent of economic activity in the top 40 world economies, and fully 80 percent in the United States.

Services, in this context, doesn’t mean such small-scale activities as providing haircuts or washing cars — or even conventional large-scale services such as accounting and retail businesses. Instead, Chesbrough has a vision of knowledge-intensive infrastructure and product lines that evolve into “the engine of growth for the entire developed world.” Breaking out of the old manufacturing-based, product-centric mold, Chesbrough says, will be challenging for business leaders, because it requires them to think of their customers not as purchasers of goods, but as co-creating partners in an evolving relationship. Companies that master new service innovation models and build or add the requisite new capabilities, he promises, will be able “to reach levels of success they have never before experienced in their market or their industry.”

* * *

To read the complete article, please click here.

Henry Chesbrough is best known as the “father of open innovation” according to Wikipedia. He authored the book Open Innovation back in 2003, before that term came into general use. Today, there are more than 13 million entries for “open innovation”, documenting the rapid rise of this new model of industrial innovation. In Open Services Innovation, his latest book, he extends the idea of open innovation into the services sector. Whether you make a product or a service, open innovation can accelerate your time to market, share risks, and boost growth for your business.

Chesbrough teaches at the Haas School of Business at UC Berkeley, and runs the Center for Open Innovation there. You can find out the latest information about open innovation at www.openinnovation.net. You can find out more about Professor Chesbrough at http://www2.haas.berkeley.edu/Faculty/chesbrough_henry.aspx.

To read my first interview of him, please click here.

To read my second interview of him, please click here.

Rob Norton is executive editor of strategy+business.

The Open Innovation Marketplace: A book review by Bob Morris

The Open Innovation Marketplace: Creating Value in the Challenge Driven Enterprise 
Alpheus Bingham and Dwayne Spradlin
FT Press/Pearson (2011)

How and why global networks of highly specialized expertise create value in the challenge driven enterprise

In Open Business Models (2003), Henry Chesbrough observes, “An open business model uses a new division of innovation labor – both in the creation of value and in the capture of a portion of that value. Open models create value by leveraging many more ideas, due to their inclusion of a variety of external concepts. Open models can also enable greater value capture, by using a key asset, resource, or position not only in the company’s own business model but also in other companies businesses.” Then in Open Innovation (2005), he develops this concept in much greater depth. As Chesbrough explains, what he characterizes as “Closed Innovation” has a number of implicit rules such as ”The company that gets an innovation to market first will usually win” and “We should control our intellectual property, so that our competitors don’t profit from our ideas.”

As a result of several “erosion factors,” the Closed Innovation paradigm is rapidly becoming obsolete. (Please see Table 1-4, “Contrasting Principles of Closed and Open Innovation,” on Page xxvi in the Introduction.) “When the innovation context shifts from Closed to Open, the process of innovation must change as well.” Today, adoption of the Open Innovation model has become wide (i.e. global) and deep (i.e. enterprise-wide and even federation-wide).

In what could be viewed as a “State of the Global Marketplace” analysis, Alpheus Bingham and Dwayne Spradlin brilliantly explain how and why global networks of highly specialized expertise create value in the challenge driven enterprise.
I especially appreciate the provision of a case study at the conclusion of Chapters 2-9. Each focuses on achievement of high-impact results. For example, HOW

2: Orchestration Creates Value for Li and Fung
3: NASA Expanded Its Innovation Framework to Find New Solutions to Old Problems
4: The Oil Spill Recovery Institute Tapped the Crowd to Be Better Prepared for Arctic Spills
5: Eli Lilly and Company Is Changing from a Closed Company to an Open Network to Provide Medicines for the Twenty-First Century
6: How Procter & Gamble Is Innovating Through Connect + Develop
7: Virtual Software Development: How TopCoder is Rewriting the Code
8: The Prize4Life Foundation Is Crowdsourcing ALS Research
9: President Obama’s Open Government Initiative Is Reinventing Government and Changing Culture

Obviously, the nature and extent of success of these open innovation initiatives vary and all of the organizations are large and have complicated operations. However, valuable lessons cam be learned from success as well as from failure and as the case studies suggest, decision-makers in almost any organization (regardless of size or nature) can apply many of these lessons when responding to their own challenges. Li and Fung, for example, is renowned for its leadership and management of a global supply chain more extensive than almost any other. Leaders within the hundreds of companies within that chain would be well-advised to read the case study in Chapter 2. In fact, I think the entire book is “must reading.”

Bingham and Spradlin devote Part I to explaining Challenge Driven Innovation (CDI) and then Part II to the Challenge Driven Enterprise (CDE). More specifically, they explain “how a marketplace of innovation allows us to reframe the innovation model, improve performance, and manage risk (Chapters 2-5) and then “virtualizing the business model to drive innovation, agility, and value creation” (Chapters 6-9). Appropriately, they focus on “The Challenge Driven Enterprise Playbook” in Chapter 8, reviewing and correlating many of their key points, then focus on “Leadership” in the final chapter because the success or failure of any open innovation initiatives will depend on the leadership (at all levels and in all areas) of the given enterprise.

These are among the dozens of passages that caught my eye:

o   “Exploration Versus Exploitation (Pages 13-14)
o   “Chat Rooms Versus Expert Help Desks” (29)
o   “Open Innovation’s Unique Potential” (40-42)
o  ”Seven Stages of Challenge Driven Innovation” (49-52)
o  ”Tackling the Long Tail” (74-77)
o  ”A Thousand and One Explorers or How to Find a Star” (78-79)
o  ”Innovation Channels” (95-101)”Project Model Archetypes” (102-109)
o  ”Hallmarks of the Challenge Driven Enterprise” (128-129)
o  ”The Challenge Driven Enterprise as Business Strategy” (144-147)
[Note: Be sure to check out Enterprise Architecture As Strategy: Creating a Foundation for Business Execution, co-authored by Jeanne W. Ross, Peter Weill, David Robertson.]
o  ”Key Points of the Book” (200-203)
o  ”The CEOs Journey: Five Essential Waypoints” (206-208)

No brief commentary such as mine can do full justice to the scope and depth of the material (information, insights, and counsel) that Alpheus Bingham and Dwayne Spradlin provide in such abundance. However, I hope these remarks will encourage business leaders, indeed all who are entrusted with the leadership of any enterprise, to read and then re-read this book with appropriate care. In years to come, success or failure in the open innovation marketplace will be determined by those who do – or don’t – create value in the challenge driven enterprise.

When Values Are Strategic: A book review by Bob Morris

When Values Are Strategic: How the Basic Values of Procter & Gamble Transformed Leadership at Fortune 500 Companies
Rick Tocqigny with Andy Butcher and the P&G Alumni Network
FT Press/A Pearson Imprint (2012)

A brilliant examination of the power and impact of core values that can transform individuals as well as organizations

With regard to the title of this book, I presume to suggest that core values always have strategic implications, for better or worse. If those values tolerate and thus condone incivility, for example, they will have a profound, negative impact on an organization’s efforts to achieve its strategic objectives. The reverse is also true. The Ritz-Carlton Hotel Company offers an excellent case in point. At every opportunity, it not only affirms but demonstrates each day that “we are ladies and gentlemen who are privileged to serve other ladies and gentlemen.” With regard to Southwest Airlines, retired chairman and CEO, Herb Kelleher, expressed its core values best when observing, “We take great care of our people, they take great care of our customers, and our customers take great care of our investors.”

With Andy Butcher, Rick Tocquigny provides a wealth of information, insights, and counsel when explaining “how the basic values of Procter & Gamble transformed leadership at Fortune 500 Companies.” As is true of all other outstanding business books, this one is driven by research…but with a clever twist. More than 1,000 P&G alumni and current employees were surveyed. The detailed results are provided in section 9 of the Appendix (Pages 242-252). A total of 36 of the respondents are also quoted extensively within a narrative framework that consists of six Parts. In fact, a separate chapter is devoted to each contributor. The titles of the Parts correctly suggest recurring themes: sustaining industry leadership, applying core values for capability, core values and teamwork, core values drive vision, doing what is right [as well as doing it right], and changing lives.

The book concludes with the last theme and that is eminently proper, given the fact that core values can transform people who embrace them…and those people can then transform an organization, sometimes even a country. As former P&G chairman, president, and CEO, A.G. Lafley, explains in the Foreword, “The stories in this book celebrate the gift we were all given – core values that really work. And they show how robust focus on core values adds great enterprise value and value to your personal life. Core values at work can bring out more engagement, more fulfillment, better work-life balance, and long-term business and financial success for your organization, yourself, and the communities in which h you live and work.”

The book’s subtitle emphasizes leadership and that includes but is by no means limited to occupants of the C-suite. On the contrary, values-driven leadership is urgently needed in any organization, at all levels and in all areas of operation. As Tocquigny and most of the 36 contributors indicate, P&G’s basic values (e.g. honesty, fairness, tradition, trust, work ethic, mutual respect, and integrity) are embedded in its employees as well as those who relocated to other organizations where those same values also have had a beneficial impact. That is, these organizations were transformed by the vales-driven leadership of P&G alumni, regardless of their official title.

Although P&G is one of the largest and most complex companies as are most of the companies by which most of its alumni were later employed, almost all of the material in this book is relevant to almost any organization, whatever its size and nature may be.  Because human beings are involved, no organization is perfect and none ever will be. That said, only human beings can bring core values to life and invest them with profound meaning through their behavior and, especially, in their relationships with others. I want to reiterate what I said earlier: Core values always have strategic implications, for better or worse. What do they say about your organization?

Reverse Innovation: A book review by Bob Morris

Reverse Innovation: Create Far from Home, Win Everywhere
Vijay Govindarajan and Chris Trimble
Harvard Business School Press (2012)

How and why reverse innovation can help to reverse the negative trends and tendencies that can weaken an organization

Those who have read one or more of Vijay Govindarajan and Chris Trimble’s previously published books (notably Ten Rules for Strategic Innovators and, more recently, The Other Side of Innovation) already know that they share a unique talent for recognizing and then explaining previously unrecognized – or under-appreciated — business trends and their implications. In this instance, the fact that the dynamics of global innovation are not only changing, they are shifting from rich countries with incumbent economies to meeting unmet needs in developing countries.

Leaders in companies that aspire to accommodate those needs must develop a mindset that is radically different, one whose core concept is reverse innovation. That is, “any innovation that is adopted first in the developing world.” To develop that mindset, leaders must understand the significant differences between rich-country and poor-country needs. “Reverse innovation does not begin with inventing, but with forgetting. You must let go of what you’ve learned, what you’ve seen, and what has brought you your greatest successes. You must let go of the dominant logic that has served you well in rich countries. If you want to use today’s science and technology to address unmet needs in the developing world, then you must start with humility and curiosity.”

In short, think “far from home” before attempting to do business there.

Govindarajan and Trimble identify and explore five need gaps that can serve as paths to success with reverse innovation in macro markets of micro consumers. Understanding the nature, extent, and perils as well as opportunities of these need gaps will serve as the foundation of the radically different mindset to which I referred earlier.  With both uncommon rigor and precision, Govindarajan and Chris Trimble explain

o  What the reverse innovation challenge requires
o  How to develop the reverse innovation mindset
o  How to formulate an appropriate strategy based the five paths
o  How to create “clean slate” innovation in emerging markets
o  “The Reverse Innovation Playbook” (Nine rules to guide and inform strategy, global organization, and project organization

In Part 2, Reverse Innovation in Action,” Govindarajan and Trimble shift their attention to mini-case studies of eight major companies (Chapters 5-12, Pages 75-188), citing real-world situations that demonstrate an abundance of do’s and don’ts during initiatives to develop macromarkets with products that appeal to microconsumers. For example, in Chapter Six, Govindarajan and Trimble explain how Procter & Gamble realized that its success in emerging markets required it to innovate the “Un-P&G Way” because unfamiliar customer needs “trump” leading-edge technology. In Chapter Eleven, “PepsiCo’s Brand-New Bag,” this major multi-national company had to learn how to “think globally but snack locally”

Readers will also appreciate the provision of a “Reverse Innovation Toolkit” in Appendix A. Govindarajan and Trimble include several practical diagnostics and templates that will help business leaders expedite their reverse innovation efforts. In fact, they make brilliant use of reader-friendly devices throughout the book, notably “Playbook Lessons” and “Questions for Reflection. Here in a single volume is probably about as much as any business leader needs to help her or his global company to use reverse innovation to avoid or reverse the negative trends and tendencies that can weaken an organization when it attempts to do business in emerging markets.

Top Executive Recruiters Agree There Are Only Three True Job Interview Questions

George Bradt

Here is an excerpt from an exceptionally valuable article written by George Bradt and published by Forbes magazine. To read the complete article, check out other resources, and obtain subscription information, please click here.

*     *     *

The only three true job interview questions are:

1.  Can you do the job?
2.  Will you love the job?
3.  Can we tolerate working with you?

That’s it.  Those three.  Think back, every question you’ve ever posed to others or had asked of you in a job interview is a subset of a deeper in-depth follow-up to one of these three key questions.  Each question potentially may be asked using different words, but every question, however it is phrased, is just a variation on one of these topics: Strengths, Motivation, and Fit.

Can You Do the Job? – Strengths

Executive Search firm Heidrick & Struggles CEO, Kevin Kelly, explained to me that it’s not just about the technical skills, but also about leadership and interpersonal strengths.  Technical skills help you climb the ladder.  As you get there, managing up, down and across become more important.

“You can’t tell by looking at a piece of paper what some of the strengths and weaknesses really are…We ask for specific examples of not only what’s been successful but what they’ve done that hasn’t gone well or a task they they’ve, quite frankly, failed at and how they learned from that experience and what they’d do different in a new scenario.

“Not only is it important to look at the technical skill set they have…but also the strengths on what I call the EQ side of the equation in terms of getting along and dealing or interacting with people.”

Click here for more on interviewing and being interviewed for strengths.

Will You Love the Job? –Motivation

Cornerstone International Group CEO, Bill Guy emphasizes the changing nature of motivation,

“…younger employees do not wish to get paid merely for working hard—just the reverse: they will work hard because they enjoy their environment and the challenges associated with their work…. Executives who embrace this new management style are attracting and retaining better employees.”

Click here for more on interviewing and being interviewed for motivation.

Can We Tolerate Working With You? – Fit

Continuing on with our conversation, Heidrick’s Kelly went on to explain the importance of cultural fit:

“A lot of it is cultural fit and whether they are going to fit well into the organization…  The perception is that when (senior leaders) come into the firm, a totally new environment, they know everything.  And they could do little things such as send emails in a voicemail culture that tend to negatively snowball over time.  Feedback or onboarding is critical.  If you don’t get that feedback, you will get turnover later on.”

He made the same point earlier in an interview with Smart Business, referencing Heidrick’s internal study of 20,000 searches.

“40 percent of senior executives leave organizations or are fired or pushed out within 18 months. It’s not because they’re dumb; it’s because a lot of times culturally they may not fit in with the organization or it’s not clearly articulated to them as they joined.”

Click here for more on interviewing and being interviewed for fit.

*     *     *

George Bradt has a unique perspective on transformational leadership based on his combined senior line management and consulting experience. After his education at Harvard and Wharton, George progressed through sales, marketing and general management roles around the world at Fortune 500 companies including Unilever, Procter & Gamble, Coca-Cola, and then J.D. Power and Associates as chief executive of its Power Information Network spin off. Now he is a Principal of CEO Connection and Managing Director of PrimeGenesis, the executive onboarding and transition acceleration group he founded in 2002. Since then, George and PrimeGenesis have reduced the risk of failure fourfold for executives they have worked with – from 40% to 10% – based on their own team, tools and perspective on delivering better results faster.

His published works include Onboarding: How to Get Your New Employees Up to Speed in Half the Time (2009) and The New Leader’s 100-Day Action Plan: How to Take Charge, Build Your Team, and Get Immediate Results  (2011). You can contact George directly at gbradt@primegenesis.com.

 

 

25 Top Companies for Developing Leaders

All of these companies go above and beyond the call of duty when it comes to grooming talent from within. The list was featured by CNNMoney online. Here are the first five. To read the complete article, please click here.

1. IBM

HQ: Armonk, N.Y.
Revenue: $99.9 billion
Employees: 426,751
Fact: IBM sends leadership SWAT teams around the world to coach local staff.

2. General Mills

HQ: Minneapolis
Revenue: $14.8 billion
Employees: 33,000
Fact: Over 90% of management promotions are internal.

 

 

3. Procter & Gamble

HQ: Cincinnati
Revenue: $79.7 billion
Employees: 127,000
Fact: Every single CEO of P&G started at the entry level.

 

 

4. Aditya Birla

HQ: Mumbai
Revenue: $35 billion
Employees: 133,000
Fact: Aditya Birla honors employees who teach villagers skills like composting and pump repair.

5. Colgate-Palmolive

HQ: New York City
Revenue: $15.6 billion
Employees: 39,200
Fact: The Colgate Leadership Challenge is a seven-day event for the company’s junior employees, with a team business project, presentations by senior leaders, and charity work.

SUGGESTED READINGS ON LEADERSHIP

Good to Great
Jim Collins

Growing Great Employees
Erika Andersen

Leadership Gold
John Maxwell

Leading Change
James O’Toole

The Truth About Leadership
James Kouzes and Barry Posner