The key to innovative risk-taking is to match the organisation to the characteristics of free-thinking, original, courageous minds...and then keep judiciously out of their way. It sounds a very tall order, but the principles are no different from those of managing anybody who you respect and trust. And if you neither respect or trust them, why are they employed at all? The courage to back others is part of the courage required to manage in the new environment.
That environment has changed the managerial career to marked degree. Most managers, however, haven't come to terms with the change. The ideals of the traditional system, with its job-for-life, hierarchical promotion and safe stability, persist: but the many redundant middle managers can testify that old ideal and new reality are far apart. Safety used to lie in not taking risks. Now avoiding risks can be positively dangerous: it's the courageous, creative, risk-taking manager who gets promoted, and the time-server who can be severed without pain - except to him.
The gap between the old corporate world and the new can only widen as companies seek shorter lines of communication and move towards horizontal organisation in the drive for faster and more innovative response. As the new boss of a high-tech multinational told his senior colleagues at an Insights seminar, their jobs are no longer permanent. Their security lies, not in their roles within the collective scheme, but in their individual skills. So long as these stay strong and relevant, their pay and prospects will remain excellent. Otherwise...
The new manager's position thus resembles that of a top sportsman, who keeps his place only so long as he displays superior form and fits the strategy. Only a few players in any sport are world-class, absolutely certain of selection until they decide to retire. Only a few managers - and those mostly proprietorial entrepreneurs - are in the same super-star category. The others have to prove themselves again and again, striving to achieve peak performance, by exploiting the always underused personal potential. Like the sportsman, the manager has to work to overcome the internal barriers, which include lack of courage, to peak performance.
The Insights sessions invariably reveal that organisations themselves heavily reinforce the internal inhibitions, often in self-defeating and eminently curable ways: say, by advocating long-term creative contributions while insisting, above all, on short-term, bottom-line results. Managers know this only too well: they customarily rate their own attributes significantly above those of the organisation. That, however, doesn't absolve individual managers from the need to exploit their own potential to the full. Indeed, the new management career makes this imperative.
High performance in each role (leading a project, running a subsidiary, reorganising a department, etc.) is the field-marshal's baton in the manager's knapsack. But the successful development of individual skills depends very heavily on helping others to develop and exploit their own talents. As stated at the start of this chapter, that's the key to unleashing creativity - by managing creatively. This is made admirably clear by Gerald Kushel in his new book, Reaching the Peak Performance Zone. He recommends a three-part system:
1. Take total self-responsibility for all your own job performances. Then model that quality and teach your direct reports how to do the same thing.
2. Make available to each of your direct reports some very good reasons for wanting to perform at peak.
3. Mentor (which includes counselling and coaching) your direct reports to the point where they are clearly performing at peak. After that, stay out of their way.
We've italicised that injunction - in its second appearance in this chapter - because of its sovereign importance at all levels, from shop floor to top management. That places responsibility where it belongs, and demands courage on both sides of the relationship. Good managers don't, to quote Kushel, 'blame others or external events' for their performance. That's not because they're wonderfully unselfish. On the contrary, WIIFM always applies - What's In It For Me? The self-interest of your direct reports is also where you find the 'very good reasons' for them to perform at peak.
Kushel's three-stage process fits perfectly with the way in which Geoff Cooke turned the England XV from also-rans to double Grand Slam winners and World Cup finalists. It fits far less well with the traditional management career, in which seniority and status counted for more than achievement and ability, and playing safe for far more than taking risks. Unfortunately, too many companies are organised in much the same way as they were in the past. That explains many of their difficulties, which are only intensifying as the pace of competition accelerates.
There's an interesting analogy from the US car industry in its prime. All the Big Three manufacturers concentrated on the so-called 'dominant design' - the rear-wheel drive, separate chassis, engine-in-front machine. The dominance didn't spring from customer preference, as was shown by the soaring rise of the rear-engined VW Beetle to fourth largest selling brand in the US. Rather, it suited the economics of Detroit to continue with the dominant design until long after competitors and, more important, the public had turned to other approaches.
The dominant organisational design, with its safety-first centralisation of decision-making and its hierarchical relationships, can't generate fast or bold enough reactions to cope with - let alone anticipate - rapid external change by swift internal initiatives. The centre is too far from the market or the factory floor, separated from both by too many layers, which in turn are reproduced in the over-dependent subsidiaries. If the latter also embody brands, the lack of independence jeopardises the vital brand identity.
The difference between the dominant design and Twenty-First Century management is charted exactly by a questionnaire which the English psychologist Mark Brown uses to differentiate between 'dolphins' and 'dinosaurs'. Score your organisation from 0 to 6 along the distance between the two extremes:
1. Those around me 'yes, but' new ideas to death...........Those around me encourage new ideas
2. We are geared to providing what we want to provide...........We provide what the customer wants
3. My organisation is focused on solving problems.......... My organisation is focused on opportunities
4. Many of our people are mentally retired.........Our people are highly motivated
5. The match between individual values and those of the organisation is poor..........The match between them is good
6. People feel disempowered.................Individuals show high levels of initiative
7. People's minds are fairly set...............People are very good at 'thinking afresh'
A score of 21 marks the dividing line between dolphins and dinosaurs. Brown also adapts the questions for personal grading ('I feel disempowered......I take a lot of initiatives', etc). He points out that you can be a dinosaur in a dolphin organisation, or a dolphin living within a dinosaur. The latter situation, very uncomfortable, must be that of the best managers inside many organisations: it's doubtful whether most corporate denizens would award a half-best score of 21.
In any event, nothing less than an all-dolphin score of 42 can be praised. Look again at the seven opposed extremes: the ideals all embody 'natural' and rewarding ways of behaving, while the zero scores result from unnatural, cramped conduct. The ideals, too, all involve courage, the willingness to take chances: their opposites all embody self-defeating attempts to play safe.
Brown's advice to his dolphins is very different: emphasise opportunities, not problems. Solving problems creates opportunities - provided that the problems are actually solved. According to one industry consultant, that didn't happen at General Motors: 'They have programmes that are going to solve every problem, but they never get solved'. He describes the 'biggest problem' as 'to get the organisation actually to do something'. But taking the risk of doing something, of course, is only half the battle: doing it right wins the war.
Such big company errors have a common theme: an instinctive preference for taking action at the centre rather than the periphery. The conventionally wise centre can order massive investments, buy other companies, reshuffle entities, close plants: but it can't increase efficiency, delight customers, raise morale, and beat the competition by bold and unconventional means. Those essential ends can only be achieved by penetrating to the true nature of the organisation and giving it the systemic treatment it requires.
The heart of the matter is that organisation provides a framework of discipline. The discipline gives creative courage its direction and its constraints. For example, the great comedy director Preston Sturges, after an unbroken run of money-making hits, broke with Paramount over his increasing irritation at front office imposition of its authority. This was enshrined in strict rules, like shooting three pages of script a day, which Sturges found irksome. But after his escape to freedom, Sturges made nothing but costly flops.
By throwing money at its problems, confident that the money would never run out, GM not only spent itself into the biggest loss ever made by any company: it took away a vital constraint. The constraints usually applied, though, are not helpful. They're totally obstructive. Gifford Pinchot III points out that 300 large corporations account for 85% of all R&D spending in the US (a pattern which is probably typical of other countries, too). Yet the big outfits produce less than half the major innovations.
This isn't because they lack inventive power: that's enormous. Rather, they fall down on the implementation. That's readily avoided, if you have the courage (and it needs plenty) to accept this advice:
1. Don't focus on the short term
2. Don't have multi-level approvals
3. Don't cut discretionary time to useless amounts
4. Don't expect big wins every time
5. Don't operate rigid planning systems
6. Don't allow turf battles over who does what
7. Don't become fearful of making mistakes
8. Don't oppose individual initiative
9. Don't allow authoritarian traditions to rule
As with Mark Brown's dolphin qualities, the positive attributes are far more attractive and natural than the negative: exploiting constraints, rather than succumbing to them. The instinctive reaction to setback in the bad manager or sportsman is to give up: the good executive and player has the courage, like Seb Coe, to regard defeat as a challenge, a spur to raise his game, and to plunge back into the arena. In fact, that's how many great businesses achieved greatness.
An intriguing book entitled Getting It Right the Second Time by Michael Gershman recounts some of the uphill struggles survived by some of today's best-selling brands. Clarence Birdseye launched his first frozen food company in 1923. It promptly went bust. After further vicissitudes, General Foods, set up to exploit Birdseye's inspiration in June 1929, finally made a profit in 1937. How? By facing up to a seemingly fatal constraint - housewives wouldn't buy frozen food.
The answer was to tackle the institutional market, hotels, restaurants, hospitals, etc. Success there filtered back into the retail market. The Second World War, which sharply boosted the demand for convenience foods, did the rest. Another example is Hoover: from 1910-17 sales rose from 2,140 cleaners to 48,878, the major constraint being that busy retailers couldn't demonstrate the machines. After Hoover put its own demonstrators into stores, sales quintupled; the big breakthrough came with door-to-door canvassing, which had a fantastic 31% success rate.
More interesting, though, than such anecdotes are the conclusions that Gershman draws from his studies. He found it 'safe to say' that, as a group, the heroes...
...took total responsibility for their products, because only by controlling the variables that had tripped up their predecessors could they improve them...
...were committed to doing the job right - no matter how long it took or what it entailed...
...looked on failures as part of the process and learned something from each one.
On that last point, the author quotes Thomas Watson, Sr., the founder of IBM: 'remember, that's where you'll find success. On the far side of failure'. For that to happen, however, you must have the courage to face up to the reality of failure and its true causes. At many companies that have 'downsized', the causes of their problems were not too many plants and workers. Those are severe symptoms. They spring from plants and workers making the wrong things in wrong ways because of bosses managing the wrong things in wrong ways.
Unless you have the courage to remedy that condition - a strategy which is far less expensive and painful than closures and redundancies - all other 'cures' will merely lead to recurrence of the disease. What CEO Jack Smith has already accomplished at GM shows how sick large organisations can become. There are now 2,500 corporate staff where once 13,500 earned large salaries. That's an astounding 81.5% cutback - or, the other way round, a previous bloat of 5.4 times more people than were actually required.
Decisions on car prices 'used to wend their way through five committees over weeks or even months'. They now take 'a matter of days'. Again, that's an improvement. But should pricing decisions rise that high? Shouldn't the people responsible for making and marketing cars be competent to decide their prices? And shouldn't top management have the courage to let them do precisely that? In the dinosaur days GM managers held pre-meetings and even pre-pre-meetings to ensure that the main meeting went smoothly. But the present system is also far removed from the dolphin culture.
His success at GM in Europe, where it came from far behind Ford to lead the Continent in car profits, is an encouraging omen for the Smith regime at GM. But the most hopeful sign lies in words etched onto a copper plate as part of a desk ornament of Smith's: 'A leader is best when people barely know he exists. Not so good when people obey and acclaim him. Worse when they despise him. But of a good leader who talks little, when his work is done and his aim fulfilled, they will say, "We did it ourselves"'.
Those admirable sentiments come, not from the Twentieth Century Mark Brown, but from the philosopher Lao-tze, who wrote six centuries before Christ. The dinosaurs, of course, lived many millenia before that. But without that brave philosophy - helping people to do it themselves - the dolphins will never take over. With that help, organisations can swim anywhere, and as fast as they want, even into the uncharted waters of the future: for that's where courage meets its hardest test.
Man cannot predict the future, but man is continually forced to try. For companies, the issue is truly daunting: the winners and losers of 2005 are being determined by views formed this very day. The 'safe' way of forecasting an unknown future is extrapolation. But that's not only intellectually unsound; it tends to lock companies and industries into existing, continuous patterns in a world of discontinuity. That's why bold outsiders, such as Intel and Microsoft in computery, coming at their industry from a totally different angle, inherit the future.
Gary Hamel and C.K.Prahalad, in Competing for the Future, argue that established managements must be brave enough to adopt the same angle of approach, forgetting where they have come from, and concentrating instead on where they want to go. 'In business...what distinguishes leaders from laggards, and greatness from mediocrity, is the ability to uniquely imagine what could be.' IBM, for example, couldn't imagine the prospect of great mainframe computers being elbowed aside by increasingly powerful, tiny microprocessors. Spotting such shifts, though, doesn't require crystal balls: just balls.
Time and again, the true cause of corporate failure isn't inability to read the future, but gutless refusal to acknowledge what is already under executives' noses. The swing away from Detroit's large cars, for instance, couldn't have been signalled more loudly or clearly. To act on braver perceptions, as Hamel and Prahalad say, 'What is required is an ability to mobilise every ounce of emotional and creative energy in the company.' In the phrase of Kevin Kelly, author of Out of Control, you're seeking 'the incubations of something from nothing', which means following 'the nine laws of God:'
1. Distribute being
2. Control from the bottom up
3. Cultivate increasing returns
4. Grow by chunking
5. Maximise the fringes
6. Honour your errors
7. Pursue no optima - have multiple goals
8. Seek persistent disequilibrium
9. Change changes itself
Kelly's language is obscure in places, but his drift is perfectly clear: have the courage to think and act freely. That doesn't mean plunging into the unknown. The future is not a blank sheet of paper. All ambitions start from somewhere: from what you have, in the widest definition. As individuals, and in concert, managers, no less than sportsmen, need courage to make the fullest use of their intellectual and physical assets: to found their strategy on the philosophy of the foundation strategy for any business is doing whatever you're good at better and better, and on a broader and broader scale - and then to go beyond.
What matters above all is courageously looking for new opportunities and for new evidence that old opportunities and basic strengths are no longer providing the organisation with the necessary dynamism. If management isn't looking for a golden future, and taking the associated risks, it's most unlikely to find one. Ignoring that truth is the greatest risk of all: but it isn't courageous.
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