The Leader Magazine

SEP 2018

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the leader September 2018 17 part of what professional associations like CoreNet Global are all about. This pressure to conform also comes from our clients and regulatory forces who expect and require us to operate in specific ways. This concept, technically named institutional isomorphism by researchers, helps us to understand why innovation is so difficult and why organizations compel conformity. In the short run, conformity to standard operating procedures guarantees perseverance. In other words, our organizations are built for stability, not change. In an organization that is built for stability, any change will look like failure without the right perspective. But we have all seen what happens to organizations that choose the safety of short- term stability over the long haul. They cease to be innovative. They fail to change with the times and those pressures aimed at short-term survival become a detriment to long-term success. r esist conformity Our best executives often intuitively understand this dynamic. In his 2017 1 letter to shareholders, Jeff Bezos articulated his vision of "Day 1" and "Day 2" companies that parallels the research about institutional isomorphism. Day 1 companies are those that retain their start-up mentality. They are innovative and not afraid to try new things. "Staying in Day 1," he wrote, "requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight." But it is very difficult to stay a Day 1 company forever. Mr. Bezos remarks about the vigilance that it takes for organizations to retain this position, especially as they get larger and more established. The research confirms his intuition. The longer a company is around and the bigger it gets, the harder it is to remain innovative. One key reason for this is the reliance on procedures mentioned above. Bezos states that as a Day 2, "you stop looking at outcomes and just make sure you're doing the process right. Gulp. It's not that rare to hear a junior leader defend a bad outcome with something like, 'Well, we followed the process.'" And this devotion to processes over outcomes has predictably disastrous consequences. If Day 1 is about innovation, what characterizes Day 2 companies? Bezos writes that "Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death." Again, he could not be more in line with the research on this topic. While stagnation and death may not come immediately, it is inexorably true that the organization that stops innovating is on a pathway to irrelevance and ultimately to being disrupted by some new technology, firm or visionary leader. Change how you work – disrupt yourself to avoid being disrupted The lesson here? You must intentionally and constantly disrupt yourself in order to avoid being disrupted. The executive who is focused on maintaining and is not taking the time to think strategically is not doing their company any favors. Owning that your organization wants to fall into stasis, and doing what you can to thwart that, is going to have a greater impact on the longevity of your organization than following a prescribed process. You cannot just keep getting better at the task-driven parts of your job and expect that things will change. s ome innovative innovating advice Here are things we frequently recommend to organizations and leaders who cannot quite seem to shake the doldrums of organizational stasis, despite their best intentions. 1. Have a plan for how you develop, compel and reward innovative initiatives. Too often, we see corporate leaders tasked with these job responsibilities without any accompanying system to capture those efforts and hold people accountable to them. The specifics of this system will shift from company to company, but it can start with something as simple as asking about these efforts on a 360° review. Similarly, if you are planning on promoting from within, then make sure that you are looking for evidence of innovative thinking from people at all levels of the organization. Encouraging these types of thought processes establishes an expectation that will follow leaders to the top. 2. Employ a systems-thinking approach. One of the most useful tools we have found for working with corporate leaders who find themselves in a position that requires innovative solutions to difficult problems is systems thinking. The principles of systems thinking emphasize the interconnectedness of today's world. Instead of a linear relationship between cause and effect, systems thinking requires us to identify and understand the role that multiple inputs might have on one outcome. This approach enables you to recognize how social forces affect your organization and will help guide productive responses. The ability to understand outcomes leads to productive thinking, strategic planning and innovation. 3. Ask yourself, "What business am I in?" The honest answer might surprise you. Robert Harris, in an interview for the podcast Trailblazers about the way technology has shaped the music industry, noted, "The people in the middle of a business have no idea what business they're in. None whatsoever. So, if you were to ask record executives, 'What business are you in?,' they would have said 'We're in the music business. Our job is to find musicians, record them and present them to the public.' That's not true, because they were in the physical-things business. That was the business they were actually in. They didn't realize it. The proof of that is that, as soon as you could have music without having to buy a physical thing, their business collapsed. Completely collapsed." Strikingly, this is a common conundrum for large organizations. After you are able to answer what business you ARE in, you should ask what business you SHOULD be in. This type of perspective will lead to strategic, systemic and innovative thinking that will lead your organization into the future. Ultimately, you need to develop the capacity to think, understand what is pushing against you, and respond to it. Clarity about your role, the direction of your organization and what your current systems are will organically drive innovation. You will need to actively fight against stasis and ask yourself questions in order to make essential change, and you will need to change in order to truly establish longevity. The executive who is focused on tasks – and is not taking the time to think and innovate – is not doing the company any favors. Sure, more things might get crossed off the list today, but at what cost tomorrow? 1. Strategic-innovation consultant Josh Packard, Ph.D., is chief executive officer of The Packard Group. He is scheduled to moderate the Closing General Session at the CoreNet Global Summit in Boston.

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