Collaboration between firms, customers will drive success
The changing global economy: In October, the Strategic Capability Network hosted an event with Eamonn Kelly, CEO of San Francisco-based Global Business Network. His presentation, entitled “An age of change or… a change of age,” covered a wide range of topics, including collaboration and the shift of innovation power from its traditional base in industrialized Western countries to emerging markets. For more information about SCNetwork, visit www.scnetwork.ca.
SCNetwork’s panel of thought leaders brings decades of experience from the senior ranks of Canada’s business community. Their commentary puts HR management issues into context and looks at the practical implications of proposals and policies.
Shifts in power, innovation drive organizational evolution
Over the past 25 years, organizational models have been evolving. Hierarchy has decreased, silos have dissolved and flexibility has increased.
While these changes are good, organizations will have to evolve even more to tap into new sources of innovation, engage new customers in new locations and adjust to changing economic rules as power and innovation shift from traditional Western nations to developing nations, said Eamonn Kelly, CEO of San Francisco-based consulting firm Global Business Network.
“We’re now in a change of age. This economic and social-political view of the world is a new age that is different from, and cannot be understood through the lens of, the past,” said Kelly at a Strategic Capability Network event in Toronto last month.
As innovation comes from all sources and all corners of the globe, a co-creative economy will emerge where organizations leverage assets from suppliers, competitors and customers. It will be messier and more dynamic than what has been seen in the past, said Kelly, who is also the author of Powerful Times: Rising to the Challenge of Our Uncertain World.
The Internet, and interactive technology, will be essential in the new economy. Organizations need to use technology to connect with different sets of customers in different ways, or risk failure, said Kelly.
Car rental company Hertz learned this the hard way. A customer posted a video online in January 2009 showing a customer service agent ending her shift, with no replacement, as a long line of customers waited. No amount of traditional advertising could undo the harm that one YouTube video caused Hertz’s brand, said Kelly.
On the flip side, toy manufacturer Lego harnessed the power of the Internet to discover how consumers used Lego blocks and ended up with a new product, Mindstorms, which combines traditional Lego blocks with electronics. Now the company regularly seeks input from customers to create innovative products, said Kelly.
Apple also turned to customers for innovation. The computer company gave away the source code for its popular iPhone so anyone could create an application for the phone and then sell it on Apple’s website — with 30 per cent of the sale going to Apple.
In a couple of years, Apple will make more money from the sale of applications, which it didn’t produce or pay for, than from the sale of the phone itself, said Kelly.
Innovation is also coming from unexpected geographic locations, he said. For the past 500 years, most innovation came from the West and other countries played catch-up.
“That era is over. The whole world is innovating,” said Kelly.
This can be seen in Brazil, which has found sugar cane is a more energy-efficient source of ethanol than corn — the major source of ethanol in the United States. Not only does the South American country produce sugar cane ethanol, it has built in systems to support this innovation by requiring all cars sold in Brazil to run on ethanol — either as the sole source of fuel or as part of a mix with gasoline. And all gas stations must sell ethanol and ethanol-gasoline mixtures, said Kelly.
“That’s a systemic innovation that is unlike anything else in the world and it didn’t happen in the traditional, developed economies,” he said.
Cities are where wealth is created and more and more of the world’s largest cities are in developing countries. In 1900, the 10 largest cities were all in the West but, by 2015, nine of the largest cities will be in countries such as Japan, India, Nigeria, Bangladesh, Pakistan and Mexico, said Kelly.
“Those are the places that are going to be innovating the fastest. Those are the places that are going to be leading,” he said.
These nations will also be driving economic processes and the rules of trade going forward, though originally set by Western nations based on Western thought, history and values. The Group of 20 (G20) — which includes several Western nations as well as many developing nations such as Indonesia, China, Mexico, Turkey and South Korea — will be setting the economic and trade agenda as of 2010, said Kelly.
“It’s going to be a much more mixed patchwork of rules and regulations,” he said.
One set of rules Kelly predicted will change is that around intellectual property. In developing nations where many residents can’t even own their homes, the idea of owning an idea is preposterous, he said.
Just as power is shifting to developing countries, the power of individual governments is changing as well.
“Power and influence are going upwards and downwards and away from governments altogether,” said Kelly.
This shift can be seen in the success of the European Union as a single, regional economy, and in the emergence of cities as a force of innovative thinking about sustainability, he said.
There is also the emergence of a new social contract between government, enterprise and the civic sector as non-governmental organizations (NGOs) team up with corporate giants to influence public policy. In India, Coca-Cola partnered with several NGOs to lobby the government to ensure clean drinking water for all citizens, said Kelly.
“Looking at governments at the international level isn’t enough anymore. Something is changing. There’s a blurring of boundaries between the enterprise sector, the government sector and the civic sector,” he said.
SCNetwork’s panel of thought leaders brings decades of experience from the senior ranks of Canada’s business community. Their commentary puts HR management issues into context and looks at the practical implications of proposals and policies.
‘Something’s happening here’
Leadership in action
By Dave Crisp
“Something’s happening here, what it is ain’t exactly clear” — to quote Buffalo Springfield’s song from the 1960s — obviously applies to today’s turbulent, complex business and social environments. For 15 years of consulting, Eamonn Kelly tried to convince companies their environment wasn’t as clear and stable as they thought. But lately, he’s focused almost exclusively on trying to convince them it is more stable than they now think.
Most organizations are still seriously hunkering down, pulling in, retrenching and just trying to survive what they believe is a highly unpredictable future. The best will develop clarity about where things are going and take steps to ensure they succeed first within those trends.
Kelly’s business is pointing out what those trends are but it seems just as few companies are listening now as before when he predicted rough waters ahead.
Behind Kelly’s presentation lies a very big, new theory — “complexity science,” a mere 30 years old. It shows how complex systems and turbulent environments can be understood to a far greater degree than previously thought, and relatively clear strategies can allow individuals and organizations to thrive in rapidly evolving environments.
That’s what Kelly means when he says he’s trying to convince companies there is more certainty in front of us than we think. The challenge is to find the key principles that lead to success within such complexity, not to bury your head in the sand and hope it all blows over, which is the most common reaction.
Boiled down to essentials, Kelly’s recommendations mirror the core principle of complexity science — to solve complex challenges requires, more than any other single thing, collaboration. At the same time our shrinking global business and social environment is generating problems, we are sitting on a tool for the beginning of a solution.
The Internet allows for massive collaboration among billions of individuals on a scale unimaginable barely 10 years ago. We are at such an early stage of using such tools, many of which are in their infancy, that it is impossible to predict many of the solutions or even methods we’ll eventually use to solve our dilemmas.
What is clear is the diverse imaginations of millions, stemming from their diverse situations and local challenges, have to somehow collaborate or the world will run out of resources and sustainability within the next century or so — a mere blink of an eye in the history of the universe.
Collaboration — finding better ways for people to work together — is the exact domain and highest calling of HR. Yes, managing benefit plans and screening individual candidates are part of establishing an environment but the higher-order challenge is leadership right to the top of organizations.
How many senior executive teams collaborate? Or do they primarily compete in silos, with each other, their business competition, their boards and employees, all for bigger paycheques?
Kelly is calling for nothing short of a totally new paradigm to absorb the competitive one that’s driven leaders for thousands of years. It won’t be easy. Paradoxically, effective collaboration includes rather than does away with competition, but the value of inclusiveness in general is a story most people have difficulty comprehending in any form.
These are in fact the core of the complexity concept that will challenge our thinking at every turn. What have you done to further collaboration or inclusion today?
Kelly’s presentation aims to stretch our thinking toward this single, fairly clear, focused but challenging objective.
Dave Crisp is SCNetwork’s lead commentator on leadership in action. He shows clients how to improve results with better HR management and leadership. He has a wealth of experience, including 14 years leading HR at Hudson Bay Co., where he took the 70,000-employee retailer to “best company to work for” status. For more information, visit www.CrispStrategies.com.
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With all the change, is it time to freak out?
Strategic capability
By Karen Gorsline
Eamonn Kelly’s message could be summarized as: “You ain’t seen nothing yet.” He discussed assumptions or mindsets on how the world works and projected how the future might be different based on current trends. Those who embraced and coped with incremental change will now have to figure out how to deal with the massive change looming in the future.
Kelly identified several trends and four implications for organizations based on possible futures:
• It will be a period of a new social contract between government, society and enterprise.
• Customers and the means of engaging them will change.
• Work will no longer be “do it all yourself” or do it in the workplace.
• Organizational models will change to address a “messy” environment where both problems and solutions are unclear.
So what does this mean for strategic capability in organizations? Do we just freak out? Here are three themes I identified in reflecting on the presentation.
Complacency and arrogance are dangerous: As organizations, managers and people, we cannot assume today’s reality will be tomorrow’s. Having coped with significant change today, there is an assumption we can continue to cope. Not preparing for possible and different futures is a dangerous complacency that assumes basic boundaries and controls won’t change. Forces that drastically change or eliminate those boundaries may dominate the future. New players with different values may exercise control. Organizations need to actively focus on a bigger, longer-term picture using multiple perspectives to identify and interpret trends and direction.
Competence in scenario planning is undervalued: Several years ago, scenario planning was hot. Since then, there have been distractions such as a technology boom, strong economic development, scandals of various sorts and the more recent economic crisis.
Scenario planning is not a crystal ball to predict the future but it can provide insights that inform choices and actions while monitoring trends and changes. The range of vision is extended beyond the current fiscal year and the five-year plan, if there is one. Sometimes scenario planning is seen as too imaginative without a clear return on investment. However, competence in understanding different scenarios is a key organizational capability required to survive massive change.
Courage and confidence will be in demand: Innovation, contemplating what may appear frivolous, outrageous futures, or eliciting and accepting different perspectives require courage. The humility to engage resources outside our immediate control requires confidence and the courage of commitment to solving problems. Human beings have an amazing resiliency and capacity for courage. As part of a discussion on change, I asked participants to think about their grandparents and what changes they had faced in their lifetime. One participant said a grandparent traveled west across Canada in a covered wagon and survived the depression. That grandparent, always concerned about the pantry contents, now keeps a list on a computer. Another participant spoke of a grandparent who sailed from a homeland to an unknown destination where language and sustaining themselves would be immediate challenges. Hopefully, this courage and confidence are still within us as we face the future.
Karen Gorsline is SCNetwork’s lead commentator on strategic capability and leads HR Initiatives, focused on facilitation and tailored HR initiatives. She has taught HR planning, held senior roles in strategy and policy, managed a large decentralized HR function and directed a small business. She can be reached at [email protected].
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The blind spot in futurism
Organizational effectiveness
By Tom Tavares
In a sense, there is nothing sillier than futurism because tomorrow is unknowable. At the same time, few endeavours are as fascinating as speculating on the future, especially when the futurist is as entertaining and insightful as Eamonn Kelly.
The short-term future is friendlier than it was a year ago. However, we are not out of the woods yet. Talk of a jobless recovery can be puzzling in an economy where consumers support 60 to 70 per cent of the gross domestic product.
Over the long term, there are tectonic shifts afoot, which have profound implications for the West. We are no longer the centre of innovation. There is a global resurgence of fundamentalist belief systems. A few major powers will no longer set the monetary and economic rules for the rest of the world. In the areas of demographics, urbanization and environmental sustainability, the challenges continue to grow more complex.
One of Kelly’s many likable qualities is his readiness to admit to gaps in his past predictions. For example, he underestimated the speed of mobile technology’s spread. It is difficult to imagine any scenario where the impact of technology is less than enormous.
Kelly also admits to being blindsided by the Enron and Arthur Anderson debacles. Organizational effectiveness is an area where his predictions seem to unravel.
He provides a detailed description of the leadership style required to survive and thrive as the speed and complexity of change continue to increase. He also asserts organizational models are evolving — specifically, hierarchies are flatter and silos are breaking down.
We have witnessed widespread breakdowns in the internal controls of corporations, accounting firms and regulatory agencies. Buckling in intelligence gathering, health care and emergency response also have been reported in detail. The North American automotive industry and financial services are in a shambles.
This blind spot is by no means isolated to futurists. Experts on leadership credibility emphasize the importance of honesty while ignoring the impact of widespread management failures on the perceived competence of leaders. Companies routinely ignore the threat to business performance from 50 per cent of employees feeling disengaged from their work.
The situation is abundantly clear — organizational performance represents a serious threat to both public and private sector institutions. Before there can be risk management, there must be risk recognition.
Tom Tavares is SCNetwork’s lead commentator on organizational effectiveness and a senior organizational psychologist. In addition to managing in large corporations, consulting in varied industries and coaching executives, he has written extensively about the relationship between business performance, behaviour and change. He can be reached at [email protected]. He is also author of The Mind Field: What’s Missing in Running Our Organizations, published by Carswell. For ordering information, visit www.hrreporter.com/books.
Would you like to attend one of the upcoming Breakfast Series in Toronto? Here’s a look at the next sessio:
December: Igniting the third factor — practical and inspiring insights on how to help people reach their full potential, featuring Peter Jensen, founder of Performance Coaching — Dec. 14.
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