In a recent coaching meeting with the CEO of an industry leading insurance company, my client raised an interesting issue. He shared his concern about the pace of change and innovation in his business. It wasn’t that he felt there was too much change. It wasn’t that he felt there was not enough. His concern was how would he ever know if the amount of change and innovation in his business was just right? Sounds like Goldilocks and The Three Bears!
He is not alone. Many of the business people I talk to articulate the same challenges of leadership: they need to anticipate change and insure against predatory/disruptive innovation or broader contextual disruption (economic, political, environmental), at the same time as pursuing innovation themselves as a sustainability measure. They have to find a way to keep ‘business (profitable) as usual’, while strategising responses to a rapidly changing business environment. Sound familiar?
Three keys to leading through rapid change
It would be easy to get the heart racing with all these challenges. That’s why, when I’m working with my coaching clients and groups, I find it’s important to break it all down. The last thing you need is panic. What leaders need to do is develop readiness for change in their companies and themselves, and how do we do that?
I don’t have all the answers, by any means – and I’m hoping that some of you reading this might have some to share as well. Personally, I think in terms of three areas: mindsets, strategies and skillsets.
People leading innovation and change need to adopt a mindset of shared leadership. The leader as decision-maker and hero just doesn’t cut it. You can’t stay across all the complexity of contemporary global marketplaces by yourself. This shift can be hard, particularly if you have a long history as a leader in a stable business environment. You’ll need a team around you with the same passion, commitment and openness as you.
You’ll also need a ‘stay close’ mindset. I mean by this that leaders need to stay close to the customers and close to their employees. You’ll need an on-going intelligence on what your customer segments are thinking, feeling and wanting, and which segments are being overlooked. I recently read a great piece (Ernst & Young 2017), which described today’s companies not as organisations but as organisms with multiple receptors to sense the market environment.
Staying close to your employees is about infusing your passion and vision throughout the company, so that its most valuable resource – your people – are committed to the journey.
The radical changes and disruptions we face can induce fear, and the role of leadership is to inspire confidence, courage and commitment to change among your people. It’s your people who, at every level, provide that receptor soaked membrane to your marketplace.
2. Strategies for innovation
You’ll need a strong dedicated innovations team whose role it is to gather intelligence (markets and innovation, global and local, present and future). I’m not talking about an exclusive ivory tower here. This team needs to be drawn from across, up and down the organisation, and needs to stay plugged in to your employees. These people will keep their fingers on the pulse of potential disrupters and opportunities for disruption. They will provide a hub for exploratory initiatives.
“Most every innovation – disruptive or not – begins life as a small-scale experiment” — Clayton Christensen 2015
The current challenges faced by Bunnings UK provide an interesting case study. In 2016 Bunnings bought UK’s Homebase, a profitable homewares chain, for $705m. They transformed this chain into a version of what we know and love as Bunnings Australia, complete with sausage sizzles. However, they discarded many features that the customers loved, such as the Laura Ashley range, and in other ways misread the needs and wants of the customers (who possibly don’t get the sausage sizzle concept!) (Miller, 6 Feb 2018) They also changed the pricing from a promotional model to an Australian Bunnings style ‘everyday low price model, when “the whole UK market is a promotional market” (Chung, 17Aug 2017)
After two years and $953m of ‘impairments’ they are still talking about proof of concept.
“The idea that Wesfarmers is yet to prove this concept after a period of due diligence, and 12 months or so of trading, is a huge concern.” (AFR Feb 5, 2018)
Of course I hope they get this project over the line and wish them all the best, but I wonder how different the outcome would have been if they had stayed closer to the customer, and started quite small with a proof of concept experiment?
Other strategies include investing in diversity. As we’ve written in other articles, deep or acquired diversity of thought, style, and experience is what drives innovation.
Diversity of gender, age, culture, sexuality, etc., combined with an organisational culture that is open to challenging assumptions about ‘how we do things around here’ provide the necessary ingredients for this deep diversity and the innovation it brings. If you have diverse employees you are likely to have on tap diverse market intelligence. The business case for diversity is pretty clear.
3. Skill sets for innovation and change
A quick list here:
- envisioning skills, for a broad vision across industries, technologies, markets and countries
- systems thinking skills, for working with chaos and complexity and for implementing design thinking
- interpersonal skills, for staying close and inspiring your teams
- learning, creativity and innovation – these are cultural shifts as much as skills
- team working and process skills
So you’ve already got these skills in your company
I’ll bet you already have a lot of these skillsets within your company. Sometimes it’s a matter of recognising the strengths that people bring to the table, and creating the time and space to focus these skills on innovation. Allowing your people time to stop and think – whether it’s about incremental or radical innovation – is probably the critical skill of leading for innovation! That, of course, is easier said than done in an environment that never sleeps!
There, I hope you are breathing easier if you are a leader navigating the currents of rapid change. Our core business is helping our clients prepare for the future, so I’d love to hear about your ideas on this topic. For more on innovation and related leadership topics, you might enjoy my podcast series.
If you’d like to find out more about we do at Executive Central in terms of leading innovation and creating a change-ready organisation, you are most welcome to contact me.