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Leadership in Business

Development

UBS - 21-04-2016

Agenda

✓Strategy & Direction✓Innovation Culture✓Innovation Charter: what’s needed to be able to

innovate?✓Innovation Culture✓Types of Innovation Culture✓Leadership Styles

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STRATEGY & DIRECTION

Why Innovate?

To deliver more value by offering…

• quicker• beter• more efficient

… products or services.

The “why” of innovation is simple: change is accelerating, which means that we don’t know what’s coming in the future, which means more uncertainty than ever, which means we’d better innovate to both prepare for change, and to make change.

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Innovation can come from anywhere, anytime & anyplace.Innovation is not only technology innovation but also product/service innovation, business model innovation and process innovation; innovation ranges from incremental (horizon 1 to disruptive innovation / horizon 3).

Business Development encompasses the creation of long-term value for an organization from customers, markets, and relationships, and, thus, also includes innovation.

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Clayton Christensen: Disruptive Innovation

Opening for Killer Applications

Progression of Technology

Incremental Business Change

Examples

• +++ Uber &c

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Virtual: New RulesUber The world’s largest

Taxi company, ownsNo vehicles

The world’s mostPopular media owner

Creates no content

Facebook

Alibaba The most valuableRetailer, has no inventory

The world’s largestAccommodation provider

Owns no real estate

Airbnb

Something interesting is happening.

Start-up mentality = Survival

No longer exist… No one can live without…

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Unbundling

Accelerating Speed of Unicorns created

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HOW TO DEAL WITH THE SPEED OF CHANGE?

Vision & Ambition

LightingLighting

Consumer ElectronicsMedical Systems

Health &

Wellbeing Company

Forestry Mobile TechnologyNokia  Networks

HereNokia Technologies

Content streamingContent creation

+Content streaming

DVD rental

Forced to adapt new identity and business model by market

Slowly adapting to new market forces

Pro-active / pre-emptive change while still making profits

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Enterprises don’t change; people in enterprises change

KNOWLEDGE SETTOOL SETSKILL SETMINDSET

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Innovation CharterWhat’s needed to be able to innovate?

• Your MTP• Innovation Culture• Innovation Strategy• Innovation Structure• Innovation Processes• Innovation Toolkits

MTP

Maximum Transformative Purpose

Source:  Exponential Organizations,  Salim  Ismail

The  Massive  Transformative  Purpose   is  the  higher,  aspirational  purpose   of  the  organization,  capturing  the  hearts  and  minds  of  those   inside  and  (especially)  outside   of  the  organization.

Source:  Exponential Organizations,  

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ExO’s

Source:  Exponential Organizations,  Salim  Ismail

Examples MTPs• Google : "Organize The World's

Information”• Ted Talks: "Ideas Worth Spreading”• Wikihow: "Positively Impact The Lives

Of Others”• X-Prize Foundation: “Making the

impossible possible.”• Singularity University: “Topositively

impact the lives of a billion people in ten years.”

• Quirky: “Make invention accessible”• The Coca Cola Company:” Open

Happiness”

1. It's uniquely yours2. Aspirational - what they aspire to accomplish

it completely inspires you3. Neither narrow nor even technology specific4. Aimed at the heart and mind.5. Declared with sincerity and confidence.6. Power Of Pull: so aspirational that a

community forms around it.7. Helps you attract and retain talent.8. Changes the organizational focus from internal

politics to external impact.

MTP: Attributes

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So, what drives innovation?

Vision Leadership

RigorousProcess

OrganicChange

Ambition

Mission

Purpose

Toolset

Portfolio Management

Funnel Management

Acceptance of failure

Learning by doing

Learning culture

Skillset

Mindset

Knowledge

Vision Leadership

RigorousProcess

OrganicChange

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INNOVATION CULTURE

The hard things about hard things*The truth is that innovation is a hard thing. And research has established that what makes innovation really hard is the lack of soft skills; it’s about the ability to work with each other.

The 2 biggest inhibitors of innovation are ego and fear**.

Ego is a Me-culture driver, focussing on individualism, hierarchy, elitism, predictability and minimizing mistakes. Fear is in this context, fear for the unknown, fear of failure (as this is not allowed), fear of not being accepted by the boss.

Innovation is a We-culture activity, focussing on group activity, equality, ambiguity and accepting mistakes to learn quicker and better than the competition: it starts by saying and acknowledging “I don’t know’. In this context there is no fear, only ownership, contribution and being part of community.

*: Taken as inspiration from the titel of the book by Ben Horowitz

**: Learn  or  Die:  Every  Business  Will  Be  In  The  Business  of  Learning,  May  2015,  Edward  D.  Hess

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So what are the enabling conditions for a strong Innovation Culture?

In the following slides we have summarised the most important enabling conditions tor creating a strong and sustainable Innovation Culture.We would like to highlight two additional aspects related to creating an Innovation Ecosystem:

1) To create a Innovation Ecosystem you require more than just the right culture. You require a clear business strategy that is closely linked to tour innovation strategy. You require various skillsets from portfolio and funnel management skills to growth hacking, from communication to rewards and recognition.

2) You can only create a strong and sustainable innovation ecosystem and culture with many baby steps. This is about learning how to do this in a for the company relevant way; it’s not one size fits all. And the same rules for creating startups also holds true for creating an innovation ecosystem: learn faster, better and quicker than your competition.

On leadership building an Innovation Ecosystem

“Leaders of the future need to be strong in their overall people ‘agility’, strategic planning, ability to inspire commitment, capacity to learn, and ability to lead and manage change.”*

Organizations don’t change. People in organizations change.

A healthy Innovation Ecosystem requires organizations to give room to the desire of people to change. Challenging the status quo is not really a problem for most employees. They start fresh and new, with plentiful ideas on how to do things better, but generally after 6 months they have been indoctrinated to accept ‘the way it works here’. They (with a few exceptions) have by then lost their interest, their energy, their belligerence to change or to drive change. Leadership is the only end responsible entity to address this and address this ruthlessly.

*: The Transformation Imperative Collaborative Leadership is Key For Future Success, John Matone

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*:  Nathalie  Baugartner

Understand   what  culture  really  is

Don’t   ask  your  employees  what  your  culture   is

Culture   is  how  you  do   things   in  your  company

Actual  culture:  how   your  people  

are  wired

Aspirational  culture:  what  you  write  on  your  walls,  your  

website There  is  no   single   right  culture

Align  your  culture  with  everything  

you  do

Identify  your  employees   core  

values  (core   values  are  very  personal)

Use your own tools to hire people who fit in the culture

Use  culture   to  develop  your  people

Your   culture  drives  engagement

Actively  managing  your  culture  lets  people   be  their  best

Diversity of  Thought

Freedom toAct

Space  &  Focus

Passion &  Energy

People

Openness &  Transparency

The 10 Enabling

conditions for a strong Innovation

culture

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Process:Develop and apply a rigourous process and measure efficacy

If you do have a process, people will regress to default behaviour as we are sub-optimal leaners and sub-optimal listeners. We regress to the state of mental laziness and confirmational thinking.

Funds:Have resources available when next milestone requires.

Every startup or venture requires funds. But these funds need only to be provided based on achievements, i.e. achieving milestones. Having said so, once startups have achieved their milestone, funding needs to be made available immediately; if you do not do show, this expresses lack of commitment and undermines trust.

Mandate:Ensure innovation has the C-suite backing to develop and grow

If mandate and governance are not clear, innovation will require complex, time and energy consuming stakeholder management. The focus of activity should be on creating a new business and not on ‘keeping all the frogs in the barrel’.

Direction:Provide teams the direction to develop the company, it’s ‘True North’

Innovation needs direction to valuable to a company. Leadership needs to take ownership and communicate the direction the company is moving towards and accept the consequences of this choice (as the rest of the company will act on this). The direction needs to be a long term objective.

Openness & Transparency

Openness & Transparency:

• Avoid the biggest inhibitors of change and innovation: ego and fear

• Candor• Confirmity to brutal facts• Fact based Meritocracy• Be scientific in assessing your experiments• Rigorous time and milestone management and firm

commitment to deadlines• Communication: loads of it!!

How to create Openness & Transparency:Ø Be extremely open yourself; model the behaviour you expect/wantØ Be radically transparent. Provide people with as much information as possible to what’s going on

around them. Allowing people direct access lets them form their own views and greatly enhances accuracy and the pursuit of truth.

Ø Communicate the logic and welcome feedbackØ Hypocrisy kills trust; always be truthful and forthcomingØ Base decisions on facts, not opinions. Define OKR’s rather than KPI’s

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Diversity ofThought

Diversity of Thought:

• Devalue hierarchy• Devalue elitism• Accept critical thinking (not negativity)• Fuel creativity• Innovation rides on variance; serendipity, mutation,

accident, and mistake• Diversity of team backgrounds

How to create Diversity of thought:Ø Recognize that people are built very differentlyØ Think about their very different values, abilities and skillsØ Research shows multidisciplinary collaboration leads to better skills in communication, collaboration,

and professional abilities, a better understanding of the collaborative process and how different professions complement each other, and has a positive effect on future career development and sense of achievement

Freedom to Act

Freedom to Act:• Psychological safety• Permission to speak freely• Permission to fail• Let go of control on content; check progress, check

learning• Leadership that is willing (mindset) and able (skillset)

to act as first line of defence against the "no-machine"

How to create Freedom to Act:

Ø Recognize that effective, innovative thinkers are going to make mistakes and learn from them because it is a natural part of the innovation process. For every mistake that you learn from, you will save thousands of similar mistakes in the future. So, if you treat mistakes as learning opportunities that yield rapid improvement, you should be excited by them. But if you treat them as bad things, you will make yourself and others miserable, and you won’t grow.

Ø Provide clear GovernanceØ Set the right expectations: provide clear milestones and let the team achieve these milestones their own

wayØ Psychological safety comes from caring for your people.

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Space & Focus

Space & Focus:• Enable team to spend 100% of their time on

creating; you can’t innovate on the side• Provide a dedicated environment for innovation• Drive focus in the way the team addresses an

opportunity

How to create Space & Focus:

Ø Space from a mental state perspective: enable looking at the problem from as broad a perspective as possible.

Ø Space from a location perspective: provide an environment that is conducive to innovationØ Move from divergence to convergence in a timely fashion so that the team can focus on what the

actual value proposition is and how to deliver thisØ Lean financing: financial pressure forces the team to focus on what really needs to be achievedØ Milestone-based value creation: using milestones help focus the execution of the plan, overall

activity and steps to be achieved to be able to move forward.

Energy & Passion

Energy & Passion*:• Fuel ownership and accountability• Fuel passion by emotional engagement• Driven by a need to continuously improve oneself

How to ensure Energy & Passion:

Ø Commitment is defined as “being bound intellectually or emotionally to a course of action.” When it comes to being innovative and creative, the problem is that most executives are only bound intellectually to a course of action.

Ø Link people, do not rank peopleØ Enable collaboration; breaks down internal barriersØ Enable people to do work, don’t tell themØ Teaching soft skills sets is perhaps more important than teaching occupational skillsØ Accept failure as long as there is learning; if there’s no learning, address failure harshlyØ Make it fun to work; remember, when you take yourself too seriously, life ceases to be fun.

*: Author, E.M. Foster said, “One person with passion is better than forty people merely interested.”

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People

People:• Hire the right people: People who are curiously

optimistic, outcome focused and willing to fail in the pursuit of creating new public value streams

• Measure their behaviour• Reward and recognize the right behaviour• Learning as a continuum

How to select the right people:Ø Most importantly find people who share your visionØ Hire people you want to share your life withØ Weigh values and abilities more heavily than skills Ø Look for people who are willing to look at themselves objectively and have characterØ Conceptual thinking and common sense are required in order to assign someone the responsibility

for achieving goals (as distinct from tasks)Ø Hire right because the penalties of hiring wrong are hugeØ Pay for the person, not for the jobØ Hold people accountable and appreciate them holding you accountableØ Think like an owner and expect the people you work with to do the sameØ Constantly stay in sync with your peopleØ Train and test people through experience

TYPES OF INNOVATION CULTURE

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Types of Innovation Culture

Entrepreneurial CulturesFormulaic Cultures

Formulaic Cultures• At BMW, the creation of a new car concept is a wonderful

orchestration. Every detail, from engine size to how a door closes and to how an engine should sound, is carefully planned. Any new technology, such as a rear-view camera, is prototyped, integrated into the design, endlessly tested, and weighed to the gram. To accomplish all of this requires the coordination of multiple departments—materials science, styling, power train, ergonomics, and manufacturing.

• Looking to speed communication and promote idea-sharing across divisions, executives have brought all of the critical functions together under one roof. The headquarters building in Munich uses a hub-and-spoke model with a central core connected to each of the floors that house the product groups. No matter where you are in the complex, you’re within easy walking distance of any of the expertise centers—electronics, safety, environment, drive train, etc. As you spiral down into the building, you can experience first hand how even the most mundane task is still connected to the overall vision of the BMW experience.

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Entrepreneurial Cultures• Despite the outsize attention they often garner, true entrepreneurial

cultures are rare in large companies. One of their hallmarks, at least in their early days, is that they often feature a single, rogue innovator, a leader who by timing or luck finds himself orchestrating a maelstrom of technology disruption. Think Steve Jobs, Mark Zuckerberg, Carroll Shelby, Stephen Elop, Sergey Brin, or, long ago, Edwin Land at Polaroid. In keeping with the bold personalities that run them, the companies are usually willing to take risks that normal companies would consider off the charts.

• Cultures that form in response to these leaders are almost never satisfied with incremental growth but rather strive for major disruption. Like sharks, they target and attack mature companies where they are weakest—in their business models. They prey on lethargic industries with outdated practices that can be completely disintermediated. They use the power of emerging and disruptive technologies to reinvent the way products and services are used.

• Such companies and their cultures can accomplish historic things. They are the very embodiment of the go-big-or-go-home mentality.

Google’s 9 principles of Innovation

• Innovation comes from everywhere• Focus on the user• Think 10x, not 10%• Bet on technical insights• Ship & iterate• 20% rule• Default to open• Fail well• Have a mission that matters

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General views• Know Thyself

There’s no singular method to creating a culture of innovation. Establishing one, and making it stick, depends on understanding the climate.

• Innovation is business as usualInnovation isn’t just a pet project. From R&D to human resources, customer service to financial operations, success relies on a constant evaluation of creativity—it’s everyone’s job, all the time.

• Just do itYou want to move quickly when innovating. Moving too slowly can be the death knell of new ideas.

• Knock failure off its pedestalInstead of glorifying failure, these companies knock it off its pedestal, disempower it, and move on.

• Lead infectiouslyStrong leaders don’t just maintain control. They communicate their vision clearly, which enables others to think expansively.

• Innovation is a human conditionInnovation is not a rare quality inherent in a lucky few—it’s a way of thinking and behaving that comes naturally. An organization’s job is to foster the right climate to unleash its employees’ innate innovative tendencies.

• Measure what’s meaningful

Top 10 Lessons from Startups

1. Start from scratch2. Fund to scale3. Ask for help4. Export5. Think Social

6. Think Big7. Use Technology8. Promote from within9. Form Partnerships10.Be fun

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https://youtu.be/iuFiEmx-M_M

Cases

https://youtu.be/86ChABxLV60 https://youtu.be/16p9YRF0l-g

http://www.bwater.com/Uploads/FileManager/Principles/Bridgewater-Associates-Ray-Dalio-Principles.pdf

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LEADERSHIP STYLES

Leadership styles

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A  great  study  on  the  subject  of   kinetic  leadership  is  Daniel  Goleman’sLeadership   That  Gets  Results,  a  landmark  2000  Harvard  Business  Review  study.  Goleman and   his  team  completed  a  three-­‐year  study  with  over  3,000  middle-­‐level  managers.  Their  goal  was  to  uncover  specific   leadership  behaviours  and   determine  their  effect  on  the  corporate   climate  and  each  leadership  style’s  effect  on   bottom-­‐line  profitability.The  research   discovered  that  a  manager’s  leadership   style  was  responsible   for  30%  of   the  company’s  bottom-­‐line   profitability!  That’s  far  too  much   to  ignore.  Imagine   how  much  money   and  effort  a  company   spends   on  new  processes,   efficiencies,   and  cost-­‐cutting  methods   in  an  effort   to  add  even  one   percent  to  bottom-­‐line   profitability,  and  compare   that  to  simply  inspiring  managers  to  be  more   kinetic  with  their  leadership  styles.  It’s  a  no-­‐brainer.

Goleman’s 6 Leadership stylesand when you should use them

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Quote from George Kohlreiser from a blog post by Daniel Goleman

“People do not naturally resist change. They resist the pain of change. They resist the fear of the unknown. The brain is naturally going to seek, be curious, explore, and do new things. It’s how the brain thrives. But to do that, you have to feel safe. When you feel safe enough, then you go out and explore. You can't change when you’re defensive. A leader has to be able to give that trust and sense of security. That’s when explosions of creativity can occur.

The failure for many leaders is that they are creating negative states in other peoplebecause of their own negative mindset. They can’t hold on to positive energy or positive focus. You have to look beyond the pain and frustration to find the opportunities. There are great stories of people who experienced personal and professional catastrophes but were able to overcome it by seeing or creating an opportunity from the setback/”.

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Real Drives Model

https://www.youtube.com/watch?v=WqmvIKge0Bo

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Appendix

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Gartner's 2015 Hype Cycle for Emerging Technologies Identifies the Computing Innovations That Organizations Should Monitor

Inspirational Reading

Zero Marginal Cost, Jeremy Rifkind

Exponential Organisations, Salim Ismail, Yuri van Geest, Michael S. Malone

The Brain and Emotional Intelligence: New Insights, Daniel Goleman

Lean Startup, Eric Ries

The Innovator’s Dilemma, Clayton Christensen

The Innovator’s Manifesto, Michael E. Raynor

Drive, Daniel H. Pink

Zero to One, Peter Thiel

Creativity Inc., Ed Catmull