It will be interesting indeed to see which organizations stick to their green commitments as economic conditions continue to dominate the headlines. 

What can we predict?  Firstly, that a lot of smaller companies that went into business with a ‘green’ proposal are going to find things very tough, particularly if they are counting on a premium price for greener products.  They will be hit not only by the economic troubles of their evironments but by a radical shift in people’s priorities:  green may be nice, but if the choice is a green widget or a gallon of gas, it may not be affordable.  Secondly, we’ll see companies continue with programs that are green but that genuinely save money or time; while those that are more expensive or inconvenient are likely to be phased out (quietly of course).  Finally, we may see the beginning of an era in which items that are both not green and expensive or optional take a beating (bottled water, anyone?).

Your predictions?

The issues they raised as barriers to growth include:

• The “de-risk” mode that many companies have gone into which makes anything even remotely unpredictable look dangerous
• A lack of a global mindset that leads to local optimization of investment and cuts off more promising corporate projects
• Brand conflict - when a new project isn’t a great fit for the existing brand
• Churn among the managers and leaders involved in innovation projects
• Silos within the organization
• Existing metrics and rewards that are not suitable for innovation
• Fear of cannibalization of the existing business
• Fear, in general
• Short-termism driven by quarterly results pressure
• Politics
• Existing power structures in the company

What I find absolutely fascinating about this list (and remember, this is an extremely well managed firm) is the extent to which the barriers to growth are essentialy self-inflicted.  They are internal processes, systems, relationship sand politics that can get in the way of doing anything new.  Existing companies tend to have accumulated lots of these sorts of barriers - but it doesn’t have to be a foregone conclusion that these will be or should be in place.  Here is where adroit innovation leadership, to me, can make all the difference.  This is one of the key themes in our forthcoming book Discovery Driven Growth.

For now, the key takeaways from my session:

1.  Too much one-way communication is ineffective

2.  In design, remember the basic principle of what makes something interesting—challenge to weakly held assumptions

3.  Build on executive participants’ own experiences and connect to your teaching points

4.  Creative repetition (700 times)

5.  Tell stories

6.  Combine facts, emotions and symbols—often, one or another are left out

Feel free to write with any questions or further ideas.  On to the next session!

ExecEdTeaching.SMS.10-08.08.pdf

My colleague, Ian C. MacMillan (or Mac, as everybody calls him) with some colleagues is putting together a special issue of the journal Long Range Planning in which a bunch of well known management thinkers are putting together their best ideas on the topic of the future of business models.  When I last checked in, they had some submissions from pretty heavyweight folks, among them Raffi Amit, Hank Chesborough, Yves Doz, Hiro Itami, Costas Markides, Anita McGahan, CK Prahalad, David Teece, Michael Tushman and Peter Williamson.  I feel flattered to be included!  The special issue should be out next year - keep an eye on the LRP web site for details as to when. 

Which brings me to a bit of advice for you.  Virtually everyone reading this blog will be involved with businesses whose fundamental assumptions were created in a radically different economic era.  The net effect has been to dramatically increase the amount of uncertainty in which planning and resource allocation are taking place—not to mention in which strategies are being conceived and executed.  When uncertainty goes up, the benefits of checking and re-checking fundamental assumptions, being prepared to redirect the business and looking clearly at what the future might hold increase dramatically.  So humor me—as you think about the next six months of activity that you’re involved with, what are the fundamental assumptions you are making, and have you re-visited them since our entire financial landscape came crashing down around us?

Here are some good candidates for assumptions you might want to think really hard about:

Price.  We’ve already seen the consequences of rising raw materials prices on the costs of everything from bagels to basic supplies.  But are the pricing assumptions in your business also taking into account the fact that your customers may not be able to get the credit they need to pay your prices?  Or that they may not be able to assemble enough money in one lump to pay you up-front, or even when you submit your bills?  You may want to consider adopting new, flexible pricing programs in the event this is the case—for instance, perhaps instead of an outright purchase, a customer might be able to afford a lease or an installment purchase. 

Timing.  One thing we know about uncertainty is that people tend to ‘freeze in the headlights’ when confronted with it.  What does that mean practically?  Well, it mean that decisions you thought were going to take place soon are likely to take place later.  So you might want to give some thought to how you can help people to make commitments and decisions in a more timely way, if that’s important to your business.  You might consider thinking through the factors that would cause them to delay and how you might mitigate those.  For instance, if customers are worried that they’re paying peak prices, you might offer a money-back guarantee if prices fall within a specified timeframe.  Or if customers are worried about cash flow, you might offer to defer billing until they are feeling more secure.

Talent.  Any business strategy depends on talented people to deploy it.  But are you really thinking about the talent implications of current hard times?  Some of them might surprise you—for instance, if your best people are feeling insecure, they might jump at job opportunities offered by a competitor, just because they don’t know if they can count on you.  Likewise, you may be discovering that some of your medium-talented people are just not up to the challenges of such tough markets, creating the chance to replace them with high performers cut loose from organizations in trouble. 

Competition.  It sounds tough-hearted, but sometimes if you are better prepared than your competition, you can use their disarray or confusion to your advantage.  Have a strong balance sheet, good people and killer products?  Consider leveraging those advantages against competitors who may not have those attributes - or who are paralyzed by the uncertainty they are facing. 

If these ideas intrigue you, you might want to check out my upcoming program Leading Strategic Growth and Change which will be next be offered in November.  In it, we’ll be adapting the Discovery Driven Planning technique to take account of today’s tough times and show you how the principles that help drive growth under uncertainty can also be applied to core businesses newly facing uncertain times. 

Measure your metrics to gauge whether these clients are falling off, and if you’re getting unique visitors. And even if you’re in a low-competition market, you should still practice ‘fire drills.’Create a ghost competitor to develop tactics to deal with competition and stay sharp. Not only are you preparing yourself for the possibility of a surge in market competition, you’re pushing yourself to achieve better results right now, which means more money.” To read the entire blog post, click here.

A recent note in the Wall Street Journal speculated that investors are making exactly the opposite bets in the case of companies suffering in the current downturn.  The ‘cheap’ buy is actually the depressed stock of a company in trouble.  Although some are likely to go bust, the options bet is that a few will survive, draw the attention of other investors, and pay a nice return to those steadfast enough to purchase when things looked grim. 

He reports that researchers from Stanford University, the London School of Economics and the consulting firm McKinsey & Co. found that solid management techniques, yes, the kind we teach in business schools, actually make a difference to the performance of manufacturing plants.  They found that better managed facilities employed management tools that helped them achieve better performance.  It’s comforting to know that the research we do and the resulting tools and techniques can have a good performance effect.

Among the studies’ more intersting finding is that (for now) factories in the US are better managed than those in other countries.  But - that gap could soon close, they warn. 

Rhee has turned this observation into something of a battle cry, with powerful symbolic effect.  In response to criticism about having fired 15% of the central office staff, she said, “Children are losing their lives because we’re not educating htem well.  But we’re concerned about the adults?  I’m not firing people because I’m mean or heartless or don’t care about people.  I’m just not willing to forsake the future of thousands of kids for the comfort of a few adults.” In a further powerful bit of symbolism, Rhee’s own children attend school in the district she is trying to reform.

Tackling large-scale change is never without controversy and it’s early days yet for the efforts to solve the intractable problems of a large district like DCPS.  But as an example of powerful symbolism, it really works.