22 Nov. 2013 | Comments (0) Share Follow @Conferenceboard
You’ve been successful and your division or business has hit its targets so why would you force change? You are getting a healthy bonus each year and you look good in the eyes of the Board or Executive team. You’d be foolish to upset the apple cart and risk what you have. Does this sound like a familiar situation to you? If so, this may be putting your business at risk.
I recently attended a presentation by George S. Yip, a well-known professor of management and the Co-Director of the Centre on China Innovation at the China Europe International Business School. He talked about organizations in the 21st century needing to go beyond finding their competitive advantage in the marketplace in order to succeed. He talks about Rita Gunther McGrath’s work, from Columbia Business School, who says, in a recent Harvard Business Review (June 2013) article:
“In a world where a competitive advantage often evaporates in less than a year, companies can’t afford to spend months at a time crafting a single long-term strategy.To stay ahead, they need to constantly start new strategic initiatives, building and exploiting many transient competitive advantages at once.”
What occurred to me while listening to Professor Yip was that building and exploiting new competitive advantages requires constant change. People need to be looking at problems and their environments’ in very new and different ways all the time, launching new products and initiatives, and then re-configuring or disbanding them as they lose steam. Yet, the way most organizations are rewarding their leaders and holding them accountable, there is little incentive to take these risks, as long as financial results are positive.
So, the question becomes, how do you, as a leader, create the will to change and drive the innovation necessary to continually build transient competitive advantages? If financial results are telling us what has happened in the past versus what will happen in the future, the first step is to understand the “early warning signs” of when change is needed.
Here are some ideas of what those “early warning signs” might look like:
1) You have lost touch with the customer – when leadership loses sight of what the customer is doing or what the customer really wants, it often signals the end of a competitive advantage. If we think back to the fall of Blackberry, when do we think the writing was on the wall that this organization’s advantage was eroding? Probably at some point years ago when leadership failed to recognized all the various uses for smart phone technology, beyond being just a business tool.
2) Your people and culture are misaligned – to deliver results in a changing environment, people must be prepared to innovate and quickly adapt to change. If we see evidence, in the form of employee survey data or upward feedback, that people are not connected to where the organization is going, have unclear expectations, don’t feel they are learning and growing, and aren’t willing to go the extra mile to help the company, then you may have misalignment. According to David Sirota and Douglas A. Klein’s new book, the 2nd edition of “The Enthusiastic Employee: How Companies Profit by Giving Employees What They Want” (Pearson, 2013), companies with high morale returned 368% more to shareholders than their industry peers. When morale is suffering or when leaders, managers, and employees are not in alignment, delivering on a change agenda will be very difficult.
Preparing an organization for continual change requires a very different mindset for leaders. Rather than just managing to your numbers each quarter, you now need to think what kind of culture you want to build, and then work towards building it every day. Will it help our change agenda to have people working against each other in order to hit their numbers? Do we want to reward people for individualistic behaviors versus collaborative ones? All these factors need to be examined and hard choices need to be made if the organization culture and it’s people are not aligned to deliver on a change agenda.
This blog first appeared on Sirota's website on 11/20/2013.