Archive for April, 2014

Crafting Innovation for a Transparent, Interactive Marketplace

April 26th

While there is widespread acceptance of the idea that in times that demand transformational change innovation has become an important, even critical management capability.  And the notion that innovation needs to anticipate both investments in sustaining technologies and investment in new disruptive business models – the ideas first advanced by Professor Clayton Christensen of Harvard Business School in his book, the Innovator’s Dilemma – have received widespread support as well.  But the approaches that are often suggested for engaging the forces of disruptive change may need to be revised to anticipate the age of social media.

The problem is not a surprising one.  No one is in favor of disruptive change when it undermines them.  Long-time line managers who have developed their careers in a business model  favoring one kind of profile are naturally likely to resist investing in a new business model that will put them at a disadvantage and possibly even bring in leadership from a new generation or new group with a different skill set. S it’s not surprising that an old-line institution such as the Postal Service might have managers who would resist a new era of digital media. But what might be even more surprising is the subtleties within the disciplines inside the institution – those who have made their careers improving the delivery of letter mail, resisting new patterns that would emphasize parcel delivery and integration of the traditionally independent institution with new e-commerce providers.

But if the customers are going to act as Christianson suggests that they will in his exposition of the shift too disruptive technologies, then there’s a need to refine strategies for him bracing the disruptive future.

Christianson suggests three models in an article written in Harvard business review quote “on innovation”, a Harvard business review paperback copyright 2001, “meeting the challenge of disruptive change”, Clayton M Christiansen and Michael Overdorf first there’s the skunk works that develops the new technologies in a laboratory set apart from the traditional enterprise. Second there’s the division within the company that said apart from others and finally there’s the strategy of acquiring the technology that allows for disruptive change.

Each of these three strategies might be seen as a “sequestering strategy” where the new investments are protected from interference from the traditional line managers. The problem with relying on sequestering strategies alone is that organizations are increasingly transparent and services require integration. Both features of the network economy are likely to make it almost impossible to protect the alternative vision of the future from the traditional enterprise. This is good news for entrepreneurs but it is going to be challenging for large complex organizations. How do you invest in alternative visions of the future without being stopped?

One pathway that’ worth a new look may be to revisit the notion of open innovation. Clayton Christianson writes about open innovation in his blog (Wednesday, September 19, 2012) he relates his experience at the annual meeting of the Academy of management (AoM). He describes a session on open innovation featuring Allan Afuah from Carnegie Mellon, Karim Lakhani and Michel Tushman from HBS, and Todd Zenger from Washington University in St. Louis.

“Open innovation is a method of innovation that has arisen in recent years which allows companies to essentially source some of their innovation efforts to outside parties, often through contests where individuals compete to develop the best solution to the innovation challenge the company has set forth,” Christensen writes.

He describes the way in which such challenges work and notes the work of InnoCentive to help companies to “clearly define the innovation challenges they are facing” and develop platforms where challenges can be held.  And Christensen notes the way that the changing marketplace has played a key role in this development,

“The rise of social media in recent years has been a significant enabler of open innovation, as it allows firms to develop strong communities of external innovators eager to solve problems.”

What’s interesting about Christensen’s review of the open innovation panel is that he both acknowledges the benefits of open innovation that offer some promise to work past the obstacles to the sequestering strategies that are created in transparent interactive enterprise and at the same time he recognizes some of the limitations,

“Open innovation can be an excellent means for innovating around specific technical challenges.  In contrast, open innovation may be a less effective means for bigger architectural or business model innovations.”

Opening the innovation process but at the same time given the challenge and the intended solution precise definition offers an important potential path around difficulties that will become increasingly apparent in the future enterprise.

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The Stakeholder Constituencies

April 23rd



If the moral of the story here were to “adapt to new technology” it would still be a worthy discussion.  But there would be little news. Organizations throughout the economy have had to adapt to survive and many haven’t been successful. The Internet and the technologies that are associated with it have undermined the fundamental business models of many of the icons of the American economy. The impact of new technologies is a story that has been told many times.

But in fact, there is an even more important and interesting story that is unfolding in every sector of the economy. The implication of the new communications modes that have made global communication instant, ubiquitous and free have had brought implications for the way in which companies communicate with one another and within themselves. The classic model of communications for the firm is one that emphasizes the employees and management. Many of the key conversations that take place are therefore thought to take place within the box outlined above.

Even before there was Internet communication facilitating global connections, the boundaries of organizations were becoming less important and connections between the traditional organization and its customers, its shareholders (in the case of public at organizations this is taxpayers, and their representatives), suppliers and even host communities describe the multiple dimensions that describe the stakeholders in a representative manner.  The pressures that they supply are easiest to see and understand.

What has become important in the modern era has been that the economics of communications have made it so dramatically easier that there are new voices seeking to express their views and to defend their interests.  Even more importantly, there is growing recognition that the stakes really do matter.  Transparent enterprise and the abundant self-publishing sources of analysis have made it easier to see strategic issues as they appear on the horizon of the leadership.  The types of products, the location of tomorrows jobs, all of these issues and more are being contested in the new, increasingly competitive market.

If the Internet Age has brought a new era of challenge, the scope of the issues have moved far beyond adapting to the new technology and now include the Democratic Impulse that has awakened the stakeholders. √

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Strategic Inflection

April 22nd

Andrew S. Grove, the former leader of Intel, wrote a book in the mid-nineties in which he sought to help leaders “exploit the crisis points that challenge every company.”  In 1996 when the book (Only the Paranoid Survive) was published, not even the head of Intel might’ve guessed the true scope of the revolution that was underway.

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In the short term, virtually every institution, both public and private, was forced to contend with the impact the creation of a global Communications system that was immediate, global, ubiquitous and virtually free. Harvard held two conferences, one in 1998 and one and 2000, and sought to involve the entire university in thinking about the Internet and Society.  There was wide recognition at the time that the Internet would have a dramatic impact on concerns that range from business to learning to global diplomacy.

The question was asked “Was this a revolution that was more like Gutenberg or Luther? the invention of the printing press or the Reformation?”  This may sound like Harvard. But the point should not be lost that there has been a recognition for some time that a revolution was taking place and that it would have wide implications for the economy, security, knowledge and much much more.  But whether the Internet would be a call to action for a given organization or not, it was the perfect illustration of the challenge for leadership in seeking to deal with pending change.

How was one to know that a downturn was actually a lead up to a strategic inflection point? Grove defined strategic inflection points as the place where a business or public institution recognizes that the fundamentals of the traditional business model were about to change. He described his own practice of looking for “10 next change” among the critical variables.

And he emphasized that change did not have to signal pending disaster.  For those who can become adept at anticipating strategic inflection and operating in a new way, these moments of transformational change can offer opportunities.

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The Coming Tension: The Democratic High Performance Enterprise

April 19th

There is a growing tension that will will be seen in the future Enterprise as many of the same technologies that are making it possible for new voices to be heard will also empower the sometimes opposing effect of top-down, centralized management.

I have discussed the dynamics of the bottom up communications revolution from a number of perspectives. But in essence what is most important is the recognition that the constituencies of the traditional firm–the myriad stakeholders are being given a new voice What’s more., the transparency of the modern enterprise makes it possible for these stakeholders to see the effect of the forces of competition. They can see and now they have every reason to be concerned.

What the empowerment of stakeholder constituencies has done is to create a new democratic force that will ultimately change the dynamics of the traditional hierarchical enterprise. The force of democracy will exert new pressures that will ultimately change historical traditions and strategic priorities for the future.

Yet at the same time, technology is making it possible to improve performance in the short term by creating a new age of performance management.  Today we live in the era of the smart enterprise as IBM might put it where there are indicators of performance, intelligence about the movement of the operating parts and interoperability among information systems.  By creating measures of performance where none have existed in the past, the modern enterprise is going to be able to wire itself to a new performance ethic.

The Coming TensionMany of the conversations about data and technology are leading in this direction.  The Internet of Things and the new capabilities of Big Data analytics are going to empower the power of top down controls at the same time that Information Technology has strengthened the capacity of the grassroots organization to assert new powers from the bottom up.

That there will be new tensions within the modern organization as top down meets bottom up.  Successful future leaders will build the capacity to mitigate tension and establish decision priorities.  There will be times when different, and possibly contradictory priorities are most important to the future of the enterprise.

To establish principles of service and frameworks for evaluating value will be critical in defining the ultimate goal by which these contrary impulses may be reconciled in the future

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The Transformation Strategy Model

April 15th

There is value in creating a model to understand the interactive dynamics of the elements of transformation. In a time of rising and falling fortunes, the growing stakeholder activism is going to create major communications challenges.  The model helps anticipate the forces of the changing system dynamics.

The strategic transformation model was created overnight in 2002 when the final editor in a series of publishing stages ask for a change in an article that I was going to publish in the Harvard Business Review. The initial proposal had been to discuss lessons learned in the effort to transform the US Postal Service. I was leaving my position as Vice President for Strategic Planning at the Postal Service to return to my private sector management consulting career.

The article was ultimately named (by the Harvard Business Review)”When a Turnaround Stalls”. I learned the hard lesson that you don’t necessarily get to put a title on your own article and there are many, even most readers, for whom the title is the most important part and sometimes the only thing that they read.

My personal view was very supportive of the senior management of the Postal Service that I continue to believe does an extraordinary job just to make the complex, difficult machine work as well as it does. Every night the service moves almost a half a billion pieces of mail and many local postal workers would literally be buried in the mail if they didn’t make the machines work in the night. But when I tried to get a final anecdote into the article, Word came back from the editors “Does he understand the phrase pandering?” and I found out who was running the show.

But in fact, the transformation of the Postal Service, at one point in 2000 referred to as the turnaround story of the nineties, had stalled.  While chairing a hearing on how to perform in the spring of 2001, seven or Fred Thompson set man exclaimed “Okay I get it the taxes in the ditch, big time”

Given the setting, lessons learned seem to be agreed to far and we headed them out of the draft. But with 24 hours to go to the publishing deadline, the final editor came back and wanted lessons learned. I wrote them in an hour, Although I had written them before over the period of months and we have been debating for transformation for six years you’re in

Screen Shot 2014-04-15 at 1.27.46 PMPostal transformation inevitably followed a pattern that has been shaped by dozens of American icons in business that have had wholesale change in the years following the Internet Revolution and other traumatic turning points of recent years.

The enterprise comes to recognize that it must change.  Alternative innovations that would redefine the future are considered.  A balance must be struck between the vision of the future and the traditional enterprise.

In the Strategic Transformation model above each of these three perspectives are captured and noted. In coming posts we will explore the dynamics of transformational change.



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Your Personal Brand

April 15th

You need to be ready with your own concept of your personal brand because it anchors your mission.  In the modern market, where everyone can be their own publisher, no one will have time to wait for you to think it up; nor can you sustain authenticity if you shoot from the hip and aim haphazardly. 

I learned the hard way.

We were at the high-end British Columbia ski resort, Whistler, at a conference on the global postal industry. In retrospect, I should have been more appreciative of my surroundings. This was living large. But at the time it just seemed as though it was a nice dinner at another economics conference.

Some friends and colleagues and I got up to leave to go back to the hotel. Others were going to move to the bar.  Suddenly a colleague from Swiss Post for whom I have great respect looked up and said,

“Are you leaving? We haven’t gotten a chance to talk this week.  Tell me, what’s your brand?”

I must’ve looked puzzled.

“…So that I can tell others about what you’re doing these days,” he explained. It didn’t help. I didn’t have an elevator pitch about my brand.

Of course I knew what he was talking about. At Harvard Business School the marketing professors used to talk about brand management as one of the great breakthrough management innovations that has come from the American marketplace.  And when I was at Market Opinion Research, we used to talk about the rise of new brands, especially in political policy analysis.

And I knew the concept of having a personal brand.  I remember Tom Peters (of In Search of Excellence, Tom Peters, Robert Waterman. 1982) talking about personal brands and personal mission statements in the 1980s.  But the point was that here I was being asked for my brand and this was probably exactly the setting and exactly the questioner that I would have chosen to illustrate the need to have a personal brand.

The Triumvirate

The Eiger, the Monk and the Jungfrau


 Not only was this  a respected colleague, an executive with Swiss Post, but he was also collaborating in setting up a Center on Innovation in Lausanne.  You could not have picked a questioner who would have been closer to the heart of my work and interests.

I have watched as the concept of personal branding has moved from the self help section of the book store to a central concept among the leadership books in the on-line book store.  In these times, there is a practical necessity to communicating with brands, a concept that’s not far from SEO (search engine optimization).  But even more importantly, if you are going to communicate in symbols, you need to connect the short hand to your moral compass or you will consign yourself to living in the froth.

For me, the symbol of the Eiger the Monk and the Jungfrau anchors the recognition that my work on the growing activism of the stakeholders and their constituencies was in fact illustrating an emerging dynamic that will be especially important to future leaders of transformation.

Figure 1 The Transformation Model

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It’s important to see that in the successful, thriving enterprise,  points of Strategic Inflection will be replaced by the innovation that is traced by a second curve.

But the constituencies are going to have significantly different agendas on the upslope and on the down slope.

Leaders have spent their careers learning how to advance with one set of assumptions and then, one day, while colleagues and forecasters are telling them that the change is not really coming, it does.

In the transformational setting, there will be a need to rethink the givens.   Far smoother transformations will come for those who can anticipate the way that expectations and priorities will change as growth is replaced by decline and then replaced again by new growth.


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Telling Your Story

April 15th

Leaders in a complicated, over communicated marketplace will need to focus on telling their stories in an increasingly compelling manner, that and to recognize that the audience is listening for a story about a success and the way forward, not another Information Age melodrama

Unquestionably one of the most striking aspects of my experience in teaching at Georgetown’s McCourt School of Public Policy was to watch the power of telling the stories that came from my experience in more than 3 decades of working on public policy concerns during times of stress and transformation.  Frankly, I had slipped into a pattern that’s familiar, especially in the business, government and academic, settings where I had worked, of taking the work seriously and sometimes ourselves even more so.  But it was stories that communicated.


And its not as though I had not been given fair warning.  In 2011 I had traveled to Wilmington to teach a class at the National Association of Corporate Directors advanced workshops.  My subject was the experience of telling the Board of the USPS that volume would almost certainly decline unless there were an unexpected change in the patterns that were already visible in  the markets that were being reshaped by the Internet.  But they didn’t believe me.

My story may have been believable from an analytic perspective.  They allowed me to put the forecast of decline into the Strategic Plan that we published in 2000.  But as Vice President for Strategic Planning more should have been expected of me than making the right forecast and publishing it.  The organization did not want to face the painful choices that would follow from accepting this view.  Multiple stakeholders were even more passionate in their rejection of the forecast of decline.  And to be fair, for at least 6 more years the trend seemed to be rising, not falling.  Only later was it clear that this was only a recovery from the decline that followed 9-ll.

“You needed a better story,” one of my director students told me after the session.

I remembered an interview that I had seen in the Harvard Business Review in 2003, (“Storytelling that Moves People, A conversation with Screenwriting Coach Robert McKee”, Bronwyn Fryer, June 2003.)  She asked a professional screenwriter and coach “why is persuasion so difficult and what can you do to set people on fire?”

His advice was that you have to unite an idea with an emotion.  “The best way to do that is by telling a compelling story.”  McKee explains that your goal needy s to be to harness imagination and the principles of a well told story.  “A story expresses how and why life changes,”  He explains that stories begin with a situation where life is relatively in balance “but then there’s an event – in screenwriting we call it the “inciting incident” – that throws life out of balance.  The story is the description of the protagonist’s experience with the crash when subjective expectations confront uncooperative objective reality.

The classes that I taught at Georgetown soon contained the stories that had shaped my perceptions of leadership and what it takes to lead change successfully.  I commited to finishing writing about what I had learned before I returned to communicating it and one of the benefits of doing that will be that now the stories will be included as well.

Including the stories also lends a sobering touch to recalling my experience.  If my story had given the leadership any compelling message that connected an idea with emotion, it had to have been a story that conveyed an ominous warning of pending disaster.  Perhaps that was appropriate.  But its not a story that you want to tell inadvertently, and it would have been even more important to have recognized that the story needed to be about the successful conclusion rather than the pending crash.


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April 14th

GerogetownDefining your vision and connecting it to ground truth is more important in an age when the pace of change is accelerating exponentially than it has ever been before.

The process is surprisingly personal.  Some leaders may find it difficult to take the path that grounds strategic insight by making a personal connection.  Yet this personal grounding process is critical to sustaining legitimacy and practicing authentic leadership, especially when turning points requiring judgment are coming faster and more often.

In my case, the process came together in a classroom.  In the spring of 2013, I had an opportunity to teach a course on Leading Transformation at Georgetown’s McCourt School of Public Policy.  Because the experience created such an important turning point in focusing my interest in exploring the dynamics of transformation, I wish that I could point to a key moment or an encounter with a burning bush when there was a dramatic conversion. But instead it was the process of teaching and then writing that created the most significant impactGerogetown.

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GerogetownCertainly the class did have its moments.

  • I asked the students whether they knew what I was talking about when I referred to Andrew Grove’s “Strategic Inflection Points”. One of the students told us “that’s what my boss calls the ‘Come to Jesus moment’ ”.  And I smiled and thought to myself only at Georgetown.
  • Or there was the time when I asked the students whether they remembered what I had talked about the previous week when I had described five arguments for democratizing transformation. I watched with astonishment as one of the students read back to me the five points in succession. It’s frightening. They were taking notes and listening to what I said is if it was doctrine.
  • And there was, at least for me, the dramatic moment when I began telling my own stories about my experience with energy policy making.  There has been such a dramatic change in the US strategic position as the country is now poised now to become an energy exporter.  This moment seems so different from the grim days of Energy independence in the ‘70s that I thought there was a need to anchor the change.  These were stories that dated back to government and to teaching in a classroom at the Yale School of Management decades earlier, and yet they were part of the insights that had brought me to that graduate school classroom at Georgetown. A visitor would have found it difficult to miss the fact that these stories were communicating far more effectively than anything that I had said earlier in the evening about policy or theory.

What was as important as the interaction with the students, was my commitment this time to write about what I had learned.  A monograph that I had written for the IBM Center for the Business of Government, “The leaders guide to transformation: Creating a Playbook for leading Transformational Change” was what had led me to Georgetown in the first place. The class was an opportunity to explore what I had learned about leadership and the dynamics of transformation

The experience of teaching the course and writing the book was important in shaping a turning point in my thinking.

  • First, the book took me back to a much broader perspective.   When I was recruited by the postmaster general to lead the development of the digital strategy for the Postal Service at the dawn of the Internet revolution,  I found, as many leaders do, that there is a severe challenge in living in both the world of strategic insight and high performance at the same time.  Even when it’s possible to sustain the focus on strategic initiatives rather than the next quarter’s earnings, it’s often because of an investment in depth rather than breadth and performance is achieved at the expense of perspective.
  • Second, the course and the book kept my focus on the dynamics of transformation.  I was given a unique vantage point in the ‘90s. Two decades later, the experience had yielded as many insights about the dynamics of changing large complex organizations in the new marketplace as it had identified digital business opportunities. (There were many of those.  But ultimately one of the things that was most interesting about them was the struggle that they created within the traditional organization that often was highly effective in killing them off.)  The story is rich.  But the distractions are many.  What may be most important in the end may be the insight into the dynamics of leading change
  • Third, the interaction with the students made it necessary to draw upon experiences in multiple public policy and public-private areas of interest.  When I was recruited to be the first Vice President for technology applications at the Postal Service and went on to be Vice President for strategic planning, I found myself hearing the echoes of the challenges that I had seen former leaders face in fields that ranged from energy policy to healthcare to telecom, politics and government.  The creation of the Internet was not my first experience with at epic transformations or the traumas that they create for leaders.  The course at Georgetown and the book that followed reconnected me with broader interests.

Perhaps most of all the experience of teaching reminded me that there is a ground truth that comes from the process. Ground truth is often cited today as critical in balancing the perspectives of leaders.  For those who have not yet encountered the phrase, ground truth is what General Colin Powell describes as the kind of insight that he was able to get throughout his career by walking around and talking to people about real problems.  Leaving the eighth floor and the view over the mall to talk to State Department employees in hallways, waiting for elevators and on their way home was critical to him in keeping him grounded.

The process of teaching, of trying to explain the ideas in simple clear terms, was a filter that drove much of the theory into the end notes.  Talking to students with diverse backgrounds, and in Georgetown’s case, with diverse public policy interests, reset my focus to the wide-angle lens.  The experience caused me to personalize the story in a way that I never would have anticipated would be useful, even important in making in accessible for future leaders who will have to make such connections to sustain their authenticity.


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