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Strategy

Wisdom and Leadership

I just re-read a terrific 1998 Harvard Business Review article by Daniel Goleman titled, “What Makes a Leader?” Goleman argues that, while experience and IQ are important, it’s emotional intelligence that makes the crucial difference.  Managers without emotional intelligence tend to maximize only their own performance. Managers with EI tend to maximize their performance and their followers’ performance.

What struck me about the article was that the five components of EI are very similar to the five components of wisdom that we discussed back in April.  Here’s how Goleman defines the components of EI:

  • Self-awareness — knowing one’s strengths and weaknesses and their impact on others.
  • Self-regulation – controlling or redirecting disruptive emotions
  • Motivation – being driven to achieve for the sake of achievement, a passion for work and challenges
  • Empathy – considering others’ feelings, especially when making decisions
  • Social skill – managing relationships to move people in desired directions, persuasiveness, expertise in building teams

And here’s what we said about wisdom:

  • Willingness to resolve conflicts;
  • Willingness to compromise;
  • Recognition of the limits of personal knowledge;
  • Awareness that a given problem may legitimately be seen from different perspectives;
  • Understanding that things may get worse before they get better.

There’s not a complete overlap but the two lists are very similar.  My conclusion: it takes a lot of wisdom to be a good leader.  Now, the question I’d really like to understand is, how do we teach wisdom?

The Art of the Wrong View

In one of my classes at the University of Denver, I try to teach my students how to manage technologies that constantly morph and change. They’re unpredictable, they’re slippery, and managing them effectively can make the difference between success and failure.

The students, of course, want to predict the future so they can prepare for it.  I try to convince them that predicting the future is impossible. But they’re young. They can explain the past, so why can’t they predict the future?

To help them prepare for the future — though not predict it — I often teach the techniques of scenario planning. You tell structured stories about the future and then work through them logically to understand which way the world might tilt. The technique has common building blocks, often referred to as PESTLE.  Your stories need to incorporate political, economic, societal, technical, legal, and environmental frameworks. This helps ensure that you don’t overlook anything.

I’ve used scenario planning a number of times and it has always helped me think through situations in creative ways – so it seems reasonable to teach it. To prepare for a recent class, I re-read The Art of the Long View by Peter Schwartz. I found it on one of my dustier bookshelves and discovered it was the 1991 edition.  While I remembered many of the main points, I was surprised to find a long chapter titled, “The World in 2005: Three Scenarios”. Here was a chance to see how well the inventor of scenario planning could prepare us for the future.

In sum, I was quite disappointed. The main error was that each scenario vastly overestimated the importance of Japan on the world stage in 2005. In a way, it all makes sense. The author was writing in 1991, when we all believed that Japan might just surpass every other economy on earth. Of course, he would assume that Japan would still dominate in 2005. Of course, he was wrong.

So what can we learn from this?  Two things, I think:

  1. Always remember to ask the reverse question. If it’s “obvious” that a trend will continue (e.g. Japan will dominate) always remember to ask the non-obvious question: what if it doesn’t? Today, it seems obvious that health care costs will continue to rise for the foreseeable future. But what if we make a medical breakthrough and costs plummet?
  2. Remember that resilience is better than prediction. We’ll never be able to predict the future — partially because we can’t really explain the past. But we can be prepared by building flexible systems that can respond to unexpected jolts. The human immune is probably a good model. This means building systems and organizations where information flows easily, creativity is valued, and leaders can emerge from anywhere.

I’ll continue to teach scenario planning in the future. After all, it’s a good template for thinking and planning. I’ll also be able to provide a very good example of how it can all go wrong.

Developing a Habit of Innovation

Last week, we learned that there are least ten ways to build a corporate culture that stimulates innovation. But what about you personally? Are there habits you can develop that will help you develop innovative products and services? According to Clayton Christensen et. al. in The Innovator’s DNA, you can become more innovative by cultivating five specific habits and modes of thinking. Learn the basics in the video and then read the book – it’s worth it.

 

Creating a Culture of Innovation

Can you create a corporate culture that stimulates innovation? Of course you can. In fact, according to the business writers Anthony Warren and Mark Turrell, there are at least ten attributes that will help you weave innovation into the very structure of your organization.  This week’s video summarizes the ten attributes or you can read the entire article by looking up:

Anthony C. Warren & Mark Turrell, “Innovation Management in an Agile Enterprise,” Chapter 5 in The Agile Enterprise, edited by Nirmal Pal & Daniel C. Pantaleo, Springer, 2005.

RIM’s new ads say, “We’re dead”

When an established vendor dismisses an upstart’s product as a “toy”, it’s time to run for the exits.  So I was surprised to see RIM’s new Blackberry ads in New York City.  Earnest looking young men stare out from billboards under the headline, “We need tools, not toys”. Similarly, a business woman says, “I’m about action. Not distraction”.  The ads deliver a clear message, “Our Blackberries are hard to use and completely out of touch with what consumers want today.” RIM to NY: “We’ve dropped dead”.

Clayton Christensen laid out the dynamic of the disruptive innovation more than a dozen years ago.  A company establishes itself as  a market leader by delivering more and more of what customers have always wanted. (Let’s call this WCHAW).  For wireline phone companies, for instance, the WCHAW was voice quality.  Customers had always wanted it and wireline companies assumed that they would always want more.  Sooner or later, however, customers decide that they have enough WCHAW. It’s good enough, thank you very much.  Customers don’t need more and they won’t pay for it either.

When customers reach this point, they start searching for something else — what customers want now (WCWN).  This often involves products that are more convenient, easier to use, and less costly.  When mobile phones challenged the wireline vendors, they were dismissed as “toys”.  After all mobile phones delivered worse voice quality and voice quality was WCHAW. What the wireline vendors didn’t detect was that voice quality was good enough and that mobile phones delivered a new WCWN — mobility and general ease-of-use. When customer sentiment shifted, it did so quickly and forever.

RIM is now dismissing the new breed of smart phones as toys.  It’s a self-defeating strategy. They’re saying, quite bluntly, that they can’t deliver what customers want now but they can happily deliver what customers have always wanted. They’re shooting themselves in both feet and doing it quite efficiently.

The odd thing is that RIM has an ace in the hole and they’re not playing it. RIM’s private network is much more secure than the public Internet.  And customers have always wanted — and still want — more security. RIM should be talking about what makes them different rather than what makes them old and out-of-touch.

You can learn more about disruptive innovations in the video.

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