Is your transformation focussed on efficiency, or is it focussed on innovation? There is an organisational element and a technology element. Tesla chief Elon Musk once tweeted that “most big companies in tech have turned into places where talent goes to die”. In truth, 99% of firms worldwide don’t fit into the category of achievement that Apple, Starbucks, Tesla, Microsoft, or Amazon have attained. That does not mean that you should not try.
Going on Offense: A Leader’s Playbook for Perpetual Innovation
That is why I picked up “Going on Offense: A Leader’s Playbook for Perpetual Innovation” by Behnam Tabrizi. The message is simple. Innovation is essential to thrive in our increasingly disruptive markets. Agility is necessary to move quickly to address opportunities and threats, and there is a playbook.
The book uses examples such as Apple (passion, energy, obsession, and ambition), Tesla (vision, talent), Microsoft (purpose), Microsoft, Facebook (no vision), Haier (https://www.ronimmink.com/haier-beyond-strategic-intrapreneurship/), ZARA (co-creation), Amazon (talent), Netflix (HR), Starbuck (principles), Google (intrapreneurship). Amazon, Tesla and Apple feature a lot.
- Existentialism (see https://www.ronimmink.com/apply-the-golden-rule-to-your-business/)
- Customer obsession
- The Pygmalion effect
- Start-up mindset (see https://www.ronimmink.com/never-lose-the-founder-mentality/)
- Managing tempo
- Move boldly
- Radical collaboration
- Meta agility
- First principles (read https://www.ronimmink.com/decision-making-principles/)
- Unlearning and reconfiguring the mental constructs you use to make sense of your world (read https://www.ronimmink.com/you-are-either-building-a-unlearning-organisation-or-youre-losing-to-someone-who-is/)
- Controlled chaos
- Disagree and commit
The book has elements of my strategic box (https://www.ronimmink.com/strategy-vuca-movement-and-you/), “Working backwards” https://www.ronimmink.com/haphazard-or-deliberate-leadership/,
- A rally cry is not enough
- Emotion is a huge factor
- Transformation is especially difficult when the company is still quite profitable
- Existential purpose motivates organisations
- Consistency is better than perfection
- People with passion can change the world for the better.
- Amazon is stubborn on vision and flexible on execution.
- Align the organisational vision with individual North stars
- Do a flow analysis (https://www.ronimmink.com/flowscore-as-a-future-metric-for-your-company/)
- Conduct market research yourself.
- Involve real customers.
- Find leading customers.
Some basics. You need to set an existential purpose. Why does your company matter?
You need a compelling vision. What problem does the world need us to solve? The most effective visions are large in ambition and scope. Without a compelling vision for the entire company, Microsoft’s divisions worked on maintaining their existing products and profitability—discouraging talented developers from pursuing game-changing opportunities. Nadella’s first job was to rediscover the soul of Microsoft, our reason for being.” Nadella and his colleagues reoriented the company to “empowering every person and every organisation on the planet to achieve more.” You need an existential, deep-seated, emotionally laden commitment. Link vision to a number/goal.
Core values are enduring ideas that fuel both the existential vision and existential goals. What are your guiding principles?
Have you defined/codified your passion in a statement?
Are you designed for customer delight? https://www.ronimmink.com/are-you-designed-to-deliver-customer-delight/. Haier is a great example. The company operates on a “zero-distance” principle: Any Haier customer should be able to reach a Haier employee whenever they wish. Employees aim to become not salespeople but trusted advisors and designers. That close connection with customers is a big part of how Haier avoids the chaos of largely autonomous microenterprises.
Customer obsession is existential
Customer obsession should be part of the emotional commitment, beyond rationality, tied to the existential purpose. Customers can’t simply be data points; they must come alive to developers. That happens in one of two ways. The first is co-creation; the other is empathetic imagination and anticipating desire. All complemented by obsessing about the entire experience. Anthropology https://www.ronimmink.com/anthropology-as-the-last-mile-of-marketing/
The power (and joy) of a customer-obsessed company is in creating positive feedback loops and preventing a fall into complacency.
Steve Jobs was a thoroughly unlikeable guy. He had a kind of Pygmalion effect across the sprawling company, winning over people who might never meet Jobs himself. He used his zeal to inculcate specific traits and concerns in employees far beyond his immediate teams. His influence ran deep into the organisation. With perpetual innovation, it’s essential to have a strong, performance-oriented company culture. The CEOs who manage to achieve a Pygmalion effect throughout their organisation not only live out these values in their management and day-to-day responsibilities, but they instil these values and mindsets, among others of their choosing, into the fabric of their company as a whole through their company culture. By weaving specific attributes into a company’s DNA, corporate Pygmalions sculpt culture and staff behaviour.
- Jeff Bezos wrote that “setting the bar high in our approach to hiring has been, and will continue to be, the single most important element of Amazon.com’s success.”
- As late as 2015, when Tesla had twelve thousand employees, he had to personally approve every hire. Musk wasn’t concerned just about individuals—he wanted to set expectations for everyone who came on board.
- Netflix made a point of encouraging independent decision-making by employees.
- Apple’s leaders believe that world-class talent wants to work for and with other world-class talents in their speciality. It’s like joining a sports team where you get to learn from and play with the best. Jobs fostered a culture where experts led experts. Lisa Su at AMD set the 5% rule, which asks employees to become 5% better each quarter.
- At Amazon, Bezos picked one “tech advisor” each year to shadow him and his work.
By establishing a specific vision for what his employees should look like and establishing that his vision is not an aspiration statement but a requirement, As at Tesla, people who chose to work at Netflix knew what they were getting into, A strong sense of identity is essential to the modern Pygmalion effect, but it requires hiring people for their expertise and drive, not their skills. Too many companies make the mistake of hiring or promoting people with good organisational skills but little expertise in their area of focus.
Sense of belonging
The lack of community is a leading factor in job burnout. Establishing a workplace where everyone thrives enables your company to make the most out of the talent it recruits. Top talent wants to come, and then it wants to stay. A. But talented, high-performing innovators aren’t easy to get along with. The challenge is to bring a team of competing individuals into a community and align them to one goal.
Beyond the rigorous hiring practices, Pygmalion companies reinforce their culture with aggressive performance requirements. Joining the company is just the beginning of earning your place on the team. Either thrive or be fired. This pressure forces people to internalise the company culture. At Amazon, employees must continually improve; at Tesla, they must regularly innovate. Only people who perform at a high level can continue with the organisation; everyone else is encouraged or forced to leave.
Autonomy and support
One way to increase influence, paradoxically, is to give employees autonomy. Steve Jobs put it best: “The greatest people are self-managing”. Even without a decentralised structure, Pygmalion influence depends on trust, including trusting your employees to stay. Trust is likely to become an even greater differentiator in the near future. Most companies offer some kind of training and development—they spent $87 billion in 2020, or $1,200 annually per employee. Beyond these general programs, Pygmalion companies take mentoring seriously. Pygmalion mentoring focuses on the mentality, attitude, and outlook that leads employees to greatness. At Pygmalion firms, people are continually moulded by colleagues in a culture that stresses personal development.
Pygmalion companies favour direct feedback over occasional reviews. You want a culture of excellence that constantly provides feedback so people feel they are continually growing. Netflix dropped formal reviews in favour of informal conversations year-round—even as employment exceeded ten thousand. Read https://www.ronimmink.com/how-to-get-the-best-out-of-your-staff-according-to-netflix-rowe-principles-legacy-and-loveability/
The start-up mindset
In the hero’s journey, people live an ordinary life, but then they encounter something calling them to a higher purpose. That start-up mindset is similar to what happens in the hero’s journey, and it’s essential for large organisations now. These are heroes who work tirelessly to accomplish what they’ve been called to do. They bring resilience in the face of challenges and an intense day-to-day focus on their accomplishments. They don’t just show up to work daily—they’re on an epic adventure, fighting battles and creatively overcoming obstacles to fearlessly fulfil their life’s purpose. And they enable their companies to do what isn’t possible in the usual corporate life.
In many companies, the flame that got the company off the ground eventually flickers out. This lack of engagement will devastate big companies as the millennial generation comes to dominate workforces by 2030. Talented employees will, therefore, gravitate to organisations with a start-up mindset; people with a start-up mindset need a personal reason for persevering. 97 They’re missionaries, not mercenaries.
While pursuing simplicity, the start-up mindset also treats decision-making as a vital skill for every employee. You need to spread the mentality to all employees. Companies can meet people halfway with intrapreneurship, where employees work within the security of a big company while still building something exciting.
- Google is famous for promoting intrapreneurship with its 20% time rule:
- Whirlpool set up “structured ideation sessions” to open up creation and development to any employee with the drive and desire to contribute.
Managing the tempo
The world of business is about more than just speed. It’s also about tempo—controlling the pace of activity, speeding up or slowing down as needed. The lion is such a strong force, but why? Lions are masters of tempo. If the leaders lose the tempo, the organisation falters. Tempo in an organisation must start from the top and spread from there.
Tempo is thus about decisions as well as movement. Type one decisions are high-magnitude decisions with low reversibility. Type-two decisions are highly reversible and less critical individually. These can be made by a skilled person quickly, with limited data. Differentiating between these types of decisions can be the difference between a slow-moving organisation and a quick one. Companies need to move reasonably quickly, even for strategic decisions. They still deliberate extensively, with a great deal of information, but with disciplined heuristics that prevent them from lingering over decisions.
Be ready to sprint. Frequent sprints are an essential part of agile product development. To work, teams in sprints need extra freedom from day-to-day responsibilities. Their operational speed might slow down (how fast they move), but their strategic speed will pick up (how fast they deliver value). They’re working on those type-one decisions before exploding into a type-two sprint.121
Tempo is more than speed
- Stay alert.
- Balance opportunity with long-term stamina.
- Stay paranoid.
- Look broadly.
Play the stars
Tempo-driven organisations give the stars disproportionate playing time. To maximise returns on capital and remain relevant in the marketplace, companies shouldn’t fear diverting resources from underperforming products. Hanging on to the past slows your ability to keep up with the present.
Build from the inside
Companies can foster that same trust through vertical integration, so suppliers and distributors are colleagues rather than contractors. The more of the process you control, the faster you can adjust speed and chase opportunities.
Establish a cadence
Continual speedups and slowdowns can wreak havoc on people’s plans, not to mention their nerves. Most agile, innovative companies have policies to promote at least a somewhat orderly tempo. One common policy is “heartbeats, not handcuffs.” The goal is to keep pace with external developments, matching that “heartbeat,” so developers don’t fall so far behind as to require “handcuffs” to avoid missing an opportunity.
Another approach is to double down on flexibility by keeping structures loose. Amazon’s “S-team” has about twenty executives, with membership frequently changing according to the needs and opportunities of the moment. Here are some structural ways to enable companies to control tempo:
- Eliminate barriers.
- Purge inefficiencies. Besides outright restrictions, there are a variety of practices that impede efficient work.
- Clear goals. Organisations that control tempo need an endpoint to work toward.
- Frequent check-ins. Large or numerous meetings reduce productivity. But regular, quick gatherings and updates work to keep the organisation’s many activities on track at the proper speed. How frequent the check-in will depend on the urgency
Controlling the chaos
That’s the dilemma of twenty-first-century business: giving teams autonomy but coordinating them to accomplish some activities quickly and others at a sustainable pace. We can point to three deficiencies:
- Failed recognition.
- Slow reaction.
- Slow execution.
Perpetual innovators tend to operate in two modes: compression for predictable or commodity activities and experiential development for new or differentiated areas. Bimodal isn’t about a neat division between continuing operations and product development. The bimodal approach divides the organisation into activities to be compressed and activities to be developed experientially.
Every company tries to add efficiency to its activities as it learns and scales up, but compression adds pressure and discipline to the process. Then unpredictability, not complexity, determines how much to rely on experiential development. Smart leaders need to distinguish these projects sharply from those that benefit from compression so the same team doesn’t work in both modes.
Set a clear plan for the activity, delegate it to accountable managers, lower the costs over time according to a learning curve, and consolidate related activities over time. Compression comes from civil engineering and uses such familiar techniques as the critical path method, PERT, reengineering, and concurrent engineering.
For an experiential activity: Develop multiple options, test each, and set frequent milestones under a leader’s guidance to ensure learning and progress. The emphasis here is on discovery, so openness and curiosity are essential, not hard discipline. Innovating beyond incremental improvements is a foggy journey through shifting markets and technology. Because innovation is inherently unpredictable, the key challenge is to build up information and a degree of predictability to propel the work forward at a good clip.
The experiential strategy involves four steps:
- Multiple options. Development teams generate possibilities such as parallel alternative designs, sequential iterations of previous designs, or some combination.
- Testing. Closely related to multiple options, frequent testing accelerates development by creating a series of small, quick failures mixed in with success. Continual testing maximises learning because it captures developers’ attention without triggering their defence mechanisms.
- Frequent milestones. Even a highly experiential development process can cause designers to lose focus and veer off track, dazzled by the possibilities. Confusion and chaos can reign.
- Powerful project leader. While the teams do the main work, strong leaders can gather needed resources and shield developers from bureaucracy.
Experiential development can thus succeed even when it apparently fails, but companies still need substantial discipline to pull it off. Here are some dangers:
- Reliance on suppliers. Suppliers can be a big help in compressing product innovation but not in experiential development.
- Neglecting derivative opportunities. When companies succeed at developing a breakthrough, they often fail to plug the marketplace gaps between current and future offerings with derivative products.
- Many customers are likely to want something in between the existing and breakthrough offerings. Providing such a product shouldn’t be difficult, but companies need the discipline and awareness to pull in a compression team to fill that gap before a competitor does.
Most successful companies lapse into conformity. It takes boldness to actively resist the tendency to stick to the safety of conformity and fiefdoms. Boldness has genius, power, and magic in it. Whatever you dream you can do, begin it. Begin it now. A tepid, cautious approach to products and services won’t work because it won’t draw on the emotional energy that comes from boldness. Besides impressing investors, a strategy of boldness has two major benefits.
- One is that trailblazers can achieve sustainable competitive advantage if they continue to invest in focused innovation.
- The second is that boldness attracts high-level talent.
- Start with you. Boldness has to start somewhere, and it has the greatest effect from the top. Know, be, lead:
- Regardless of past accomplishments, current resources should go to the products and the people that can bring success.
- Simplify the structure. You can’t move boldly if your organisation has a large body of middle managers who can strangle or dilute any bold move from the top (or bottom).
- Boldness usually requires a lean organisational layer.
- You need the mental capability and tenacity to knit your inferences into something meaningful and the imagination to think of new options. That means confronting the fear of failure that keeps most CEOs up at night.
- Boldness ultimately has to be partly emotional—especially now, markets are too uncertain and volatile to support simple rationality.
- Boldness is less about chasing volume or speed and more about quality: Are we effectively building a sustainable business for the company?
- The opposite is the power of complacency: It deadens your
- Boldness sets you free and energises you to overcome the obstacles that stop timid organisations.
- Boldness brings clarity
- Above all, boldness requires a kind of restlessness—never accepting a successful approach for long. Most leaders lack the extraordinary gifts of Jeff Bezos or Elon Musk, but they can adopt their techniques around insisting on the mission and daring to add significant value.
There is an important distinction between everyday cooperation and radical collaboration. Radical collaboration matters at least as much at the head of an organisation as it does in its body organisation. Structure isn’t enough to ensure collaboration, nor are performance measures that can be gamed. Companies also need talented people who, as at Apple, are inclined to collaborate. They need to be internally motivated, disciplined, consistent, and accountable in order to get colleagues on the outside to trust and work with them. Radical collaboration also requires bravery.
Companies can’t adopt radical collaboration half-heartedly. It’s such a difficult practice that an organisation must live and breathe it to prod people to actually do it. No single strategy will make this happen in every company, but a few principles are worth keeping in mind.
- First is the simple openness to all opportunities for collaboration, which can lead to otherwise daring policies like Amazon’s “two-pizza” teams. These groups stay small and focused, dealing with
- Second is to remember the payoff from collaboration with entities outside the organisation.
- Third, make sure to adjust your collaboration according to strategic goals.
- Fourth, encourage not just collaborative structures but also a collaborative ethos, from Tesla’s formal policy to Microsoft’s worldwide hackathon. Ultimately, radical collaboration depends on an organisational mindset.
Transformation operating system
The aim is to build a perpetual transformation operating system. This system is a flat, adaptable, and cross-functional organisational structure that enables sustainable and ongoing change. Add the technology (AgilePoint) and add enterprise citizen development, and you will have a recipe for success.