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Emerald Group Publishing Limited
Strategy & Leadership, Volume 42, Issue 2
These brief summaries highlight the key points and action steps in the feature articles in this issue of Strategy & Leadership.
Navigating the phase change to the creative economy Stephen Denning
Today, we are seeing disruptive innovations that create whole new market ecosystems – unique products, revolutionary delivery systems, a distinctive supplier network, startups offering customization, apps designers, customer engagement platforms, social media – that abruptly transform traditional markets. These “economic phase changes involve “a complex transformation in human behavior produced by a new way to satisfy consumption needs.
Incumbent companies will either do the disrupting by reimagining their products, and thus lay claim to the markets of the future, or they will be rendered obsolete by unexpected competitors. The change needed is not a transition to a new business process (the doing side of the equation); it is a transformation (the being side of the equation).
Management change required
A new economy – the creative economy – is emerging. To thrive in it, organizations need to get beyond conventional “good management, and instead embrace management of a different kind: different goals, different ways of organizing and coordinating work, different values and different ways of communicating from the way organizations were run in the twentieth century.
To manage successfully in the creative economy requires that leaders and followers maintain a sharp focus on profitably inspiring customer delight and then implement all the changes that flow from that principle.
Management approaches that are likely to be successful in a dynamic market:
1. Top management embraces the belief that the organization needs to be run in a fundamentally different way, which spurs the whole organizational culture to change, rather than merely aspects of it.
2. The organization risks thinking big.
3. Leaders and followers accept the death of the firm core business as inevitable.
4. Innovation proceeds in small iterations.
5. The organization learns fast.
6. It risks failure because it is the prerequisite for achieving success.
7. Management banishes intellectual slogans supporting old ways.
8. The culture measures all the important decisions with the guiding principle of “profitably adding value to customers.
What conventional wisdom gets wrong about culture change:
1. Transitions do not occur as a response to a crisis.
2. Transitions do not spread from a successful pilot program.
3. Transitions do not happen if the goal is to “fix management rather than to radically repurpose it.
Case Building a culture of co-creation at Mahindra Venkat Ramaswamy and Naveen Chopra
Mahindra is one of Indias largest vehicle manufacturers. This case offers a look at the results of applying co-creation thinking/principles to enhance creative collaboration, communications and co-ordination among stakeholders.
Central to co-creation thinking is engaging external and internal stakeholders – including customers, employees, suppliers and dealers – to create value together through platforms of engagements and environments of interactions, purposefully designed and configured to address the interests and needs of participating individuals.
The Mahindra team put together a set of six steps that captured the essence of implementing co-creation thinking to promote transformational change. Each is offered with “lessons learned postscript pointers:
1. Identify key stakeholders and increase their willingness to engage.
2. Set up platforms purposefully designed to engage individuals more co-creatively, with environments of interactions configured around their personal experiences.
3. Identify and support new co-creation champions.
4. Expand the circle of stakeholders and joint value creation opportunities.
5. Deepen the impact and enable the viral spread of “win more-win more value creation in the enterprise ecosystem.
6. Engage stakeholders across private, public and social sectors to expand wealth, welfare and well-being for the benefit of all.
Expansion via platforms
The payoffs of building co-creative enterprises include greater creativity and productivity, lower costs, lower employee turnover, identification of potential new business models and new sources of stakeholder and enterprise value. In a truly co-creative enterprise, leaders at all levels must go beyond the conventional institution-centered “cascade and align view of management to an individual-centered “engage and co-create view. To do this, organizations must design and support engagement platforms – both face-to-face forums and online discussions – that offer stakeholders the opportunity to debate, discuss and establish priorities and participate fully.
Mahindra started with a remarkable “bottom-up approach, building a quality culture at plant and process level; now it is spreading throughout the companys ecosystem to many key areas, such as strategy, performance management and customer-facing functions. But top-down commitment is needed, too, because co-creation brings many changes and has further implications.
And finally, Mahindra has also engaged change-makers across India through a societal engagement platform (www.sparktherise.com). The culture of co-creation is becoming part of Mahindras DNA and continues to evolve.
How to plan and manage a project to co-create value with stakeholders Gaurav Bhalla
Companies engage in co-creation projects because they want to foster the discovery of customer interest and value, which they can turn into innovation and competitive advantage.
Leading firms have developed best-practice processes, tools and technologies to better enable and expedite value co-creation. These can be structured into five steps:
Step 1 – Setting objectives. Most co-creation objectives can be classified into one of three categories:
* Generation – to solicit ideas, suggestions or designs from customers and other stakeholders, through contests or open-ended appeals, for subsequent use in the design and development of products and services.
* Refinement – to refine one or more features of a target product or service, to help improve its performance, leading to a better customer experience.
* Creation – to develop a prototype of an entirely new product or service.
Examples illustrating the three categories of co-creation objectives are offered.
Step 2 – Selecting arenas. Co-creation arenas are often digital, given the reach of the internet, and smartphones, but there are times when the ability to actually witness customers and employees in action is essential. Then a physical space is essential for collaboration and co-creation.
Step 3 – Engaging collaborators. Which customers, or types of customers, should a company recruit for its collaboration and co-creation programs? There are essentially two options:
Collaborate with end-users who have ideas, passion and energy, but who are not formally trained in the co-creation task.
Collaborate with professionals and specialists, people who are formally trained, like scientists, engineers and computer specialists. Selection criteria are offered.
Tools like simulation, experimentation, and prototypes help move customer ideas speedily from idea to the development of the final value proposition.
Step 5 – Defining contracts with stakeholders. Customer collaboration rarely operates independent of incentives. Passion notwithstanding, collaborators need incentives and promises for their effort and time. Effective practices are cited.
Interview Agile at IBM: the software developers teach a new dance step to management Robert M. Randall
Because so many products for consumers and businesses include embedded software systems, developing products in the future will require deeper collaboration across multiple engineering disciplines and marketing teams. The pace of product innovation is picking up – and to be competitive requires organizations to execute in a disciplined manner with agility and speed. The Agile/Scrum software development methods could be the answer, says IBM expert Rob Purdie.
The Agile software development movement addresses a problem that many organizations face: how to develop new products faster, with higher quality, while at the same time accommodating changing requirements. Rather than deliver the product of a large software development project after a long slog of several months or years and simply hope it works for the customer, Agile/Scrum methods provide a way for cross-disciplinary teams to deliver new products incrementally and iteratively by getting customer input at every iteration. With Agile, the customer can see business value sooner.
Management skills gap
Because Agile requires leaders and teams to work and learn through problems, designs and options in an open and transparent environment, it places new demands on technical leaders in terms of negotiation and planning skills, which may be far outside a technical developers comfort zone.
Managers outside the software industry should note that Agile/Scrum is increasingly essential to the future of product development and manufacturing and therefore a familiarity with the Agile approach grows in value.
Masterclass India: MNC strategies for growth and innovation Brian Leavy
Every company with global ambitions would be well advised to make innovation in India a part of their plans so that they might become the global disruptors of the future, not the victims. This Masterclass article examines insights from three recent books that studied how successful multi-national corporations learned to grow and innovate in Indian markets.
Why focus on India?
“Indias strategic importance is not only because it is a large market but more importantly because it is the largest democracy and “a Petri dish for developing products, business models, talent, capabilities, and operating models that will help companies succeed in a host of challenging markets. Innovations of products/services at more price points will help open up access to large underserved markets in China, Brazil and Africa while also fuelling innovation to open doors in new markets in developed countries.
In Conquering the Chaos Ravi Venkatesan offers a winning leadership formula:
* Participate in multiple tiers of the market pyramid, tailored to India at different price points.
* Create “a localized business model, including a supply chain that can generate profit “even at aggressive price points.
* Take a “long-term view of the investment challenge.
* Manage India as “a geographic profit center, empowering the local organization to grow the business, with the freedom to make all but the most significant investments locally.
In India Inside Nirmalya Kumar and Phanish Puranam offer these insights:
* India is an “unavoidable location for global innovation activity due to talent in growing numbers that offer the fresh “injection of intelligence into what others consider to be more or less commodity business activities.
* India uniquely offers “the ability of certain sectors to attract talent with qualifications vastly superior to the qualifications of those employed in the same sectors in western countries. This represents a very valuable innovation resource for companies that know how to tap it.
In Reverse Innovation, Vijay Govindarajan and Chris Trimble present a promising way to drive global growth. India is the innovation platform. Failure to reverse innovate there may lead to losing out “on an opportunity abroad and “to an even bigger loss at home because such innovations have the potential “to migrate from poor countries to rich countries in the form of classic disruptive innovations with major implications for the leading incumbents.
A significant departure from the conventional transnational management model is necessary. “For GE, winning in India requires a new business model, one in which we are ‘local’ in every sense of the word.
Innovative ways companies are using design thinking Jeanne Liedtka
Design thinking is the process of continuously redesigning a business using insight derived from customer intimacy; it is a key capability for revolutionary innovators and a potential source of sustainable competitive advantage.
The design thinking process incorporates four key questions. Each explores a different stage of the process:
* “What is? examines current reality.
* “What if? uses the learning from that first stage to envision multiple options for creating a new future.
* “What wows? helps managers make some choices about where to focus first.
* “What works? take managers into the real world to interact with actual users through small experiments.
These four questions have an accompanying set of ten design tools to help managers work through the questions.
Design thinking is evolving in practice
Leading companies are effectively adapting design thinking in a variety of industries:
1. The process of “innovation in many large organizations could be described as a battlefield in which R&D, marketing and business development functions are striving for control and often work at cross-purposes. The proponents of “design thinking are often mediators of this struggle.
2. Design thinking is a problem solving process as well as an innovation process. It could help any organization – not just for-profits – become more successful at internal challenges, customer engagement, management development and individual-skill building.
3. The wide range of project outcomes showed that the design thinking approach forces a team to stay focused on the questions and not to rush to define exactly what the problem is. Thus the design thinking approach forces all parties to spend time discussing unclear, sometimes very murky issues. This promotes the process of clarifying the true nature of the problem the team is trying to solve.
4. Design thinking helps build better teams. Amazing things happen when design teams combined engagement and alignment with focus. They also produce another invaluable asset for any organization trying to move innovative ideas through bureaucracies: speed.
Design thinkings most significant impact may well be the way it adds new possibilities to the ongoing conversation between those doing the work and those controlling the resources. Finding new opportunities for learning from this conversation is perhaps the most productive path to innovation. Hence design thinking has the potential to be a game changer.
Veteran strategy consultant newly based in Portland, Oregon (firstname.lastname@example.org) and a contributing editor of Strategy & Leadership.