The 13^th Global Peter Drucker Forum again raised business critical questions such as: “Can big businesses be humanized” and “How fast should you transform your business. The answers were: “YES you can humanize a big company “, and “you need to CHANGE your perception on how fast a strategic change of your business will be”.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Parallel Panel #7 – Can Big Business be (Re)humanized?

Moderator
Amy Bernstein Editor, Harvard Business Review & VP Harvard Business Publishing

Speakers
Hubert Joly Senior Lecturer Harvard Business School; former CEO, Best Buy
Claudio Fernández-Aráoz Executive Fellow for Executive Education, HBS
Maurice Lévy Chairman of the Supervisory Board, Publicis Groupe
Patricia Pomies Chief Operating Officer, Globant

Parallel Panel #9 – Leading People through Change – Hoch much? How fast?

Moderator
Jenny Darroch Dean, Farmer School of Business, Miami University in Oxford

Speakers
Roger L. Martin Strategy advisor; former Dean, Rotman School of Management
Sara Mathew Non-executive Chair, Freddie Mac; former CEO Dun & Bradstreet
Elsbeth Johnson Senior Lecturer MIT’s Sloan School of Management, Managing Director, SystemShift
Michael Watkins Professor of Leadership and Organizational Change at the Institute of Management Development and Co-Founder of Genesis Advisers

Can big businesses truly be humanized

The focus of this year’s Drucker Forum was on the leader him- or herself. Many top leaders are indoctrinated by the old- stereotyped picture of a leader- the hero, who knows it all and will guide his or her people on what to do and how do it. In a VUCA world, 80% of leaders, according to Hubert Joly, understand and want to adopt the new humanized leadership model, better suited for the current dynamic economy, but find it very hard to do. According to Joly, leaders’ true purpose is to transform from only being great business leaders to also become great human leaders. Today’s leaders must lead with, not only the brain, but also with their heart and soul. Therefore, leaders need to start with themselves and ask: “what is my true purpose as a leader?”. Getting some coaching help could be one way of managing this transformation, as mentioned in last year’s Forum.

Another factor that plays an important role in humanizing businesses is who the board select as the next CEO. According to Maurice Levy, board rooms are haunted by Milton Friedman and his maximizing shareholders’ value mantra as the ultimate duty of any board. Whilst boards recognize this may not be useful anymore, they struggle to discard it.  Perhaps if boards started seeing and accepting the importance of an CEO as a great human leader, as well as a great business leader, they might recognize that better performance comes from better human qualities.

How fast should leaders push the transformation of their businesses

The panel shared the view that many leaders should “slow down” the transformation to achieve true strategic change of their business. The hunt for quick wins, could according to Dr. Elsbeth Johnson play some role to demonstrate success, but is not in any way a proof for true long-term change, which demands a true shift in mindset and of the technical system. Instead, leaders should view a transformation more long-term and understand that for a real change to happen, behavior need to change, supported by changes in structure, compensation and more. This reminds me about the excellent model developed by Schein and Schein (2017) in their book ‘The Corporate Culture Survival Guide’ in which they discuss cultural transformation from three perspectives: social culture (behavior), technical culture (the design), and the macro culture (influences from outside, for example fads such as Holacracy, Lean, and more).

In fact, the leader should during a transformation focus on ‘outcomes’ and ask the right questions to their people in the organization, rather than take on the role of the central agent for change. Johnson referred this phenomenon to ‘Magic Delusion’ in which the leader over values his or her own role and contribution to change. The risk then is that the change process will stop as soon as that leader has left the company. Other risks are the; ‘Drama delusion, the Activity delusion, and the Agency delusion. With the Drama delusion Johnson means that the change needs to be perceived as fast and action packed but is then also very risky. With Activity delusion she refers to the risk of focusing on quick wins, rather than on a long-term change. Finally, with Agency delusion she means the same as Schein and Schein (2017) stated, namely that a change in people and their behavior is not enough for a change. Instead, a change requires also changes in the technical system.

An excellent example on a leadership team that BOTH has humanized their company and successfully managed a long-term transformation, from being a cash cow to start being a winner in the digital age, is the leadership team at GE Appliances (GEA).

The team did 4 simple things:

a) Defined a leading goal

b) Promoted and role modelled a new set of beliefs (culture)

c) Reinvented the organizational structure and how different units were to be aligned with each other

d) Redefined the compensation system

The transformation of GE Appliances was not falling into any of Johnson’s ‘delusion traps.’

Let us start with the first one, ‘Magic delusion’. The transformation was and is not conducted by Kevin Nolan, the CEO himself. Instead, he got advice from Mr. Liang at Haier, and he consulted his senior leadership team and asked them to suggest solutions for working more ‘user focused’ and to become a winner in the North American market. Nolan trusted his senior leaders, so that important decisions were made based on senior leaders’ involvement and competences. Further, Nolan also avoided the ‘Agency delusion’, as GEA, after Nolan’s alignment with senior leaders, performed technical changes of management processes, structure, and compensation system, which in turn required a new behavior as well from leaders, between units, and between people on different levels. Regarding the ‘Drama delusion’, GEA did several of the big changes already during the first 12 months. However, the leadership team perceived the risk to stay ‘AS-IS’ as larger than to perform the changes during the first year- and they had key stakeholders with them. So even if many changes were done during a short time period, the team was not looking for quick wins (the ‘Activity delusion’) as they believed they had to change to stay relevant in the digital age. Their focus was, and still is, long-term and their transformation journey has not stopped. Neither will it, as the external environment continuous to change.

For more information about GE Appliances transformation, please read:

https://www.druckerforum.org/blog/must-there-be-a-human-imperative-at-the-core-of-organizations-by-annika-steiber/

Or

https://www.forbes.com/sites/benjaminlaker/2021/09/17/here-are-the-four-simple-steps-that-transformed-ge-appliances/?sh=25eb50d763ff

About the Author:

Dr. Annika Steiber is a Professor, Best-Selling Author, Speaker, Founder, Investor and the Director of the Rendanheyi Silicon Valley Center. She is the author of eight management books.

Moderator
Johan Roos Chief Strategy Officer, Hult International Business School

Speakers
Santiago Iñiguez de Onzoño Executive President, IE University
Patricia Pomies Chief Operating Officer, Globant
Rosanna Sibora Vice President Digital Products & Innovation, Universal Music Group

Setting the Stage

When the pandemic hit, few companies were prepared for the unpredictability of the threats and related challenges that it brought. The completely unexpected need to switch the internal operating system to fully digital within days ruthlessly exposed the flaws and booby traps hidden in many organizations. Operations were not prepared. Staff was not prepared. Management was not prepared. Governance was not prepared. Media discontinuities, paper files, compulsory attendance, undocumented workarounds, and micromanagement became visible as what they are: the legacy debt of an anachronistic business culture that suddenly turned into a very real threat to the business. In many companies, home office was more an incentive-like working model for a small number of employees. All of a sudden, this exotic mode of working turned into the new normal, creating a bunch of unsolved problems for the routines of a legacy business operating system. Managers and employees were thrown into the deep end of a new digital reality where established cultural habits and soft practices lost their impact.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Technology – Driver or Threat

Looking back on these early days, it is obvious that the problem had different layers. On the one hand is the problem of how to deal with technology. Often digital technologies are seen as purely an IT matter, leading to a lack of knowledge and understanding in the rest of the company. Also dangerous is the glib assumption that “technology or digital tools will solve the problem and make change happen”, overestimating their impact on deep-rooted procedures and habits, as well as their ability to solve the problem of missing leadership. All this can leave an organization digitally unprepared when a pandemic hits. In today’s world technology cannot be delegated, since everyone needs to have the knowledge, the ownership and the skills to make use of it.

Leadership? Leadership!

On the other hand, there are big issues in management and leadership. The pandemic created a situation of great uncertainty, compacting corporate working routines. From one day to the next people became isolated and invisible behind their computer screens at home. They lost the office as the familiar locus for social interaction with peers, managers and leaders.

This presented a huge problem for leaders, as it is difficult to create a safe social space using narrow band communication through digital channels. Capabilities like empathy, listening and awareness of what happens in the team on a daily basis are easily lost in digital operations, yet are must-haves in situations like the pandemic, with teams and leaders daily dealing with uncertainty, anxiety and stress. Such situations call for the full range of human-centered leadership skills, trust and psychological safety – and not for more micromanagement. Unsurprisingly, the pandemic quickly exposed the many organizations lacking these leadership skills and cultures, greatly contributing to record levels of employee turnover throughout the US, for example.

Understanding the Human Side of Business

The session panelists described the different leadership challenges they were facing, and what they did about it in their respective organizations. During the pandemic, the boundaries between private and professional life blurred. While challenging, this situation also offered the chance to better understand employees and to connect emotionally on a much deeper level than in the office: Seeing their living rooms and getting to know their children and families, leaders could build a new depth of connectedness within the team, develop fresh leadership abilities and stronger social skills.

Expanding on these individual leadership skills, leadership development also took a giant leap forward. It is no longer sufficient to manage known risks and to lead people through best practices with superior knowledge. Uncertainty, i.e. not having superior knowledge, characterizes the new business environment in which leadership has to prove its worth. Leadership, and leadership development then, is all about people and continued learning to understand the nature of new challenges and deal creatively and effectively with them. In addition, this has to happen at all levels of an organization, requiring more leaders everywhere. Discovering and developing new leaders can start small, by combining the need for more learning, training and leadership. Globant, for instance, successfully instituted communities of practice to share good practices among peers. These communities set the stage for individuals who were gifted trainers, and who were good at leading others without having formal authority over them. Talented new leaders rapidly emerged from these communities, equipped with exactly the skill sets required for the new business challenges: Leading others without having formal authority, proactively rising to new challenges and easily adjusting to new technology.

Leadership Development 2.0

Bringing newly-forged leadership talent like this into formal leadership development programs quickly exposes their flaws. Existing programs are too focused on management and leading with formal authority. Reforming leadership education in business schools and development programs inside organizations might sound revolutionary– but it is no less than a necessity for the times ahead.

Future leadership development needs to put much more focus on building interpersonal skills, encouraging entrepreneurial opportunism and continuous learning. The path of leadership can only be an individual journey of exploration, constantly taking advantage of new opportunities to grow and learn in real-world challenges. This setup has a far more experimental nature than in the past, and no pre-cut-out career paths. It requires patience and mentors who really care. After all, you cannot become a good leader unless you have a deep liking for people. Nor can one develop leaders without liking them – they are people too.

Today, we need good leaders more than ever.

About the Author: Janka Krings-Klebe and Jörg Schreiner are founders and managing partners of co-shift GmbH, helping companies to transform into business ecosystems. Their latest book is “Future Legends – Business in Hyper-Dynamic Markets“ (Tredition 2017). Both also contributed to “The Power of Ecosystems“ (Thinkers50 2021).

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Ed Catmull: co-founder of Pixar Animation Studios and president of Pixar Animation and Disney Animation.

Hal Gregersen: senior lecturer in leadership and innovation at MIT’s Sloan School of Management.

Moderated by Julia Kirby: Senior Editor, Harvard University Press

The workshop began with Hal Gregersen introducing the polling software Question Burst (questionburst.com) which was used to interact with the workshop participants.

Acknowledging the pandemic and its exponential features, he then told the story of Hungarian biochemist, Dr. Katalina Kariko and her 30 year-long quest to make RNA molecules in the laboratory and get mRNA into the cells of the body. Her work would form the basis for the successful mRNA vaccines that have been so instrumental in slowing the spread of COVID-19. Drucker would have called her a “monomaniac on a mission”.

Gregersen compared Kariko’s story to those of other visionaries like Jeff Bezos (Amazon) and Marc Benioff (Salesforce) who, he suspects, saw the world through an “exponential lens” identifying opportunities that others could not. He then illustrated the nature of exponential growth by referring to Azeem Azhar’s book The Exponential Age and what Azhar calls the “exponential gap” between organizations designed for a linear world and exponential growth.

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This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Hal Gergersen’s opening remarks supplied the frame for Ed Catmull to introduce the concept of a Learning Power Cycle. He began by recounting his experience at the University of Utah in the 1970s. Although computers were big (in all senses) at the time, computer graphics was not considered part of computer science. Catmull, who believed that computer images would one day become part of feature films, could get traction in neither the computer nor the film industries. This was due in part he thinks to the difficulty people have in grasping the explosive potential of exponential growth from its usually modest beginnings. For example, it took Pixar twenty years to produce its first feature film, Toy Story.

Reality is complex. Many exponential activities are in play and the dynamics are unpredictable. Catmull and Gregersen describe this dynamic interplay as the “Learning Power Cycle”. They used the example to illustrate this of machine learning and its origins in neural networks, a concept that had been around for fifty years but sidelined by a lack of computer power. The catalyst for machine learning to take off was the rise of the games industry from it humble origins in the game of Pong (1972)to its explosive growth through arcades, consoles, desktops, handhelds and mobile devices. In 2020 the market was worth $165 Billion. Nvidia capitalized on this growth by releasing a new GPU (graphics processing unit) every six months, creating a positive reinforcement cycle. Out of this emerged the application of GPUs to neural networks, enabling deep learning. A second example is the power of apps on mobile phones, the emergence of which was unpredicted.

The workshop then went to Breakout Rooms. Questions for discussion were:

• What exponential events will or are affecting your organization? Who is seeing them? Who is missing them?
• What is one of the biggest challenges faced by your organization because of these exponential events? How well is your organization responding?
• “What Great Surprises are Machine Learning (ML) and Deep Learning (DL) creating in your organizational industry? How did those Great Surprises come about? How are you and your organization approaching them?

Ed Catmull told the workshop that at Pixar they make it clear to their people that the growth and economic success of their films is not their #1 priority. They intentionally make films (often short ones) that don’t make money to show they have other values, like encouraging people to push themselves creatively. People are often focussed on data to the exclusion of softer sources of information. Pixar tries to create a “classless” organization to enhance the sense of ownership.

Nice quote: “Tenant farmers don’t pick up rocks”

The Learning Power Cycle

The cycle is conceived as going through three phases:

1. Potential Arising
   • First steps in exponential processes seem small and inconsequential
   • They are not intuitive or obvious
2. Realizing Potential
   • The results affect large numbers of people.
   • They affect the environment in a broad sense, good and bad (unintended consequences).
   • Many transformational events are not exponential. (Do not confuse rapid with exponential)
3. Preparing for Transition
   • There is an end to exponential growth.
   • The outcomes are highly unpredictable.

Great companies operate in all three phases simultaneously.

Each of these phases requires a particular mindset to navigate in a dynamic environment:

1. Potential Arising
   • Recognize the implications of exponential change at the beginning of exponential growth – when it is not obvious.
   • Start with a challenge-driven, project-focused mindset.
   • Vote at least one-third of your growth innovation resources to longer-term initiatives that hold the potential for becoming Learning Power Cycles.
   • Learning Power Cycles are neither sparked or sustained by people operating in isolation.
   • Build a broad umbrella allowing uncertainty, noise, and a high volume of small but interesting developments, often unrelated or loosely related. (in Pixar’s case those that fail the “elevator test” i.e. cannot be explained in 30 seconds or even longer).
   • Seek out ideas that have great exponential potential.
2. Realizing Potential
   • Continually modify the processes in almost every aspect – far beyond what the originators could conceive.
   • Beware of the “sweet spot” trap (Innovators Dilemma).
   • Hold long-term and short-term views/approaches simultaneously. (and retain the ability to function)
3. Preparing for the Transition
   • Many look for replacement systems but often make the mistake of only wanting systems that are already far up the exponential curve.
   • Align people around what “might” work when systems are built for them to hold onto something that is working.
   • Are we actively looking for the end of exponential growth?

The session closed with a general discussion around which mindsets were most difficult to master and what questions and insights the Learning Power Cycle and the associated mindsets had surfaced.

Ed Catmull suggested that the secret of creating the right mindsets is to hire people who want to make a difference by working in a company that wants to make a difference. People who will help each other spontaneously without expecting rewards.

Closing Questions and Answers

Question: As a small cog in a large corporate machine how do I get management interested in these ideas?

Answer: In most large organizations management is rewarded for short term results. The challenge is to change that system – there is no simple answer.

Question: What learning, experience or educational design can help me get better at thinking this way?

Answer: Observe what’s blocking you. You still have choices about how you behave. Good role models are really helpful. Read books by and engage with people who think like this.

About the Author: David Hurst is a speaker, writer and management educator (www.davidkhurst.com). His most recent book is The New Ecology of Leadership: Business Mastery in a Chaotic World (Columbia University Press 2012)

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
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Moderator
Rosanna Sibora, Director, IT Innovation, Universal Music Entertainment GmbH

Speakers
Donald Allan Jr., President & Chief Financial Officer, Stanley Black & Deckerer
Simone Ahuja, Author and Founder Blood Orange, a global innovation strategy firm
Robert I. Sutton ,Professor of Management Science, Stanford University of Engineering
Martin Reeves, Chairman BCG Henderson Institute

Not for romantics – #15 Turning Large Enterprises into Hotbeds of Innovation

“It is an ongoing challenge that never ends”, Donald Allan, CFO of Stanley Black & Decker, replied to Rosanna Sibora’s question about what the biggest challenges are for large companies on the road to harnessing innovation.

10 years ago, Stanley Black & Decker focused only on incremental innovation with a “frozen middle”. “We spent a lot of time helping middle management feel empowered and ‘unfrozen’”. Then they started building an innovation ecosystem consisting of several elements: incremental innovations, a group of employees working on disruptive innovations, another one working on disruptive innovations, called “Stanley X”, and a venture group looking out on start-ups.

“That whole evolution has been driven from the top of the company,” explained Donald. It was 3 people who designed and implemented the new innovation system and made it successful.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum

Not for romantics

This panel was not for innovation romantics, with participatory ideas, pure agile principles, or start-up dreams in mind. “The assumption that big companies don’t innovate is suspect,” was the starting point of Bob Sutton from Stanford University. Basically, as a big company wanting to be innovative, you must avoid 2 things: paying people for just talking about innovations and having the idea, everyone has to be involved in innovation. Martin Reeves of the BCG Henderson Institute added that the success of big companies in being innovative has to do with the observed shift from a focus on efficiency to a focus on the rate of learning.

Only Simone Ahuja, founder of Blood Orange, put forward a not so rosy picture of innovative big companies. She thinks that “there is a long way from the idea to execution to innovation”. We do have a lot of “innovation theatre because it is all about change”.

Of course, in this specific panel there was a lot of talk about the examplars of Apple, Google, Microsoft, Disneyland and similar American success stories. “You have to generate a lot of ideas and then kill almost all of them again.” “You need 2 kinds of collaboration, the nice one is the agile get-together. The nasty one is authoritarian decision-making.” Just look at the highly successful Steve Jobs who had set up a permanent authoritarian innovation system at Apple.

The most important factor in this respect, according to Bob, is logical consistency within the company. This means that everyone knows what the game is about, works within the same structure, under the same rules, and, of course, with the right mindset.

The power of imagination is certainly a key factor for innovation. What prevents a company from unleashing this power? According to Martin, there are four things: complacency, the continuation of past successes, a lack of curiosity and introversion. That’s why it’s so important to make sure people stay externally oriented, focused on the outside world.

But how can you drive curiosity?  Openness, diversity, reflection on past and future, empiricism – trying things out and seeing what happens -, dissemination of ideas, codification to scale ideas, humbleness. Martin listed these factors as if shot from a gun. They are shaped by the company’s culture and the precedents set by its leadership.

“The magic happens during the collaboration process, when we build on ideas of others. So, is it possible for organizations to harness imagination collectively?”, asked our moderator Rosanna. Or are imaginations unmanageable, in the sense that we need these genius leaders like Steve Jobs to drive the process? According to his cognitive science research Martin believes that to some degree the process of collective imagination is manageable if you do six things right: openness to surprises, discipline[1], experimentation, dissemination of ideas, codification in scaling ideas and the ability to check your own success.

Simone then was asked about another aspect: Intrapreneurship. She referred to the power of diversity and that everyone can have good ideas. When it comes to innovation, intrapreneurship “moves the needle”. But for that, you have to overcome inconsistencies. Only when you teach people communication and problem-solving skills will they say yes to change.

Take-aways?

It was a panel discussion about the realities in the corporate world. Nothing was glossed over. Sobering for all those who believe in one or the other idea of new forms of work that generate more creativity and innovation.

The one panelist who comes from real leadership practice showed what is always behind successful innovation: hard work. The others, the thinkers, professors, and consultants, joined In sober analysis of the underlying drivers and interconnections. This culminated in the final round query of take-aways in Bob‘s response: “Inspired by Don, bureaucracy is not a bad word.”

Only Simone countered a bit with her take-away stated at the end, “patience in the long run”.

[1] I did not exactly catch what Martin has said at this point

About the Author: Hans Stoisser is an entrepreneur and management consultant with long-standing experiences in various African countries; and has attended all of the previous Global Drucker Forum events.

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum