The quest for innovation is great. Business leaders have the vision, drive and ambition to embrace technology. So why do innovation projects so often end in failure?

In times of economic downturn, performance improvement depends more than ever on innovative problem-solving. But how can companies overcome obstacles that block innovation and inhibit value creation? Surprisingly, the most important hurdle is recognising what they are up against in the first place.

Don’t develop solutions until you understand the problems

Some of the greatest minds ever known have given a lot of thought to problem-solving. Albert Einstein said: “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.” 

It was this famous quote that framed our discussions on innovation and problem-solving at the recent Peter Drucker Forum in Vienna, Austria. This year, the event was held against a gloomy economic outlook. All of us in attendance – from business, academia and civil society – were looking to identify the fastest and least painful ways to navigate these difficult times.

When I reflect on the many sessions, there was one theme that ran across them all – the need to innovate.

But there was another common thread: almost everyone talking about innovation was struggling to deliver it.

All around the event, voices from Harvard, Stanford and the London Business School were saying the same thing. Something is not working, there’s a blockage in business that stifles innovation and the value creation it brings.

At Tata Consultancy Services (TCS), I have seen these blockages first hand in the organisations we partner with. Our experience of driving innovation agendas with our customers has revealed valuable insights into how to unlock the innovation journey to create exponential value.

Unlocking value through innovation

The first challenge is to identify what value really looks like for an organization. That always begins with the customer. To realise this value, ask which unmet or unarticulated need must be addressed for your customers, or the customers you want to reach.

Once you know what value looks like, the next steps will become clearer. Now search out the problems standing in your way of creating value. This kind of laser focus comes with a major advantage – it will help you discover which problems to tackle.

It’s important that innovation addresses the biggest problems standing in the way of creating value. Everything else can go on the back burner so that you keep the mission-critical list clear and focused. This takes us back to the Einstein quote earlier. Spend time identifying the right problems to solve. There’s nothing worse than throwing time and money at solving problems that won’t create value.

Overcoming the biggest innovation killer

Leaders are frequently frustrated with their organisation’s inability to deliver on innovation, but they often look in the wrong place to identify blockages.

A question I ask senior executives is: With the investments you have already committed to making, can you rate your confidence level in future-proofing your business?  In most cases, the responses are not encouraging.

Embedding innovation with future-forward thinking is not a default choice for most leaders. Innovation is not mainstream in most organisations. When innovation is not given priority, new ideas are more likely to be stifled by “corporate antibodies” – people and processes that shut down innovation in the same way our bodies shut down disease. Only by placing innovation at the core of the organisation will this major risk to its successful implementation be managed.

Short-term targets accelerate innovation 

A big bang approach to bring innovation mainstream is not recommended. Instead, begin the journey by having the right business problems assigned to hand-picked leaders. These leaders should be early adopters and entrepreneurial thinkers who will push hard to drive this change. Creating a time-constrained environment that triggers unconventional thinking to deliver value is also key for allowing organisations to accelerate this journey. We have seen extraordinary results when we set targets to deliver incremental value in 120-day cycles.

These initial successes will create the right foundation for building a culture of continuous innovation within your organisation, and for bringing innovation mainstream. Thinking big, starting small and moving fast is the only way to accelerate your speed of learning in this journey.

About the author:

Lalit Karwa, Head of TCS Pace, Europe

Lalit has over 20 years’ experience in building new capabilities for organizations keen to respond to shifting customer needs, helping them get more value from their innovation and transformation investments. As the Head of TCS Pace, Lalit puts an emphasis on solving business problems using technology enablers: through digital re-imagination/transformation, strategic planning, defining roadmaps and modelling the execution.

Frances Hesselbein, whose leadership of the Girl Scouts of the United States of America from 1976 to 1990 turned a failing not-for-profit into one of the greatest socially serving institutions of the 20^th and 21^st centuries, died on December 11^th, 2022 at her home in Easton, PA.  Surrounded by loved ones, she was 107. Throughout her storied career, Frances Hesselbein often changed the life of a Girl Scout, an aspiring student, a military officer, or a business executive with a single conversation. 

Frances Hesselbein was revered as a model of servant leadership and was considered visionary for her recognition that confronting and building a better reality required respect, civil discourse, and a shared mission.  

General Lloyd Austin reflected, “In the more than 25 years that I’ve had conversations with Frances, and learned from her, she has been irreplaceable.”  Jim Collins said, “Frances taught me that one of the greatest sources of energy is leadership done in a spirit of service. Her most enduring impact is through the multitude of leaders—in business, in the military, in the social sectors—inspired by the guiding principle of her life: to serve is to live.”  

Frances Hesselbein first defined “leadership as a matter of how to be, not how to do” at a conference in 1982.   Peter Drucker, who was speaking at the same conference, hailed the definition as “the most important thing said all day, and the best definition of leadership I have heard.” As it happened, Frances’ leadership of the Girl Scouts was heavily influenced by Peter F. Drucker who, in 1990,  told Businessweek that she could run any organization and called her the “greatest leader he had ever met.” Their mutual respect and shared leadership principles later were embedded in the creation of the Drucker Foundation.

Born and raised in Johnstown, PA, Hesselbein began her education in Johnstown and at the University of Pittsburgh Junior College and yet received her “advanced” education during her 107-year-long life.  In that time, and much like Peter Drucker, Frances received numerous honorary degrees and awards – including the Presidential Medal of Freedom. 

Frances never intended to leave the mountains of western Pennsylvania, and turned down most of the important jobs offered to her during her career at least once. When a neighbor first asked her to lead a local Girl Scout troop, she declined—until she learned she was the last hope: either she would step in, or the group of ten-year-old girls from modest families who met in a church basement would have to be disbanded. She agreed to stand in for six weeks, and ended up staying until the girls graduated high school.

In 1970, she declined a request to run the local Girl Scout council.  She’d never take a “professional” job, she said.   Then she was told the council would lose the United Way partnership if Frances weren’t there.    “Okay,” she said, “I’ll do it for 6 months until you get a real leader.”     She entered her first day, with copies of Peter Drucker’s, The Effective Executive and handed it to everyone in the organization.   She stayed for four years, fell in love with learning about management and became the first woman leader of a regional United Way campaign.  Note:  Frances had first read Peter’s writings in 1968, one year after the Effective Executive was published, and commented “he is writing this for the Girl Scouts.”

When Frances was invited to interview for the Girl Scouts CEO role, she declined. Her husband countered saying that if she wanted to decline the job, he’d drive her to New York City to decline in person. In the interview, Frances told the board that society had changed dramatically, but the Girl Scouts had not. Girls were preparing for college and careers in unprecedented numbers, and they needed information on thorny topics like sex and drugs. The handbook needed to be thrown out and rewritten. The membership needed to reflect America in its entirety and the volunteers needed to be respected.  Girls and the Girl Scouts needed to feel good about themselves and what they could contribute.  The organization was in an existential crisis. Her frank assessment of what needed to be done earned her the role and forever changed the Girl Scouts.

On July 4th, 1976, Frances began in her role as the CEO of the Girl Scouts of America.  She was the first CEO from inside the Girl Scouts.  Previous CEOs had staggering leadership credentials.   One was founding director of the US Coast Guard Women’s Reserve.  Another had an MIT PhD and worked in wartime technology.

Frances was keenly aware that she didn’t have, nor could she magically obtain, all the knowledge it would take to turn around the organization. With Drucker’s principles in mind, and his book under her arm, Frances dismantled the hierarchical leadership structure in favor of what she called “circular management.” Rather than rungs on a ladder, staff at all levels would be beads on concentric bracelets, with multiple contacts who could advance ideas from local councils toward the national decision makers at the center of the organization. She launched an effort so that when girls of all backgrounds look at the Girl Scouts, they would find themselves, just like any inclusive community.  She tripled the minority membership, added 130,000 volunteers, added badges for math and science, turned the cookie business into hundreds of millions per year, and weathered a hoax scandal about needles in cookie boxes.  She made tough decisions, like selling campgrounds that volunteers adored in their youth but were no longer getting use. And she changed the pin that so many had loved to reflect everyone’s profile.

Frances and Peter met for the first time in 1979.  She was invited to an event that Peter Drucker was to speak at, hosted by NYU at the University Club. The invitation said 5:30 p.m. and if you grow up in Johnstown, you arrive at 5:30. Frances walked in and found herself alone with the bartender and a man at the bar.  She turned, the man introduced himself, “I am Peter Drucker.” 

Frances described her reaction to that fateful meeting:  “I forgot my manners. Instead of saying, how do you do? I blurted out, Do you realize how important you are to our 335 Girl Scout councils?” If you visit any council, you will see every book you’ve ever written. If you look at our national planning management, corporate management materials, you will find your philosophy flows right through it.” Peter smiled, and responded: “You are very daring. I would be afraid to do that. Tell me, does it work?”    And their journey together began.  

Peter visited the Girl Scouts on many occasions.    Some of his comments included:

–       “I have never seen an organization before without an ounce of hate.”

–       “You’re remarkable. You do not see your selves life size. You do not understand, appreciate the significance of the work you do. For we live in a society that pretends to care about its children and it does not. For a little while, you give a girl a chance to be a girl in society.”

In 1990, Frances retired from the Girl Scouts, and described The Effective Executive as her guiding light in managing the early challenges she faced, and Peter Drucker as an integral part of the transformation.

Six weeks later, she was brainstorming in Claremont, California with Bob Buford, founder of The Leadership Network, Dick Schubert, the CEO of American Red Cross, and Peter F. Drucker. The four of them agreed that the greatest challenge was to redefine the social sector as an equal partner in business and government.   The Peter F. Drucker Foundation for Nonprofit Management was launched, and at Peter’s insistence, Frances began her journey as leader of the foundation where she worked for the remainder of her life.^[1]  Peter served on the board of the foundation, and the first book they wrote together was, The Five Most Important Questions You Will Ever Ask Your Organization.

From 2008–2011, Frances Hesselbein also served as the Class of 1951 Chair for the Study of Leadership at the United States Military Academy at West Point, in the Department of Behavioral Sciences and Leadership. She was the first woman, and the first non-graduate, to serve in this chair position.   She influenced a generation of senior military leaders, and  mentored  multiple Service Chiefs of Staff, Presidential Appointees, and the Current Secretary of Defense.

While running the Drucker Forum, active at WestPoint, and editing and writing 35+ books and being the editor-in-chief of the Leader to Leader journal, she also served on many private and service sector boards, including Mutual of America Life Insurance Company, the Bright China Social Fund, California Institute of Advanced Management, and Teachers College, Columbia University President’s Advisory Council. She served as the Chairman of the National Board of Directors for Volunteers of America from 2002–2006. Reflecting on the outsized impact Frances has had, former US Secretary of Veterans Affairs General Eric Shinseki said, “she bent the arc of American history.”

In the same and yet different ways, Frances Hesselbein’s and Peter Drucker’s lives – lives that started in the hills of western Pennsylvania and on the other side of the world in Austria, ended up having an extraordinary impact on society. Frances as an extraordinary light that guided so many people with her simple focus on “how to be, not how to do,” while Peter as an outsized thinker who was the father of management and influenced “a few people to be better, do better, and deliver better.” While Frances thought of Peter Drucker as “the greatest thought leader of our time,” Peter Drucker often referenced Frances Hesselbein as “the greatest leader.” In the end, their relationship meant that Frances brought all of Peter’s wisdom into the not-for-profit world and Peter brought Frances’s service mindset into our leadership and management lexicon.

In remembering Peter recently, Frances said, “There was something about Peter’s ability to sit in a room during a meeting where everybody would be talking. At some point in the conversation, Peter would speak and summarize his thoughts in three sentences. In those three sentences, he would steal the wisdom and the direction. When asked how he was able to so accurately predict the future, Peter would say, ‘I never predict, I simply look out the window and see what is visible but not yet seen by others.’”

They were each extraordinary people that we were so fortunate to have learned from and enjoyed.   

[1] In 2017, the foundation was renamed The Frances Hesselbein Leadership Forum, offering leadership resources and inspiration to leaders working in every sector of industry and across the globe. The Forum is currently in the Johnson Institute for Responsibility at GSPIA in the University of Pittsburgh, which also manages the Frances Hesselbein Global Academy for Student Leadership and Civic Engagement and the  award-winning quarterly journal Leader to Leader.  

About the author:

Elizabeth Haas Edersheim

NYU

Author “The Definitive Drucker”

“The two most important days of your life are the day you’re born and the day you understand why” – Mark Twain  

Purpose matters to all of us: it’s a key factor in our physical and mental wellbeing. As humans, finding our ‘why’ is important. When we understand our purpose and live it, we make a positive difference to ourselves and to those around us, and we change the world for the better. It’s exactly the same for organizations. 

In today’s complex and challenging business environment, where we face existential threats like climate change and rising inequality, purpose is the critical factor in ensuring an organization succeeds over the long term. As business re-wires itself, to deliver against urgent ESG and UN Sustainable Development goals, only a clearly-articulated purpose at the core will ensure that companies and their employees thrive and grow. It’s purpose that enables organizations to deliver profitable solutions to the problems of the planet. Today, over half of all professionally managed money is following ESG guidelines seeking to achieve positive impact, as well as profit. 

Positive leaders connect people and purpose

Connecting the human to the mission and vision of the organization is a unique opportunity for positive leaders. This is not about static words on corporate slides, it’s what you as a leader role-model through your actions, your values and the decisions you make each day. When you can achieve a connection between everyone’s personal purpose and the organizational purpose, it’s incredibly powerful, whether you are looking at Total Shareholder Return or hiring and retaining talent.   

My fellow panelist at the recent Drucker Forum in Vienna, Harvard Business School Professor Ranjay Gulati, author of ‘Deep Purpose’, has spent years researching what makes companies successful and he has found that they “strive to deliver on their purpose while also generating profits at every turn. Indeed, they see purpose in the same light as profit – as a generative force that expands and improves everything about an organization.”   

Microsoft’s journey: growth mindset; leadership principles and manager expectations   

Microsoft has been on a journey of rediscovering its purpose. It started with our Chairman and CEO Satya Nadella, when he took over the CEO role in 2014. Together with the rest of the senior leadership team, we were intentional in creating a purpose-driven mission for our company: to empower every person and organization on the planet to achieve more. And we introduced a culture that could help us to deliver this.  

As an organization, we’ve made a conscious decision to ground ourselves in the growth mindset, which provides the foundation for everything we do. Building from this, we have developed three leadership principles: create clarity, generate energy and deliver success. We ask: are leaders bringing clarity or confusion? Are they bringing energy or fear? Do they drive success or anxiety? For all managers, we have three expectations, wherever they sit in the company: that they are role models, they coach and they care about the people who work for them.  

Culture matters 

Creating a culture where employees feel empowered, included and autonomous, among other attributes, is crucial. This culture must offer a connection to the company’s purpose so every employee can see their work as meaningful and themselves as a mission-critical component of the organization. 

Meaningful work delivers 

An example of meaningful work is an initiative I sponsor: Entrepreneurship for Positive Impact. Employees around the world are engaged with it. It’s designed to empower social entrepreneurs, start-ups and scale-ups that have driving positive change as their guiding principle. As Microsoft, we are privileged to be able to help scale their businesses and accelerate their impact. Digitization is the key to achieving this; as is connecting these entrepreneurs to our ecosystem of customers and partners. 

This isn’t about philanthropy. As author of ‘The Purpose Mindset’ Akhtar Badshah told me in a recent conversation on my podcast: “Purpose is the soul of the company and purpose does not become amplified just because you are giving away money. You can write a check without having a purpose.” 

This is a two-way street. One one side it gives the entrepreneurs access to the technology investment and support to achieve their goals faster. On the other, it gives our ecosystem the opportunity to partner with entrepreneurs who bring innovative start-up solutions to the table. So it’s an initiative that’s rooted in our mission, our purpose and enables our customers and partners to accelerate progress in meeting their ESG goals.  

Where to start defining your purpose 

So where to begin if you want to find your purpose? I recommend reading The Second Mountain by David Brooks. Brooks looks at the way people climb their ‘first mountain:’ they pursue a career, acquire skills, support their families and achieve success. However, they then realize that this isn’t their mountain at all; there is another, bigger, ‘second mountain.’ It’s about putting the needs of others above your own and caring for people. Only by reaching the summit of this second mountain will you find joy, meaning and purpose.  

As Paul Polman, former CEO of Unilever and co-founder of IMAGINE, told me: “Purpose is really about putting yourself at the service of others…..I think if you can achieve that and inspire others through your actions and your values….you will have a very fruitful life, and be part of something bigger.” 

Start today and channel your purpose into positive change for you, your teams, your organization and the world. 

About the author:

Jean-Philippe Courtois is EVP and President, National Transformation Partnerships, Microsoft 

Peter Drucker once said, “if you want something new, you have to stop doing something old.” The simplicity of Drucker’s dialogue seems always to cast a shadow over the depths of the words he said. 

In the wake of past and ongoing hardships—the pandemic, labor shortages, supply-chain instability and inflation—businesses continue to adjust while looking for something new to keep up with quickly evolving market and consumer demands. Many organizations have begun to reconsider new working models and the implementation of cutting-edge tools as much as the outcomes of their work, productivity and employee satisfaction. While new articles are published daily preaching the effectiveness of hybrid working or giving us 10 reasons our business needs AI, these innovative practices and tools are only as effective as employees working with and within them. 

That is why, to generate performance that matters, businesses must remember that an inside-out approach which focuses on employees and their work environment must be part of their broader business plans. And, by looking inwardly, employers can determine the support and resources their employees need to flourish as well as identify the pieces of their workplace environment and culture that must change. After all, if you want to find new ways to increase performance, you have to stop doing the same old things.  

In anticipation of this year’s Global Peter Drucker Forum, the Emergn team developed an eBook to be released at the Forum, Creating Performance that Matters in the Workplace. In it, we discuss the five surefire ways to create performance that matters in the workplace:

1. Building trust

By implementing an employee-first environment, working models that promote employee performance and servant leadership that focuses on the enhancement and elimination of employees’ strengths and weaknesses, employers can build trust with employees through compassion, inclusion and earned autonomy. This two-way trust, in turn, increases employee job satisfaction, wellbeing and self-motivation while encouraging creative and innovative thinking.

2. Facilitating communication and team collaboration

Research estimates that poor workplace communication costs US businesses $1.2 trillion a year. Implementing popular modern methodologies, like Scrum or Scaled Agile Framework (SAFe), to drive team collaboration without analyzing if the method is truly the best fit for specific teams and projects is one frequent culprit. Effective, performance-enhancing internal communications require employee engagement, effective leadership and the right technology. Through the alignment of all three, leaders ensure teams are working toward a shared goal, with the knowledge and tools to streamline communications and facilitate team collaboration.

3. Encouraging forward thinking and experimentation

Agile operations that thrive through rapid innovation and changing market and demand responsiveness are only successful alongside equally agile employees. Introducing a ‘discovery mindset’—a philosophy that pushes teams to take a more iterative approach to their thinking by encouraging experimentation, forward-thinking, and learning from failure—teaches employees to think freely, embrace change and learn through experimentation and their own mistakes. Teams working with a ‘discovery mindset’ do not get lost in routine. They are constantly searching for ways to improve customer and business outcomes and are willing to try new things even if they fail. Allowing employees to think and work openly and creatively will lead to more intuitive, context-sensitive, and personalized products and better overall performance.

4. Investing in employees’ growth

Emergn’s 2022 survey report, The Pursuit of Effective Workplace Training, found that having a strong workplace training program played a big role in an employee’s decision to stay with a company. However, many organizations still use generic learning and development (L&D) programs that are inaccessible or irrelevant to their employees. Developing strategic context-focused L&D that aligns training with business and customer goals is an easy way to feed employees’ appetite to grow and fuel motivation while improving productivity and outcomes.

5. Creating purpose and motivation

Now more than ever, employees are looking for purpose and fulfillment through their job, and it is up to business leaders to create that purpose and fulfillment in their contributions. Research has shown that effective short- and long-term goal setting positively affects employee engagement, motivation, and accountability. Further, setting achievable goals and celebrating the completion of those goals has been shown to increase both satisfaction and job retention. The setting of effective short- and long-term individual goals that align with larger strategic business objectives will help employees feel more connected to the company, increase accountability and generate improved performance and business outcomes.

Businesses looking for new ways to improve productivity in today’s fast-paced markets should think twice before trying to patch operations with the latest methodologies and innovative tools. Leaders who truly understand business, like Peter Drucker, know that if you want something new to work, you must change your old ways. Looking inward, focusing on empowering employees and improving the working environment through strategic and calculated change is one important lever to drive performance that matters.

About the author:

Alex Adamopoulos is Chairman and CEO of Emergn Ltd

Sign up to view the full eBook, Creating Performance that Matters in the Workplace, at emergn.com/drucker-performance

Monday, 9 a.m. The board urgently needs your report. It will take you 45 minutes to do it.

9:02 a.m. “Do you have a minute?” You don’t. “What’s the matter?” […]

This goes on all day.

Tuesday. Same.

Wednesday, 2 p.m. “When can we expect your report?” Do you say “Sorry, I was interrupted”?

In an average office you will spend more than two hours on emails and text messages every day, attend meetings for 1,5 hours, search information for an hour, and spend around three hours concentrating after an interruption. That’s because the time to focus on what you’ve done before an interruption takes up to 40 percent of your workday.[1][2][3] A whopping 3 plus hours of an 8 hour working day doing nothing?

Yesterday’s management and tools

To all those who think that we will digitize the work of our best people and replace them with an algorithm: good luck. No AI will replace people who can cater to the inventive weirdness of demands that come up overnight. Instead, we use our best people as a cheap call-center.

No-one needs 8 hours of concentration time. But we don’t even get an uninterrupted 10 minutes. Already one hour of concentration time per day would unleash a massive productivity gain.

Today, we live in an environment of an at least 30-to-50-fold increase of information to be processed per person since the 1970s.[4] We migrated to the information age with the information habits and management styles of the industrial age. Now, we try to manage knowledge worker productivity with the tools that we used to increase the productivity of manual labor. It’s not working.

Knowledge worker productivity still not managed

The most important contribution of management in the 20^th century was the 50-fold increase of manual worker productivity, Peter Drucker famously wrote in “Management Challenges for the 21st Century”. Only to add: “The most important contribution management needs to make in the 21^st century will be to increase the productivity of knowledge work and knowledge workers.”

To date, we do not even differentiate between the productivity of physical labor and knowledge work. There is only one indicator on labor productivity.

Also, we don’t have a common set of definitions for performance, productivity, efficiency, and effectiveness. These four terms have been used interchangeably to date.

Research and relevant current practice can be summarized as follows:

Labor productivity relates growth in output to growth in hours worked. Similarly, we also know total factor productivity (TFP) that relates growth in output to the growth in a combination of inputs like labor and capital, energy, materials, and purchased services.

Productivity measures the efficiency of resource allocation.[5]

Performance is a much broader term that covers both economic and operational aspects and expresses the degree to which (the desired) success has been achieved. Performance therefore includes almost any objective of competition and excellence that can be related to cost, flexibility, speed, delivery, or quality, etc.[6] Whilst delivering a high ratio of defective products or useless reports can be considered highly productive, performance would pick up on the lack of quality, errors, complaints, inconvenienced clients and colleagues, etc.

Efficiency was defined by Drucker and others with “doing things right”, and effectiveness with “doing the right things”.[7] In practice, efficiency boils down to the minimum resource level required to achieve the desired output, while effectiveness is rather difficult to quantify and can be broadly defined as how well results are accomplished. If results are not a specific goal, effectiveness could possibly be limitless[5]. The same could apply to performance: If defined by the degree to which – possibly limitless – success has been achieved, performance could be considered limitless as well.

Let’s look at the challenge at hand. How will we improve the productivity of knowledge work? Two points, to start the conversation:

Culture: If we consume each other’s productivity with unnecessary interruptions, we will lack the time for the really important conversations. What do we celebrate, what is it we don’t tolerate? What happens if leaders promote those who suck up instead of those who perform best? What if leaders interrupt others whenever they please? What will our culture learn? Everyone will have learned that performance doesn’t matter and that we disrespect others. No “culture workshop” will turn this around. That’s good and bad news. Culture is the consequence of management and leadership. If you don’t like what you see as a leader you need to change first.

Bureaucracy is not invented by admin or by authorities. Bureaucracy is the natural consequence of rules. Authorities don’t check on the ventilation in your restaurant if they don’t have to. They tick off the list provided by legislation. Up to a certain point, rules create useful structure and quality. We are way past this point. Most regulations (public and self-inflicted corporate alike) are so complex that we need extra staff to deal with the reporting. Staff that are not involved in value creation. While we won’t limit information growth in society, we will have to slash rules and regulations, on a societal level but also self-inflicted corporate red tape. Not inhibiting the growth of rules can be considered an utter management failure.

Albert Einstein’s assistant asked why he gave the same exam questions to his students every year. He responded: “The answers have changed.”

It’s the same with management: The answers have changed. Working more or faster the old way is not the solution. We need to work differently.

—————-

The above is condensed from a book (first to be published in German by Springer in early 2023) and from 15 years of research and several hundred projects on knowledge work productivity and overall performance.

[1] Brown, E. G. (2014) The Time Bandit Solution: Recovering Stolen Time You Never Knew You Had. Cohen Brown. Los Angeles.

[2] BAuA (2019) Interruptions & Multitasking (German). Federal Institute for Occupational Safety & Health (BAuA). Dortmund. doi:10.21934/baua:praxis20170914

[3] Baethge, A., Rigotti, T. (2013) Effects of interruptions and multitasking on performance and health. (German). Federal Institute for Occupational Safety & Health. Dortmund, Germany.

[4] Mankins, M., Brahm, C., Caimi, G. (2014) So managen Sie Ihr knappstes Gut. (German: This is how you manage your most scarce resource). Harvard Business Manager, 10/2014

[5] U.S. Bureau of Labor Statistics: Productivity https://www.bls.gov/productivity/

[6] cf. Tangen S (2005) Demystifying productivity and performance. International Journal of Productivity & Performance Management Vol. 54 No. 1, 2005 pp. 34-46. doi: 10.1108/17410400510571437

[7] Drucker P. F. (1967) The Effective Executive. New York: Harper & Row.

About the author:

Isabella Mader is CEO of the Excellence Institute, Executive Advisor for the Global Peter Drucker Forum and lecturer at universities in the fields of information and knowledge management, IT- strategy and collaboration.

“Water! Build your organizations so that they move like water.”

This advice from Haier’s Chairman Emeritus, Zhang Ruimin, began a search for useful guidance for treating ecosystem engagement as a strategic asset for the future. Ecosystems are an ageless phenomenon, newly rediscovered for commercial purposes, by James F. Moore, in 1993. Once multi-geographic trade began, the ancient world was held together by interwoven threads of economic activity. As these linkages became more reliable, ecosystems bloomed.[1] Today, ecosystems are emerging as a central part of moving into an ever-complex future, but they are still too new to our understanding to establish “rules” for ecosystem engagement. Nonetheless, we are seeing useful observations reflecting lessons learned, that begin to form the basis for thinking more analytically about how to design and engage with effective ecosystems.

• Ecosystems are about optimism, exploration, and growth. Dr. Moore emphasized the power of optimism when he observed that “Haier looks at its employees and rather than seeing fixed costs, sees unlimited possibilities, instead.” This is exactly the spirit of optimism that powers a growth-mindset throughout an entire ecosystem; it’s opportunities, not constraints, and then crafting relationships to act on them, that characterize successful ecosystem mindsets.

• Ecosystems are not value-chains. Although they might appear to be related, almost everything about ecosystems differs from value-chains. Value-chains are fashioned for command and control. Ecosystems are more suitable for pursuing unforeseen opportunities. Value-chains have “tiers” with expected outcomes; in effective ecosystems, everyone has unlimited options, and opportunities. Value-chains are closed; ecosystems are open. Julian Birkinshaw, recognizing that more ecosystem members are more valuable than fewer, has suggested that, for fashioning ecosystems, protective moats (barriers to entry) should be exchanged for more open “turnstyles.”

• Ecosystems are inherently non-linear.  Not only are ecosystems unlike value-chains, they are non-linear. Alan Moore’s book No Straight Lines has emphasized the power of not imposing predetermined outcomes upon a community of potential co-creators. The whole idea of ecosystems is to break-out of the tyrannical linear constraints of value-chains.

• Ecosystems should be centerless. Every ecosystem has a distribution of members, whose  attributes, including size, brand, access to resources, future-orientation, daring and other such indicators of organizational predisposition, help us anticipate the value a member potentially brings, and some hints regarding its likely behaviors. It is easier for bigger members to act as if they have more power, but in the ideas game, size is not necessarily associated with idea fecundity, and the more that any one member assumes a greater say in how the ecosystem works, the less likely the ecosystem will be to benefit. Indeed, the more centered an ecosystem is around one member, the more likely it is to devolve into a value-chain for that member.

• Leverage points are easy to identify, but the correct actions should take a system-wide perspective, rather than an isolated nodal (or client) perspective Centerless systems, however, does not mean that there are no leverage points for effecting change. These, within a complex system, are “those places where a small shift in one thing can produce big changes in everything.” Donella Meadows, who has studied systems at all levels of complexity, argues that the most effective leverage point, in any system, is “The mindset or paradigm out of which the system — its goals, power structure, rules, its culture — arises.” This means dispensing with trying to fix a node, and focusing, instead, on trying to understand the whole pattern of relationships that characterize a particular ecosystem, and its underlying logic and beliefs. Ironically, this often results in recognizing that what seems naturally intuitive from the perspective of any particular node, is often sub-optimal from the perspective of the system as a whole.

• Temporaryiness. Ecosystems should also be considered temporary, or always in flux; engaging in temporary liaisons as the relationships with customers change. More than five decades ago, Warren G. Bennis and Philip E. Slater alerted us to the imminent arrival of The Temporary Society: “adaptive, rapidly changing temporary systems…. groups of relative strangers with diverse professional skills…. Arranged on an organic rather than mechanical model, they will evolve in response to a problem, rather than to programed expectations.[2]” What they saw in the future, is our present, and expresses a need for spontaneity in organizational direction; not random, but purposeful searching for the next most promising opportunity. 

• Successful co-creation requires that there be a sharing of the outcomes, as well as the inputs. Unlike the provision of products or services, participation in the creation of new ideas comes with the expectation of full commitment of time, effort and brainpower. The ecosystem projects, that Haier’s microenterprises are partners in, establish the shares of future outcomes that will be distributed, so that opportunity becomes a magnet that draws members in, and binds them together.

• Ecosystems are often hidden in plain site; invisible, and thus less effective than they could be. The irony is that ecosystems are already all around us, and have been always. Most ecosystems emerge organically; remain informal, invisible, yet reliable; and take on a life of their own as new needs and capabilities arise. This is what Moore spoke about in his seminal article on business ecosystems, when he wrote “A business ecosystem, like its biological counterpart, gradually moves from a random collection of elements to a more structured community.”  Our work on the Esports ecosystem in the Greater Copenhagen region[3], revealed an existing ecosystem that was already functioning, but was unheralded. Organizations bonded, and unbonded, as their individual situations changed. It was unlikely that anyone involved actually thought of it as an ecosystem, and It was operating as a network so far from Pareto optimality, that there was no inducement to adopt an ecosystem-mindset. As a result, it undoubtedly underperformed for most of its participants. Our belief was that the simple act of recognition of the bonds that were taken for granted, could only improve the linkages and understanding between the participants.

• Networks-within-networks, “many-to-many,” arrangements could be the real promise of ecosystems. Temporary, centerless ecosystems increase the possibility of groups of members coming together, even briefly, to address the needs of a potential client base.  Such “many-to-many combinations were described in 2001, by computer scientist David P. Reed, who argued, that the value of ecosystems with group forming networks (GFNs) increases exponentially in proportion to 2ⁿ, where n equals the total number of members. Reed envisioned “.. customers band[ing] together to request customized products and services from suppliers, and they can help suppliers organize alliances to create new products and services.” This GFN behavior can already be seen in Haier’s Internet of Food, and Internet of Clothing.

• Focus on the links, not the nodes.  The formation of GFNs suggests a degree of fluidity in brand-allegiance, employment and group formation and dissolution to allow such spontaneity. In ecosystems characterized by an increased reliance upon autonomous, microenterprises, that generate their own income, a recognition of higher-order outcomes and beliefs has become evident, to the extent that what happens in any one connected unit is not as important as the linkages between units.  Zhang Ruimin, when asked what will be Haier’s key assets twenty years from now, responded “our relationships.”

• The health of an ecosystem is measured by the opportunities for all that result from their collaboration.  With any biological ecosystem, the health of the entire system matters more than any one member, keeping in mind that all members are linked to each other, directly or indirectly, by the contributions that they make to the system as a whole. The overall health of a business system should be associated with the overall opportunities that ecosystem membership provides for all. James F. Moore concluded his article on ecosystems with the sobering thought that “From an ecological perspective, it matters not which particular ecosystems stay alive; rather, it’s only essential that competition among them is fierce and fair—and that the fittest survive.”

• Being like water Ecosystems are different enough from traditional business practices that it makes little sense to believe that present-day organizations, or leadership mindsets, are well-prepared for them. Zhang Ruimin’s suggested “being like water” serves as a useful metaphor for designing organizations that can function effectively, and opportunistically, in ecosystems that are open enough to celebrate co-creation. Simone Cicero, of Boundaryless realizes that organizations that function in a traditional and linear, two-dimension, world, might not be at all suitable for the three-dimensional possibilities of ecosystem involvement. He argues for building ecosystem-enabled enterprises that are better-suited for the opportunities and faster-paced cadence of embracing ecosystem partners. This is not for the faint-hearted, but is essential for the major shift in management that ecosystems require and deserve.

[1] Amitav Ghosh” In An Antique Land, brings to life how ecosystems worked in linking 12^th Century East-Asia to the Egyptian world.

[2] Warren G. Bennis and Philip E. Slater, The Temporary Society, New York: Harper-Colophon Books, 1968.

[3] Anouk Lavoie and Bill Fischer, “How Copenhagen launched an Esports ecosystem,” IMD Case IMD-7-2102.

About the author:

Bill Fischer is a long-term member of the Drucker Forum community. He is a Professor Emeritus of Innovation Management, at IMD, and a Senior Lecturer at MIT’s Sloan School of Management. Bill has a long-term consulting relationship with the Haier organization.

The forces of change are gaining momentum. In the past Industrial Age, companies had to contend with dramatic changes but these were relatively infrequent and gradual. Today’s environment presents a different sort of playing field for every institution. They are all faced with a constantly swirling cloud of change. As a result, every institution is surrounded by unpredictable innovations, shifts in the marketplace and other events that can quickly render a long-reliable strategy obsolete.  Furthermore, new competitors can emerge from seemingly nowhere.

The problem is not the shifts in themselves, but the lack of abilities among institutional players to change. Consequently, societies all around the world are experiencing an increasing gap between their aspirations for change and their abilities to change. As Peter Drucker, the father of modern management strongly expressed, a re-invention of management is needed to achieve value creation at scale. In Drucker’s words, “management is the central resource, the generic, distinctive, the constitutive organ on which the very survival of society is dependent”.

Five Capabilities for Continuous Innovation

A vast amount is written on new management practices for how an institution could become more innovative, adaptable, and fast. This body of knowledge can be distilled into five necessary key areas of management capabilities that need to be built and practiced:

1. Dynamic capabilities. Including the ability to sense and shape opportunities, to seize them, and to build, buy, reorganize, or co-create resources as needed. 
2. Human-centric capabilities. Based on a belief that people want to be creative and that a company must provide a setting in which they can exercise their creativity. 
3. Ambidextrous capabilities. Allowing the institution to combine two very different forms of business logics, to optimize daily production and optimize innovation.
4. Open innovation and co-creation capabilities. Allowing the institution permeable boundaries to exchange information and knowledge with their surroundings.
5. Systemic capabilities. Allowing a holistic and systemic approach when reinventing management components such as: culture, leadership, HR practices, organizational design, and more, that all are interdependent and jointly affect the institution’s outcome.

A New Management Model is needed

When applied, the five areas of management capabilities require not only incremental changes of the current management model, but commonly a 180- degree new management model that includes a new set of cultural beliefs, a new way of leading people and a new way of assigning and coordinating tasks and create user value in the form of product, process, marketing, and management innovations.

Currently societies and their institutions change too slowly and there is therefore an urgent need for use-cases that can first, describe and illustrate versions of this new management model, and second, tell the story how the transformation can be managed. 

GE Appliances as A Use Case

In 2022, GE Appliances (GEA) had become the fastest growing home appliances company in the USA and could proudly show-case innovation of its core business, such as Small Appliances and Recreational Vehicle appliances, as well as innovations in new channels, e.g working side-by-side with the Jewish community to develop appliances to be used during the Sabbath and with the visually impaired community to develop the talking laundry. However, what GEA is most proud of is the fact that the company now is, by its employees, labeled as ‘A Great Place to Work’ and that their goal is no longer limited to what competitors do, but instead focused on consistently building new capabilities to co-create and serve more and more users. However, behind all these successes is the most important innovation of them all-the reinvention of their own management model!

Only six years earlier, in 2016, the company was slowly dying with zero-growth. The top leadership was at this time focused on cost control and the culture was risk averse and focused on behavior that secured profit margin and cash flow, not innovation. To ensure this, leadership was top down, command and control and people selected had a long tenure in the company. Some employees described the company as a ‘machine’.

The change of GE Appliances was enabled by a new owner. In 2016, the company was acquired by Haier, which had transformed its own management model over the past years. With coaching and support from the new owner, the executive team of GE Appliances became convinced they could become the number one on the North American market if they followed some key new beliefs. As a result, in 2017, the old beliefs were exchanged with a new set of beliefs:

• The user is the boss, we need zero distance to the users
• Hierarchy is exchanged with a networked organization
• Employees are entrepreneurs
• Pay by enterprise is exchanged with Pay by users
• Management needs to transform into a non-linear leadership
• The corporation is a platform
• The firm is transformed into a win-win ecosystem

Impact on the Management Model

Previous product lines were now transformed into user focused microenterprises, with P&L responsibilities. Previously powerful functions such as supply chain, sourcing, manufacturing, legal and human relations were changed into supporting platforms, serving the user-oriented microenterprises. In this way the whole organization was now focused on the market and user needs.

Decision power and budget accountability were pushed down in the organization and the top leadership became leaner and focused primarily on new growth and inventing the future. By viewing the corporation as a platform, the company consistently added new high-growth businesses to its governance structure, going from 4 businesses in 2017 to 14 in early 2022. As has been mentioned, in July 2022, GE Appliances had become the fastest growing home appliance company in the USA.

New business opportunities also required new domain competences among employees as well as an entrepreneurial mindset and skillset. Coming up with ideas for incremental and radical innovations was now expected and rewarded, and new avenues for funding new initiatives were established.

When the changes within the company were established and rooted, GE Appliances next started to learn more about ecosystem businesses and brands and decided to become the leading ecosystem brand in North America in their industry.

As a result of the new management model, based on a new set of beliefs, GE Appliances improved their dynamic, ambidextrous, human-centric, open innovation, and systemic capabilities, which led to continuous innovation, adaptability and speed.

About the author:

Dr. Annika Steiber, author of the Springer book Leadership for the Digital Age

Starting a panel discussion at Global Peter Drucker Forum 2021, Helga Novotny elaborated on the vast horizon of challenges faced by the global science in the 21st century. The academic community has been observing a rise in complexity: from tech finance speeding the banking systems to the climate changes speeding the economic systems. Complex systems reveal three inherent properties:

1. Emerging interconnections of the networks in which unexpected can come up
2. Building feedback loops into interconnections with positive or negative reinforcement
3. Massive adoption of ICT solutions

These three tipping points are starting radical changes in the systems’ nature, showing that the transformational breakdown has just arrived. Complex systems are filled with wicked problems, social or cultural, difficult, or impossible to solve.  Their complex and interconnected nature, which makes it difficult to determine appropriate solutions.

Doxa, techne, episteme, and predictive algorithms

Some are convinced that building models are essential for making better decisions. The scientific method has been adulterated with doxa mixed with philosophical beliefs, populism and conspiracy theories for centuries. But the scientific method has turned out to be the only reliable way of understanding the world because it invites professionalism, transparency, accountability, and methodological rigor. Thanks to episteme, progress is observed. The scientific method has branched out to emerging new technologies that have been changing our lives. Quantum computing is also a promising techne driver. New technologies allow us to build models with „what-if” calculations that are so much better in prediction than the previous ones—science and technology, in a fantastic way, accelerate progress. But we need to ask “To make better decisions by what criteria? It is an open question which provokes new ones: Do we need wide ranging data driven methods as means to determine markets, given the need for personalization, or should we be thinking more on a village/community/individual level? Modeling partial predictive solutions builds our belief in “managing the present”, but do we know where we are going? Without an answer to this question, it is difficult to manage performance.

Solving wicked problems with technology and interdisciplinary cooperation

Some scientists say that excellent theory comes from engagement with the world problems, not gaps in the literature. But could we expect much more from science? As the world is filled with wicked problems, they can only be solved with interdisciplinary research. That is not the strongest point of universities. Rebuilding how research is funded, and collaboration, means that performance in science cannot be limited to scientific publications  The three together of teaching, researching, and commercializing will drive academia performance.

Co-creating collaboration between researchers, entrepreneurs, and investors

It is important that scientists should work with entrepreneurs to invest investors’ money efficiently. Investors expect scientists to understand the research gap and entrepreneurs to understand the creative business problem resulting from research. Scientific models take time to mature for commercialization. Entrepreneurs come to investors for funds with simpler models that could create immediate revenue for building ventures. However, should science performance depend on commercialization success (results) or rather on learnings achieved in that process?

Regaining the trust and support of society at large

Until recently, drugs needed decades from discovery to development.,. Today we see both happening at the same time. Research does not seem to be the limiting factor. We have been observing very intense multidisciplinary collaboration that has not happened before. There are two challenges: (1) to have more people appreciating and embracing the importance of that cooperation, and (2) allowing research to be detached from urgent citizens’ purposes. Science is moving at a breathtaking speed. It is therefore essential to act against scientific illiteracy and anti-scientific campaign by boosting ethical values with philosophical purposes.  Paradoxically, science helps us solve the wicked problems we face; at the same time, scientists are losing the support of society.

Transformational time for research that does not belong only to universities

Understanding research timeline as long-terms solution to wicked problems will result in breakthrough innovations in both science and society. Technology, knowledge, and research are developed not only in universities but also in companies The best AI-powered projects are now being done at Google and Microsoft, not universities. However, quantum research has moved from companies to universities.

Chester I. Barnard (1886-1961), one of the pioneers of management thinking,  wrote in  The Functions of the Executive (Boston: Harvard University Press, 1938), that businesses are complex systems of cooperation because of the people of which they are composed. He was probably the first authors to emphasize the role of leadership, although the centrality of his work was cooperation. He wrote: “Cooperation, not leadership, is the creative process; but –he added– leadership is the essential fulminator of its forces.”

 A cooperative endeavor between academia, business, and end users, seems to be a possible route to a quicker resolution to the wicked problems that bedevil the world.

About the Author:

Sylwia Sysko-Romańczuk is professor of innovation and entrepreneurship at Warsaw University of Technology with research interests in value-driven growth in the digital and networked economy.