This blog was originaly published on the HuffPost blog.
Billed as “The Great Transformation”, its work was cut out for itself from the moment you could register online. A conference paying homage to the brilliance of Peter Drucker has now become an annual calendar fixture not to be missed. The 6th iteration of the Global Peter Drucker Forum — recently held in Vienna, naturally — has arguably become the TED or Davos of all leadership conferences. But could we shift into an era of “managing our way to prosperity,” as the conference sub-title suggested?
Could we achieve “The Great Transformation”?
Richard Straub, the Forum’s chief architect, asked a rhetorical question in his opening remarks to the Forum, “Have we reached a turning point?” The ‘we’ he referred to might have been leaders in today’s organizations. I reckon you could argue it was ‘society’ in general that needed an autopsy on turning points. Either way, I sat at my seat, took another look at magnificent mural on the ceiling, and answered the question Richard posed to myself.
No.
We haven’t reached a turning point.
At least not yet.
We’ve reached a crisis point.
Think of it as if you were a member of the G7, trying to sort out what to do about Russia, Vladimir Putin and the ongoing saga that is the Ukraine.
The opening act of the conference included Clay Christensen, Gary Hamel and Roger Martin. This conference was about to get epic. What a triple-play bill of thought leaders to begin with.
The question this trio was tasked to answer was, “Is management up to today’s challenge?”
Renown Harvard Business School professor, Clay Christensen, — he of the disruption theory and accompanying models — claimed that growth comes from innovation and the link between growth and innovation is investment. Clay suggested there are three types of innovation:
- Market creating innovations (only the rich have access to it) e.g. the computer. It’s the source of all corporate and national growth. The kind of innovations that allow access to more people and services.
- Sustaining innovations – most of what we see today are sustaining innovations, he said. It helps an organization’s margins improve because they make markets vibrant. They don’t create growth, per se. These innovations are important but they are replicative.
- Efficiency innovations – helps an organization get lean. If the firm doesn’t get more efficient, they get kicked out of the game sooner. It’s when an organization seeks to “do more with less” as an innovation strategy.
When I heard Clay gracefully and calmly explain the “efficiency innovation” example — using the term “do more with less” — I immediately felt my body go into uncontrollable spasms, reminded of the far-too-frequent number of times I’ve heard that soul-sucking phrase in my various workplace dealings. I always thought it was a practical joke of CFO’s to wax lyrical about doing more with less.
Where I felt Clay answered the question most effectively, however, was when he launched into a finance lesson on numerators and denominators. “Prior to 1980, measures of success were based on whole numbers,” he remarked. “For example, dollars were used as the measurement.” Now that made sense. But Clay went on to outline something I hadn’t thought of before.
“Finance has now given us measures to view how successful we are with capital. These are measures of how efficiently we are using capital. They are ratios and as we know, ratios have a numerator and a denominator.”
“We stand on the shoulders of others,” exclaimed another management guru Gary Hamel, as he took the stage in what can only be described as a frenetic delivery style, compared to Christensen at least. With the audience half-scared he might venture off the stage to deliver head-butts, he continued,
Gary believes salvation and prosperity can be had if the goal of organizations becomes the process in which they can become a self-renewing organization. This happens by innovation which, as he stated, “is the fuel for renewal.” He outlined three to build a self-renewing organization:
- How have employees been trained as a business investor?
- If an employee has an idea, how can they get capital to launch it?
- Is the organization measuring the investment/idea and attaching it back to compensation and other targets?
The final opening act speaker was fellow Canadian, Roger L. Martin, Academic Director of the Martin Prosperity Institute out of the Rotman School of Business in Toronto. Truth be told, I’ve always been a fan of Roger’s work. He long has railed against the “game” that has been played by publicly traded companies, analysts, hedge funds, pension corporations and the stock market. He, like me, yearns to bring balance to our organizations such that there may be a better sense of equilibrium between purpose and profit.
His talk, as I had hoped, delivered on multiple levels. Speaking on the “Structure of Democratic Capitalist Infrastructure” and how it has become what he calls “perverted”, Roger explained to a captivated audience that “patent trolls” exist solely to make money and they do so by raping and pillaging companies that want to use the technology for good. You should tweet that sentence.
With this inexcusable mindset in play, the infrastructure inside our organizations is set to be far too narrow, thus basing its interests on short termism type actions. As I am an opponent of maximizing shareholder value as the sole means to measure a business, Roger deftly argued (and phew, agrees with me) that this sort of deplorable corporate robbing creates stagnation, a lack of innovation, and a skewing of what the true purpose of an organization really should be.
The Global Peter Drucker Forum was two hours into its journey but, with a tear in my eye, I was becoming more depressed by the second. The talks to this point were splendid but the recipe for change — the master playbook for “The Great Transformation” — seemed complex and beyond our reach. Were my expectations off kilter? Or, perhaps, I was correct in asserting we were not at a turning point, but at a continued state of crisis.
The speakers continued throughout day one. Each took a turn identifying the problem, and for some, taking a crack at a solution.
Vineet Nayer, the former CEO of HCL — a company and leader I profiled in FLAT ARMY — stated the turnaround at HCL was due, in part, to a democratization of innovation where ideas were allowed to surface from anywhere, and decisions were made across any level.” He believed that an organization’s competitive advantage lies in “putting employees first, and customers second.” I’ve read the book, so if you’re looking for the ‘how’, there are some good examples you might want to investigate.
Would an economist have better luck answering our question? Martin Wolf, Associate Editor and Chief Economics Commentator at the Financial Times, gave it his best shot suggesting no one individual should be allowed to own a company. “No one can own a country,” Wolf further stated, “so the claim that shareholders should have absolute control of the company is false.” I liked where he was going. It reminded me of the work another economist — Bill Lazonick — had put forward recently on Harvard Business Review.
The real answer began to surface when he said, “If management is to use its position to benefit the company and society, it needs the best arrangement in which to do so.” His answer?
“The company should be seen as a semi-permanent institution and philosophically it should be set up much like a trustee relationship.”
Bingo! Wolf had set the table and highlighted a possible answer to our vexing question. Perhaps Wolf was suggesting companies re-establish themselves as B-Corps, otherwise known as Benefits Corporations? I’d be all for that idea.
In his usual thoughtful and cerebrally controversial way, John Hagel — Co-Chair of the Deloitte Center for the Edge — concluded day one, and claimed most companies are an unnatural bundle of three business types:
- Infrastructure management business – high volume e.g. call center
- Product innovation and commercialized – e.g. iPad
- Customer relationship business – knowing customers better, and helping them more
By the end of Day One, it was clear to me many smart people have thought an awful lot about the current crisis. Each had provided a wonderful snapshot explaining “what” was wrong but I still was missing the unified “how is this going to get fixed” answer.
Was there a unified answer out there?
Day two saw more talks and panel discussions. There were three talks in particular that I found further defined our current crisis, that also provided a glimpse into how our organizations might be fixed.
Rita Gunther McGrath, a professor at Columbia Business School, delivered a delightful talk suggesting “intelligent failures” need to become more common in today’s organizations. “You had a plan, you tested it, you knew what went wrong, you shared messages of failure, you learned from it, and you innovated again,” was how Rita explained the concept. My take from Rita’s talk was organizations need to be resilient and flexible — while not only being a learning organization – agreeing to gather and disseminate the tuition value from mistakes.
Nilofer Merchant, entrepreneur extraordinaire, took the conch and wonderfully hammered home the point that social is not a technology, it is a behaviour. (She actually stopped her talk mid-keynote and asked us to get social with someone beside us) Her point? The more people are allowed (and encouraged) to connect and collaborate, the greater payoff your organization will have downstream. I loved Nilofer’s message in addition to her delivery style, something I hadn’t yet experienced face-to-face. (If you haven’t watched her TED Talk, please do so. It’s a gem.)
Herminia Ibarra, a professor from Insead, gave incredible insight into the nuances of different types of leaders. From heroic, to charismatic, to visible, to individualistic, to peacetime/wartime, to collaborative, Herminia’s examples were insightful, funny and painful for their accuracy. I’ve always appreciated her work and the connections she makes between effective (and ineffective) leadership and the crisis we find ourselves in today’s organizations.
From the various speakers, to the attendees I spoke with, to several meaningful and deep conversations, — it was evident everyone is (for the most part) on the same page. It was fair to summarize that we may not be at a turning point but we’re all acutely aware of the crisis we’ve gotten ourselves into.
As Clay Christensen remarked in the closing comments to the conference,
“Let’s take the best of each other’s ideas and languages, — our ways of communicating — share, focus and then standardize to make change.” That’s exactly what we need to do next!
Dan Pontefract, author of FLAT ARMY: Creating a Connected and Engaged Organization. (@dpontefract or www.danpontefract.com)
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A blog following the Global Peter Drucker Forum 2014. An opportunity to share experiences and learn from one another in the context of The Great Transformation.