Opposites energize development
Stand firm in that which you are.
Do you believe there is some place that will make the
soul less thirsty?
In that great absence, you will find nothing.
Be strong then, and enter into your own body;
there you have a solid place for your feet.
Kabir
-
Nokia dominated the mobile and smartphone markets in 2007-2008 when Apple launched the iPhone and Google the Android operating system. The new rivals revolutionized customer expectations, causing Nokia’s Symbian operating system to become outdated. However, Nokia held on to Symbian until 2011, when it eventually switched to Windows operating system, which also underperformed. Ultimately, Nokia initiated a radical strategic renewal in 2013 by divesting its mobile phone business and focusing on manufacturing network equipment and software, patent licensing, and opportunities in wearable technology and the internet of things. This bold strategic leap was in part facilitated by Nokia’s newly appointed board who actively attended to top managers’ emotions in 2012-2013. The emotional practices used by Nokia’s board shine a light on how organizations can better manage themselves under stress.
Defining new rules - First, the new chairman defined new Golden Rules for conversations. Several top managers and board members revealed that, in the past, low trust between top managers and board had undermined the quality of strategic discussions after the iPhone and Android launches. In particular, top managers and even some board members were unable or afraid to voice their concerns about the severity of the threats and to develop a stronger response. The new chairman appointed in 2012 sought to improve strategic discussions by “breeding a new culture in the company — in the board, and between the board and the management team.” He was explicit that he did it “because things clearly weren’t working. […] If the board is a place where the management comes with knees trembling [i.e. feeling fear], a solution in their mind, that they need to sell to the board, that would be a complete disaster.” The board defined concrete “Golden Rules” for board discussions that included showing respect to other members and assuming that they speak with good intentions — and made sure that these rules were followed. For example, a board member told us how, after he had made hostile comment to a top manager, the chairman made him apologize to the top manager in the next meeting.
Learning to let go of the known - Second, he encouraged letting go of attachment to the known through generating of many new options – not just one alternative. In the past, Nokia’s top managers did not succeed in revising their strategy partly because they were emotionally attached to the prevailing Symbian-based strategy. As a top manager noted: “No one on an emotional level wanted to think about it right away, even though [top managers] knew analytically [that the prevailing strategy should be challenged]. The consequences were emotionally burdening.” This inability to discuss the limitations of the prevailing strategy was partly fueled by the absence of readily available alternative options. As another top manager reflected: “Even if you personally thought that ‘Damn it, this won’t work,’ you couldn’t shout that to anyone. Not until there’s an option. You need to have a [viable] option before you can change course.” In 2012, the new board was explicit in that the creation of new options can change top managers’ emotions toward the prevailing strategy: “We did a huge amount of work to analyze those options, which helped to reduce emotional attachment to the current strategy […] If you have several options it reduces fear.” The continuous pressure from the board to generate and analyze multiple options disciplined top managers’ evaluation process — despite their own initial emotional impulses — and made them develop a deeper understanding of the situation: “The workload was so huge that if the board wasn’t constantly asking for more scenario analysis, there was a risk that the management would just say, ‘We’re so f***ing tired. Isn’t it obvious that these two are the main alternatives? Why are we dragging these other three out?’ That’s where the [new] board played an important role… to say, ‘No, we want to look at all of them. We want to see them all the time. Let’s go back to the drawing board.’ Because that generates more information that helps formulate a [more thoughtful] decision.”
Embrace conflicts and tension - Third, he pushed the board to attend to data that conflicts with their gut feelings. In the past, especially when Nokia was contemplating Windows or Android as the replacement for Symbian in 2011, some top managers had been blinded by wishful thinking. A top manager said: “There was the bias to wanting to be a market leader. […] We believed that with Windows you can influence the game; instead of playing with the same Legos [Android] as everyone else.” And a strategy director elaborated: “All outsiders thought that the Windows Phone would not succeed. […] The rational [side of thinking] led to, ‘Well I don’t believe in the Windows thing so this is doomed to failure’, whereas if you yourself believe that the Windows thing might have a chance […] then this [seems like a] better solution.” To avoid similar wishful thinking, the new board required detailed attention to data about the progress of the prevailing strategy in 2012-2013. Key sales numbers were followed regularly and specific actions were defined for different projections of sales revenues, such that emotional reactions to the incoming data would be less likely to bias the interpretation of the data. A board member explained how this helped them “to evaluate not only what will happen but also the delta compared to our expectations, and then we were able to backtrack from there and see, what was the reasoning behind our expectations, which in turn enabled us to calibrate our reasoning.” In addition, several options were thoroughly analyzed regardless of their initial seeming attractiveness. In particular, the option of switching from Windows to the Android operating system in 2012-2013 — which many initially thought as the right move and would have allowed maintaining the company’s identity as a smartphone maker — was ultimately rejected based on data analysis: “Through this analysis, little by little, the truth kind of stared you in the face.” Likewise, top managers’ initial dislike of the option of buying full stake of the Nokia-Siemens Networks — which was a joint venture between Nokia and Siemens that had been performing badly for several years due to difficulties in post-merger integration and industry conditions — was transformed: “When [the CFO] presented that alternative for the first time [laughs], people weren’t really enthusiastic about it, right away. But after a few discussions, it looked reasonable, specifically in terms of the financial metrics.” Ultimately, Nokia acquired Nokia-Siemens Networks in 2013, and started expanding the networks business, also acquiring Alcatel-Lucent in 2015.
In sum, these three practices helped Nokia senior executives to make one of the most difficult decisions in its history — to renew itself radically by divesting its main business. While this move surprised outside observers, Nokia’s top managers strongly felt that this was the right choice: “It was of course the entire path […] All that time, we had gone through [the options] with a fine-toothed comb […] Since we had left no stone unturned, there was no longer anywhere to hide; you couldn’t say, ‘No, we still have to take time out and think about this or that.’” They transformed their long-standing emotional commitment to their once world-dominant mobile phone business into a voluntary and thought-through radical departure from their former identity and pride.
-
We return to Enso Stora’s journey to reinvent itself. You may recall that the decline in demand for paper had hit the company hard. By 2011, the company had laid off over one-third of its 30,000 employees. Though profitable again, it needed to transform itself into a global renewable materials company.
Choosing a new path: Jouko Karvinen, the CEO at the time, and his team decided to take a unconventional route to change. Instead of bringing consultants from outside, they decided to leverage their own people. There was one more condition thought - “We also did not just want to handpick the usual senior managers we had always worked with before, because we knew that, in order to drive the transformation of the company, we needed new and fresh perspectives.” So, instead of the usual senior managers, a team called Pathbuilder was formed of a diverse group of insiders to present senior leaders with new ideas - a sort of a “shadow cabinet.” To start, the Pathbuilder team undertook establishing a new company purpose and values along with the design of a group-wide process for how to implement disruptive innovations and digitalization.
Seeing the results: On a larger scale, the Pathbuilder group supported Stora Enso’s transformation into a global renewable materials company. In 2006, 70% of revenues and 60% of the company’s profits still came from paper; today the new growth businesses contribute 67% of sales and 76% of profits. Since 2011 the share price has more than doubled. The culture was also evolving and improving, as evidenced by an annual survey that tracked the main levers for the transformation, including innovation and sustainability, leadership, team, and engagement.
Knowing what worked: The Pathbuilder program succeeded because of a range of reasons. We will lay out the journey right here. The initiative began with an advertisement on the company’s intranet inviting anyone in the organization to apply to the Pathbuilder program, which was defined as an internal change initiative designed to address some of the most critical challenges facing the company at the time. The ad read: “As questioning old ways of doing things and finding new and different solutions to satisfy customers, shareholders, and employees is a daunting challenge, we have concluded that the Group Executive Team needs help.” Two hundred and fifty employees from throughout the organization applied. Following a thorough selection process, including interviews, ability tests, and an assessment center, 16 participants from widely different functions and levels of seniority were selected to work with top team sponsors over a six-month period. What the team also discovered, surprisingly, was that many of the Pathbuilders who excelled in the program had not been on the radar of Stora Enso’s established talent screening system.
The design of the Pathbuilder journey had five choices that, in combination, contributed to its success in the company’s continuing transformation.
Choosing the right people - First, and most important, by relying on the self-nomination approach, the company tapped into the hidden energy, diversity, and skills of its employees. As a result, Pathbuilder represented different corporate functions, geographies, and personality types. In addition, participants came from all hierarchical levels of the organization.
Having them partner with the leadership team - Second, the leadership team was closely involved in the projects, sponsoring the teams throughout the six-month journey and emphasizing how critical the initiative was to the transformation of the company. On the one hand, this elevated the visibility of the program and enticed the most capable and motivated candidates to apply. On the other hand, top team sponsors also benefited from the continuous and intense interaction with the Pathbuilders. When sponsors worked with their teams and engaged in discussions over the six-month period, they were challenged to open up to the potential of new ideas and, over time, develop different perspectives and views of the business.
Working on projects that mattered - Third, building the project work around mission-critical challenges was important not just to motivate participants but also to sustainably engage top team sponsors. If projects had been set up primarily for the sake of participant learning, as is often the case in executive education programs, the sponsor’s interest would likely have waned after one or two runs. However, since project sponsors saw pressing challenges being resolved, the program became a vital vehicle to help them achieve business goals.
Training them on skills that were needed - Fourth, intensive training helped accelerate contribution. Building a diverse team with highly motivated people was necessary, but not sufficient. Several of the Pathbuilders, though smart, young, and energetic, had little or no experience working in close collaboration with top management on highly complex challenges, so enabling them to perform was essential. More concretely, participants learned specific, project-relevant skills in areas such as strategy, structured thinking, innovation, digital, and, equally important, leadership to be able to work effectively as a team and navigate the dynamics and difficult trade-offs of the senior leadership team.
Tracking impact of the program - Fifth, Stora Enso closely tracked both the business and the people impact of the Pathbuilder program. Working outside the line organization created impact, but also a lot of noise in the system, as it challenged traditional ways of working. In particular, the self-nomination process upended the established power distribution and people’s sense of entitlement, as companies would normally appoint people to be part of important initiatives rather than allow “just anyone” to apply. To manage and counteract this noise and to maintain momentum, business impact was rigorously measured by following up on the results of each project. The impact on people was measured by tracking how many participants had moved into considerably different and/or more-senior positions within 12 months of finishing the program.
-
Lenovo, the Asian upstart that was competing with its rival, Acer, and has now come to rule the global market in personal computing is a great example of the power of alignment. In 2008 Taiwan’s Acer and China’s Lenovo ranked third and fourth respectively in global market share, well behind HP and Dell. Over the next seven years, 2015 Lenovo had claimed the top spot and Acer had slipped to sixth. While both had similar quests—expanding global reach—and pursued similar strategies of acquiring embattled Western businesses to generate value and transform their global presence, the outcome had not been the same . A key difference between Lenovo and Acer was their commitment to globalizing the senior leadership ranks.
Yang Yuanqing, who studied computer science in his native China, had assumed the reins of Lenovo in 2001, when the company’s founder, Liu Chuanzhi, moved on to become chairman. Yang served as CEO for three years before succeeding Liu as chairman, and he and Liu engineered the unthinkable 2005 acquisition of IBM’s personal computer business. The deal suddenly made Lenovo (formerly known as Legend) the world’s third-largest computer maker. In 2009, after Lenovo had begun to falter during the global recession, the board asked Yang to return as CEO, a post he’s held ever since. There are several key factors to Lenovo’s rise to its current position.
First, Yang saw the company as an innovative one like Apple and Samsung, and having a successful formula of its own for creating value. Their pursuit of a clear strategy and execution; having an efficient business model; innovating on their own products and technology; and having a diverse team and culture. According to Yang, innovation had been in the company’s genes. They developed products such as the ThinkPad, which became iconic in the commercial-customer segment. And they expanded innovation to the consumer space, with their Yoga PC and tablet. Furthermore, Yang saw Lenovo more innovative than Apple because they saw themselves as knowing how to balance innovation and efficiency. While for some companies, innovation meant an expensive product, it was not Lenovo’s philosophy. Yang wanted innovation to be affordable for most of their customers. They did have premium products, but they aimed most of products at mainstream or entry-level customers.
Second, Yang turned things around, pursuing a strategy the company called “protect and attack”—defending its core market in PCs while moving into new growth areas such as mobile and the cloud. In 2011, the company made two more eye-popping acquisitions, spending $2.3 billion for IBM’s low-end server business and $2.9 billion for Google’s Motorola Mobility unit..
Third, Yang focused on three elements for sustaining a healthy corporate culture. The first was an ownership culture: empowering people to think for themselves, to make decisions for themselves. Everyone was an engine. The second was a commitment culture: If employees commit to something, they had to deliver. And the third was a pioneer culture: they encouraged their people to be more innovative. And for this they saw a lot of ways to do it. For example, Yang held monthly brainstorming sessions with his R&D team. At each session they focused on one topic—it could be a product, a service, or a technology. Another approach was through the budget. For their R&D people, they allowed 20% of the budget to be flexible, so they could decide which areas they wanted to focus on and what they wanted to develop.
Fourth, as a leader, Yang became best known for his efforts to break down Lenovo’s hierarchies and empower employees at every level—and for his well-publicized generosity. In 2012 he opted to share well more than half of his $5.2 million bonus—and in 2013 more than three-quarters of his $4.23 million bonus—with Lenovo employees. Leadership development at Lenovo was kept fully in line with the company’s quest for a greater global presence. For example, by 2012 its top team of nine represented six nationalities. Yang himself relocated to the United States, and other members of the team were scattered globally, gathering for one week each month in a different strategic market. Aware of the challenges his team faced as a result of its members’ varied backgrounds, Yang brought in a coach to work with the executives on cross-cultural issues. And to promote diversity as a source of competitive advantage—in both hiring and operations company-wide—the company elevated the role of cultural integration and diversity VP to the C-suite. Such efforts paved the way for ambitious acquisitions and joint ventures with German, Japanese, Brazilian, and U.S. companies—enabling Lenovo to extend into new software and services categories globally.
In contrast, its Taiwanese competitor Acer’s board struggled with “de-Taiwanization,” rejecting CEO Gianfranco Lanci’s bold plans to hire foreign talent with expertise in mobile technology and to triple the number of engineers. (It’s worth noting that Lanci soon left Acer to head up Lenovo’s PC group.) In 2010 Acer had six foreigners among its top 24 executives; by 2014 it was down to three out of 23. In the same period, the board went from having two foreign directors to having none. Predictably, the top team’s decision making became increasingly cautious and inward-looking. In 2016, for example, it hired the founder’s son to head up the company’s cloud services, which prompted the TechNews headline “Is Acer Becoming a Family Business?”
-
Most believed that Toyota was one of the world’s greatest companies only because it developed the Toyota Production System (TPS). Quite simply, TPS was a “hard” innovation that allows the company to keep improving the way it manufactures vehicles; in addition, Toyota mastered a “soft” innovation that related to corporate culture. The company succeeded because it created contradictions and paradoxes in many aspects of organizational life. Employees had to operate in a culture where they constantly grappled with challenges and problems and had to come up with fresh ideas. That’s why Toyota constantly got better. The hard and the soft innovations have worked in tandem. Like two wheels on a shaft that bear equal weight, together they move the company forward.
Efficiency was never enough.
Toyota believed that efficiency alone cannot guarantee success. Sure, they practiced Taylorism better than anyone did. At the same time, they viewed employees not just as pairs of hands but also as knowledge workers who accumulate chie—the wisdom of experience—on the company’s front lines. As a result, they invested heavily in people and organizational capabilities, thereby garnering ideas from everyone and everywhere: the shop floor, the office, the field.
Researchers investigated Toyota through for six years, during which time they visited facilities in 11 countries, attended numerous company meetings and events, and analyzed internal documents. They also conducted 220 interviews with former and existing Toyota employees, ranging from shop-floor workers to Toyota’s president, Katsuaki Watanabe. Their study uncovered six major contradictory tendencies, influencing company strategy and organizational culture.
Move slowly, yet take big leaps - For example, the company started production in the United States gradually. It began in 1984 by forming a joint venture with GM called New United Motor Manufacturing, in Fremont, California, and opened its first plant in Kentucky four years later. However, the launch of the Prius in Japan in 1997 was a huge leap.
Grow steadily, yet remain unsatisfied - In the early 1950s, the company faced near bankruptcy, but over the past 40 years, the company has recorded steady sales and market-share growth. Despite this enviable stability, senior executives constantly hammer home messages such as “Never be satisfied” and “There’s got to be a better way.”
Operate efficiently, yet include everyone - Anyone will be amazed to see how many people attend a meeting at Toyota even though most of them don’t participate in the discussions. The company assigns many more employees to offices in the field than rivals do, and its senior executives spend an inordinate amount of time visiting dealers. Toyota also uses a large number of multilingual coordinators to help break down barriers between its headquarters and international operations.
Be frugal, yet splurge on what matters - In Japan, the company turns off the lights in its offices at lunchtime. Staff members often work together in one large room, with no partitions between desks, due to the high cost of office space in Japan. At the same time, Toyota spends huge sums of money on manufacturing facilities, dealer networks, and human resource development. For instance, since 1990, it has invested $22 billion in production centers and support facilities in the United States and Europe.
Communicate simply, yet build complex social networks - It’s an unwritten Toyota rule that employees must keep language simple when communicating with each other. When making presentations, they summarize background information, objectives, analysis, action plans, and expected results on a single sheet of paper. At the same time, Toyota fosters a complex web of social networks because it wants “everybody to know everything.” The company develops horizontal links between employees across functional and geographic boundaries; creates vertical relationships across hierarchies; and fosters informal ties by inviting employees to join clubs.
Be strictly hierarchical, yet challenge authority - Voicing contrarian opinions, exposing problems, not blindly following bosses’ orders—these are all permissible employee behaviors. The researchers were surprised to hear criticism about the company and senior management in our interviews, but employees didn’t seem worried. They felt they were doing the right thing by offering executives constructive criticism.
In the second phase, the researchers tried to identify the underlying forces that caused the above. They identified six forces that caused contradictions inside the company. Three forces of expansion led Toyota to instigate change and improvement. Not surprisingly, they make the organization more diverse, complicate decision making, and threaten its control and communications systems. To prevent the winds of change from blowing down the organization, the company also harnesses three forces of contraction. These stabilize the company, help employees make sense of the environment in which they operate, and perpetuate company values and culture.
Forces of expansion:
In order to prevent rigidity from creeping in like it does in most organizations, the company forces employees to think about how to reach new customers, new segments, and new geographic areas and how to tackle the challenges of competitors, new ideas, and new practices.
Clear purpose and impossible goals - By setting near-unattainable goals, senior executives push the company to break free from established routines and to raise employees’ consciousness and self-worth. Consider the company’s global strategy: Meet every customer need and provide a full line in every market. Such a strategy seems impossible for any company to do that and runs contrary to management thinking, which espouses the merits of making trade-offs. However, Toyota tries to cater to every segment because of its belief that a car contributes to making people happy. It’s reminiscent of Henry Ford’s desire to make automobiles affordable to American families of moderate means so that they might enjoy “the blessings of happy hours spent in God’s great open spaces.” By setting itself the goal of delivering “a full line in every market” Toyota believes that it makes employees feel they serve a useful purpose. Toyota Value, the document that outlines the company’s beliefs, says it best: “We are always optimizing to enhance the happiness of every customer as well as to build a better future for people, society, and the planet we share. This is our duty. This is Toyota.” Many of Toyota’s goals are purposely vague, allowing employees to channel their energies in different directions and forcing specialists from different functions to collaborate across the rigid silos in which they usually work.
Customization - The company doesn’t modify its automobiles to local needs; it customizes both products and operations to the level of consumer sophistication in each country. This strategy pushes the company out of Japan, where it is dominant, and into overseas markets, where it has often been the underdog. Following the strategy increases operational complexity, but it maximizes employees’ creativity since they have to develop new technologies, new ways of marketing, and new supply chains. Nissan and Honda follow the same strategy, but less rigorously: In 2006, Toyota offered 94 models in Japan—almost three times as many as Nissan’s 35 and Honda’s 30 models. Pursuing local customization also exposes Toyota to the sophistication of local tastes. For instance, when it introduced the subcompact Yaris in 1999, Toyota had to offer advanced technology, greater safety, roomier interiors, and better fuel efficiency to live up to European customers’ expectations. Local customization forces Toyota to push the envelope in numerous ways. For instance, the company faced complex challenges in 1998 when it developed the Innovative International Multipurpose Vehicle (IMV) platform. Toyota engineers had to design the platform to meet the needs of consumers in more than 140 countries in Asia, Europe, Africa, Oceania, Central and South America, and the Middle East.
Experimentation - Toyota’s eagerness to experiment helps it clear the hurdles that stand in the way of achieving near-impossible goals. People test hypotheses and learn from the consequent successes and failures. By encouraging employees to experiment, Toyota moves out of its comfort zone and into uncharted territory. Toyota has found that a practical way to achieve the impossible is to think deeply but take small steps—and never give up. It first breaks down a big goal into manageable challenges. Then it experiments to come up with new initiatives and processes for handling the more difficult components of each challenge. This pragmatic approach to innovation yields numerous learning opportunities. Consider, for instance, Toyota’s path for developing the Prius. In 1993, the company decided to develop a car that would be environmentally friendly and easy to use. The development team first came up with a car that delivered a 50% improvement in fuel efficiency. Senior executives rejected the prototype and demanded a 100% improvement. That was unachievable using even the most advanced gasoline and diesel engines or even fuel cell technology–based engines. The team had no choice but to tap a hybrid technology that one of the company’s laboratories was developing. Sure enough, the first engine wouldn’t start. When a subsequent model did, the prototype moved only a few hundred yards down the test track before coming to a dead halt. In later models, the battery pack shut down whenever it became too hot or cold. Despite these setbacks, Toyota didn’t stop working on the project and unveiled a hybrid concept car at the 1995 Tokyo Motor Show. Its executives knew that alternative power train technologies were emerging, but the fact that the Prius would be an interim solution didn’t deter them. They believed the project was worth the investment because Toyota would learn a lot in the process.
Forces of Contraction
As the company expands, it has to deal with a greater variety of perspectives from the growing number of employees and customers in many markets. In addition, the quality of internal communications deteriorates, and it becomes difficult to coordinate operations across markets and product groups. In order to cope with the hazards of constant change and growth the company employs three forces of contraction that allow Toyota to stick to its mission.
Values from the founders - Over the decades, several people have developed Toyota’s values: Sakichi Toyoda, who created the parent Toyoda Automatic Loom Works; Kiichiro Toyoda, Sakichi’s son and founder of the Toyota Motor Corporation; Taiichi Ohno, the TPS’s creator; Eiji Toyoda, Kiichiro’s first cousin and a former Toyota president; Shotaro Kamiya, who developed the company’s sales network; and Shoichiro Toyoda, Kiichiro’s son and another former president. The values include the mind-set of continuous improvement (kaizen); respect for people and their capabilities; teamwork; humility; putting the customer first; and the importance of seeing things firsthand (genchi genbutsu). Toyota inculcates these values in employees by demonstrating their everyday relevance through on-the-job training and through stories that managers tell succeeding generations of employees.
Up-and-in people management - Unlike most companies who either promote employees or ask them to leave—up-or-out, as the practice is called, Toyota rarely weeds out under-performers, focusing instead on upgrading their capabilities by preferring on-the-job training over off-the-job programs. During their initial training, employees are given the freedom to make judgment calls. They have to adhere to a broad set of guidelines rather than follow a strict set of rules. The company adds more context to employees’ perspectives by asking them to think as if they were two levels higher in the organization. Toyota trains employees in problem-solving methods during their first 10 years with the company. Another feature of its people management policies is the role exemplary employees play as mentors. They shoulder the responsibility of developing a cadre of managers who learn through experimentation, and pass on Toyota’s values by sharing personal experiences—a modern-day apprenticeship system. When Toyota evaluates managers, it usually emphasizes process performance and learning over results. The company looks at how managers achieved their goals; how they handled issues; how they fostered organizational skills; and how they developed, motivated, and empowered people.
Open communication - Toyota operates 50 manufacturing facilities outside Japan, sells vehicles in more than 170 countries, and employs close to 300,000 people. Despite its size and reach, Toyota still functions like a small-town company. Its top executives operate on the assumption that “everybody knows everybody else’s business.” Information flows freely up and down the hierarchy and across functional and seniority levels, extending outside the organization to suppliers, customers, and dealers. Typical of traditional Eastern business practice, personal relationships are of primary importance, and Toyota’s networks are human rather than virtual. Employees must cultivate the skill of listening intently to opinions in an open environment. The result is a web of relationships that former executive vice president Yoshimi Inaba calls the “nerve system.” Like the human body’s central nervous system, Toyota transmits information swiftly across the entire organization.
-
The Tata Group, India’s largest conglomerate, holds an annual celebration honoring innovation accomplishments across its sprawling collection of business units, which range from tea to IT consulting to automobiles. In the true spirit of One Tata, Tata InnoVista, the group's flagship innovation recognition programme, invites both Tata employees and partners to showcase their innovations, designs and technologies on a single global platform. The programme evaluated and recognized the best innovations at an annual award function in a democratic fashion, with 75,000+ innovations and a vibrant community of over 1,20,000 innovators in 2022. Started in 2006 with just 101 innovations, Tata InnoVista has grown multifold and received over 15,000 innovations in 2022.
Daring to try.
The awards at Tata InnoVista are mutually exclusive, but collectively exhaustive, thereby providing equal opportunity to every Tata employee to participate. The categories range from ‘New Products and Services,' the most obvious, to 'Core Processes,' a less heard of in corporate innovation. Awards invite innovations in human resources, supply chain, marketing and sustainability. In an increasingly digital landscape, design has taken centre stage to create differentiated experiences, be it in user experience or business processes. The 'Design Honour' category recognizes designs in products, services, processes or workspace. One of the most coveted awards given is called Dare to Try. As the name connotes, it goes to a team that failed, but in an intelligent way. In the company’s words, “Showcasing a growing culture of risk-taking and perseverance across Tata companies… [Dare to Try] recognizes and rewards novel, daring and seriously attempted ideas that did not achieve the desired results.”
Embracing risk and tolerating failure.
Dare to Try is a substantial program, attracting hundreds of applications annually. Promotions for it help nudge innovative behaviors like embracing risk and tolerating failure. The award itself—a trophy—and the high-visibility public summary of the event are artifacts that effectively reinforce Tata’s innovation culture and attempt to overcome a major obstacle to doing something different that creates value. Innovation doesn’t mean mere inventiveness and it isn’t just the purview of engineers and scientists, nor is it limited to new-product development. Processes can be innovated. Marketing approaches can too. Something different can be a big breakthrough, but it can also be an everyday improvement that makes the complicated a bit simpler or the expensive more affordable.
Being consistent.
With the Dare to Try, the Tata Group engages in Organizational Consistency - that is, avoiding falling into the trap of encouraging people to do one thing and punishing them for that behavior or rewarding them for something else. Research into behavioral-change literature and experiences working with dozens of global companies have shown that the most innovative organizations exhibit five key behaviors
Basic assumption or philosophy - They always assume there’s a better way to do things.
Customer focus - They focus on deeply understanding customers’ stated and unstated needs and desires.
Boundary-crossing - They collaborate across and beyond the organization, actively cross-pollinating.
Process-orientation - They recognize that success requires experimentation, rapid iteration, and frequent failure.
People-empowerment - Last, they empower people to take considered risks, voice dissenting opinions, and seek needed resources.
The above seemingly obvious and straightforward behaviors face a whole host of obstacles - lack of time (few executives or organizations have slack capacity to spend on new thinking); perception that doing things differently produces no benefits, just costs (and possibly punishment); lack of skills; and lack of infrastructure for bringing ideas to fruition. However, one of the biggest impediments is organizational inertia. Businesses are “organized to deliver predictable, reliable results—and that’s exactly the problem.” A major paradox managers face is that the systems that enable success with today’s model reinforce behaviors that are inconsistent with discovering tomorrow’s model. Furthermore, organizations contribute negatively by rewarding A, while hoping for B.
Knowing is not enough, we must apply.
Johann Wolfgang von Goethe
Embarking on a quest in pursuit of value places new demands, first and foremost, on the leaders. Top people have to be able to reimagine the company’s place in the world and transform the organization to live up to a more ambitious purpose. This means a fundamental change not just in the executives themselves but also in how they collectively manage the firm’s resources and capabilities and lead the firm. Vast majority of such pursuits run out of steam because the development of leadership is neglected. To keep moving in a desired direction, executives, and managers at all levels, must understand the mindsets and behaviors that will take the company there and then take care to embody them so that employees know how to act in the new context. Any mismatch between the leadership-development and leader’s work with enablers and derailers is bound to impair value generation. Pursuit of value demands development of leaders who can see it through, without which sustained transformation is not possible.
“In many cases, organizations fail to realize the true potential of leadership development. In fact, one estimate found that just 10% of spending on corporate leadership training delivers concrete results.”
The learning
Opposites are complementary.
Niels Bohr
Today, leaders must lead themselves and others in a world that is unlike anything anyone has experienced in their lifetime. We are facing significant and increasingly urgent challenges that are affecting individuals, organisations, governments and society alike. And the only thing that appears to be clear is balancing certain contradictory characteristics that on the surface look paradoxical. A PwC global survey highlighted not just the high importance placed on leaders’ ability to balance paradoxical demands, but also the low confidence in leaders being able to manage the tensions inherent to both elements of the paradox. In the past, it was common to accept, for instance, that leaders could be either great visionaries or great operators. That is no longer true any more. Companies now need their top people to perform both roles—that is, have a clear vision and be able to execute. They’re also expected to be tech-savvy and humanist, politically-savvy and principled, exude confidence and be humble enough to admit mistakes, navigate both global and local and know the best places to expand scale and scope, and honor the traditions of the past and foster innovation, failure, learning and growth for the future.
The most exciting attraction is between two opposites that never meet.
Andy Warhol
Companies that have transformed and positioned themselves for success in this new world have shown that leaders at these companies went beyond relying solely on their areas of strengths. Learning to work with others whose backgrounds and ways of thinking are different from their own, and collaborating to lead their business despite all their differences is how they went about it. The characteristics that leaders considered most important align with the six paradoxes of leadership.
The core self: Humble Hero - The digital age calls for heroic leaders, people who are willing to make bold decisions (like shedding certain business positions or staking out new ones) in times of uncertainty. At the same time leaders need to have the humility to acknowledge that they don’t know it all and to bring on board people with potentially very different skills, backgrounds, and capabilities. They need to be willing to learn from others who may have less leadership tenure, but more relevant insights. They need to be highly inclusive and great listeners to understand not only new technologies, but also new ways of doing things that are different from how they did it before.
The core demands of the role: Strategic Executor - Having clarity about what the new world will look like and what the company’s place in that world is going to be matters. This requires highly strategic leaders, visionaries who can step back from the day to day to see where the world is headed, understand how value can be created in the future in ways that are different from today’s, and stake out a powerful position for the company. However, this isn’t enough. Leaders need to be equally skilled at execution. They need to own the transformation of the company needed to reach the future. They need to be able to translate strategy into specific executional steps and see that execution through to the end. They need to be able to make rapid operational decisions that help deliver the path to the future.
The quest for Presence: Globally-Minded Localist - As technology erases many boundaries and distances, it’s becoming easier now to reach customers on the other side of the globe and to collaborate with people from far apart. Almost by force, companies need to think globally — even if only to gain access to insights and talent to serve local needs. This requires leaders who can think and engage globally, who will expose themselves to new thinking and work with people from all around. At the same time, deep awareness of and responsiveness to the situation and preferences of individual customers and to the local communities and ecosystems in which they operate cannot be overlooked. Customers, partners, and institutions expect companies to be responsive to their specific needs, and leaders will certainly have to adopt a locally conscious mindset.
The quest for Focus: Tech-Savvy Humanist - While in the past, leaders could get away with delegating the company’s technology challenges to their Chief Information or Chief Digital Officer, that approach no longer works. With technology being an essential enabler for almost everything a company does — innovation, product management, operations, sales, customer service, finance, or any other area — every leader needs to understand what technology can do for the company and how. At the same time, they also need to understand and be sensitive to the human dimension. This means understanding how technology impacts people’s lives and how people can adapt to and adopt the many changes that technology will enforce. Engaging people with a huge degree of empathy and authenticity — helping them to embrace the changes and co-own the transformation is central to this.
The quest for Agility: High-integrity politician - In an ecosystem world where companies, institutions, and individuals must collaborate to create value, being able to accrue support, negotiate, form coalitions and partnerships, and overcome resistance is an essential leadership capability. Leaders need to make compromises, be flexible in tweaking their approach and go one step back to be able to move two steps forward. This way of operating, however, can only be successful if leaders establish trust and integrity as the bedrock of all their actions. Effective collaboration within ecosystems can only happen when the parties involved can trust one another. Customers are willing to share privileged insights and participate in ecosystems only when they can trust how their data is used and how they are treated. And integrity will be key for managing the increasing regulatory scrutiny many companies are going to see. In a data-driven economy, integrity and trust are essential foundational conditions. These are values that cannot come from a computer — they require human leaders to make deliberate choices measured by their actions and words.
The quest for Innovation: Traditioned innovator - Company purpose and values have probably never been as important as they are today in a world of constant change and multiple disruptions. In the midst of uncertainty, having clarity of purpose and values helps guide organizations through their path to value creation and relevance. While leaders reimagine their company’s place in the world, they also need to be clear and grounded about who they are as a company. They need to be clear about the organization’s reason for being — its purpose and values — to guide how they will uniquely create value in a way that engages others in their ecosystems and is relevant in the future. At the same time, leaders need to innovate and try out new things — faster than at any time before. They need to have the courage to fail and allow others to fail as well. All this experimentation and innovation, however, must not be unbound — it must happen within the guardrails consistent with the company’s purpose.
“The paradox of paradoxes is that they are material illusions: phantastic objects forged by individual and group desires for conformity and cohesion that are nonetheless invaluable to address.”
