Impact Journal - Change in an Age of Innovation

ISSUE 31

C H A N G E I N A N AG E O F I N N OVAT I O N

The articles in this issue of IMPACT JOURNAL have a consistent theme: leading change.

In the 2015 Impact Executives’ Change Leadership Survey, hundreds of senior executives from around the world confirm that leading change continues to be a key business

challenge. However, Anitha Thornlund, an experienced change leader from Scandinavia, explains how organisations can prepare for a new permanent state of change and still flourish in her article, “Change is here to stay”.

Boards are wrestling with the disruptive effects of change. In fact, e-commerce entrepreneur Niclas Huerlin argues that a lack of board-level engagement in digital strategies present the biggest risk to delivering innovation projects. The influence of digital channels on almost all industries and organisations should provide further motivation for board appointments to include diverse candidates that understand the fast pace of technology change.

If there is one company in recent years that has embraced change and embodies the spirit and values of innovation it is the online music streaming service Spotify. In her interview with Impact Journal, VP of Global HR, Katarina Berg, explains how Spotify succeeded. And in a feature article, business journalist Gavin Hinks argues that having just one big idea is no longer enough to stay ahead in today’s environment of constant change.

With our ‘Impact Journal Insights’ highlighted through the following pages, I hope you enjoy reading these diverse illustrations of how one of 2015’s most pressing challenges – leading change – can be addressed, embraced and optimised.

ISSUE 31

THE JOURNAL FOR CHANGE LEADERS

Christine de LargyManaging Director,Impact Executives - Global Interim [email protected]+44 (0) 20 7314 2003

leading change continues to be a leading business challenge

Editorial Gavin Hinks and Andy BooklessDesign Phil Shakespeare

IMPACT is a publication of Impact Executives, a division of Harvey Nash plc

Impact Executives Head Office110 Bishopsgate, London EC2N 4AY+44 (0)20 7314 2011www.impactexecutives.com

©2015 Harvey Nash plcAll rights reserved. Contents may not be reproduced in whole or in part without the written consent of the publishers

ABOUT IMPACT EXECUTIVESImpact Executives is a leading provider of interim executives to organisations of all sizes around the world. With offices covering the UK, the Nordics, Europe, Asia Pacific and North America, Impact Executives is part of the global recruitment specialist Harvey Nash Group plc. Over the past 20 years it has helped more than 2,000 organisations to engage interim experts at short notice to help them manage periods of growth and transformational change.

WELCOME

Impact Executives / IMPACT / Issue 312

CONTENTS

CHANGE IS HERE TO STAYExperienced change leader, Anitha

Thornlund, explains how organisations can prepare for a new permanent state of change and still flourish. Pages 4 - 5.

IMPACT EXECUTIVES CHANGE SURVEY RESULTS

Results and analysis from the annual Impact Executives Change Survey: a majority of

business leaders are shifting their focus to growth-related endeavors. Pages 12 - 15.

THERE’S NO SUCH THING AS FAILURE, ONLY FEEDBACK

The big problem for companies is making innovation something that happens

continuously. Having just one big idea is not enough. A feature article from business

journalist Gavin Hinks. Pages 18 - 19.

MODEL BUSINESS: WHY BOARDS SHOULD GRASP THE DIGITAL CHALLENGE

E-commerce entrepreneur Niclas Huerlin knows how to turn digital innovation

into business success. He believes a lack of board-level engagement presents the

biggest risk to delivering innovation projects. Pages 8 - 9.

INNOVATION:OUTDOORS AND INDOORS

Ola Klingenborg uses his experience from the world of outdoor advertising to argue that only by empowering staff and embracing

failure can organisations build a truly innovative culture. Pages 6 - 7.

THE SPOTIFY WAYIf there is one company in recent years

that has embodied the spirit and values of innovation it is the online music streaming service Spotify; an interview with Spotify VP of Global HR, Katarina Berg. Pages 10 -11.

THE IMPACT EXECUTIVES REVIEW OF BOOK REVIEWS

What makes a great change leadership book? Our resident book-worms present five top

books for change leaders, as well as a 200-word summary of what their 2,000 pages of text really mean! Pages 16 -17.

Impact Executives / IMPACT / Issue 31 3

PROCESS

Organisational change is unavoidable in a competitive business. But it is the people behind the scenes – the support staff – who are essential in forming corporate cultures which accept that change doesn’t just end with completion of the latest project. Indeed, according to Anitha Thornlund, an experienced executive with a track record that includes time heading HR, legal, credit and communications departments at some of the world’s biggest consumer brands, support roles are critical in reinforcing the message that change is good and should be a permanent feature of corporate life.

“It’s important to see how important the administrative functions are in change. People forget that when they talk about strategic change. The ‘stoppers’ of change often sit in these kinds of role – in communications, in HR, even legal can be a blocker.”

She adds: “These stoppers can obstruct engagement with change among staff if they don’t believe in it and fail to put processes in place to support it.

“In the era we’re in you have to understand the mechanisms for driving change, the processes employees must go through to actually get change moving and implemented. And this you do, for example, from HR or communications.”

Anitha speaks from experience. With a forte for managing change in teams or organisations, she now takes on interim placements but her CV reveals a record of leading support services or business transformation at a raft of big name companies. Anitha has served at brewers Carlsberg, Sweden, where she was head of legal and compliance followed by a stint as HR and communications director. This followed time as general counsel EMEA/Asia and then head of global sales support at Lawson Software. Prior to that was a period heading the legal department at Coca-Cola Nordic and Microsoft Nordic. More recently Anitha was CEO of an international law firm in Moscow, leading business transformation. Currently she is a interim HR /IT manager at Svensk Handel (the Swedish Trade Federation) and temporary CEO of one of its affiliates.

Her experience has left Anitha with a passion for “goals-driven” change, and an abiding belief in back-office services playing a significant role in underpinning strategic change.

IMPACT JOURNAL SAYS:

CHANGE ISHERE TO STAY

Anitha Thornlund has held top-level legal and compliance roles at Svensk Handel (the Swedish Trade Federation), Carlsberg Sweden, Coca-Cola Nordic and Microsoft Nordic. She explains how organisations can prepare for a new permanent state of change and still flourish.


PROCESS

Interims offer a 'neutral' set of hands to manage change

In tandem with that passion comes a belief in the inherent advantage that an interim has when brought in to manage change alongside a reform-minded CEO. Interims, she says, are “healthy” and “clean”. Unaffected by an organisation’s recent past, and its entrenched positions, they are able to assume the role of “neutrals” to develop change objectively (a distinct advantage when helping craft change programmes that will include newly defined goals and KPIs for everyone from senior management to employees at the sharp end of service delivery). According to Anitha, goals and KPIs move an organisation forward in a single direction and provide a transparent process. It’s important that they come from a part of the company that is untainted by bias.

“If you come from the support function you are working with everyone and that’s why you have such a broad view of all delivery departments,” she says.

“You can help the CEO to motivate the leadership team, and you can sell change to them.”

Often the interim can offer more value to a smaller organisation where processes and support services are less well developed than in a large enterprise with a multifaceted headquarters

creating vision and policy centrally.“In a small organisation you can create

change, visions and goals from scratch, together with the CEO,” says Anitha. “You can be the strategic eye in the room.”

That strategic advantage places the onus on support services gaining a full understanding of their organisation’s goals and planting them firmly at the core of their own policies and processes. Anitha observes that roadblocks can be formed when support departments become fixated by the latest models, or ideas, about how their departments should run, without considering how they serve wider business aims.

“If you are doing anything that doesn’t help the business deliver on its goals, then you shouldn’t be doing it,” Anitha insists.

“It doesn’t matter what kind of change you’re in. The only thing you have to understand is where the business is going and the goals that need to be reached. Then you have to help the CEO take it there.”

IMPACT JOURNAL SAYS: Effective change management requires leadership; the CEO must lead by example when adapting to change.

But while Anitha’s role is to implement immediate change requirements, she emphasises the broader strategic need to shepherd organisations and their staff to an acceptance of change as an ever-present part of their working lives, especially at a time when frenetic technological innovation means companies must adapt to keep pace with competitors and new trends. Mindsets, Anitha argues, must be moved from “conserving” old ways of working to one of delivering on goals. If that can be achieved, change will be accepted as “good”, she says.

“The first thing people ask when you come in as someone who will help drive change is, ‘So when will we be ready?’

“The answer you have to give is that they will be working with change for ever because they will be in an organisation that works with goals, and the goals may be totally different next year.

“You have to build a mindset that the world is changing at a fast pace, and you have to keep up to be relevant. To do that you need to have change all the time.”

IMPACT JOURNAL SAYS: Organisations must be prepared to be in a permanent state of change. Change is now business as usual.


INNOVATION: OUTDOORS AND INDOORSOla Klingenborg is the regional vice president and CEO Sweden of Clear Channel, the international outdoor advertising specialists. He outlines to Impact Journal how empowering staff can help organisations build a truly innovative culture.

IMPACTJOURNAL SAYS:

Building an effective innovation culture rests on leaders with the courage to take risk knowing at

least 50% won’t succeed.

EMPOWERMENT


For Ola Klingenborg innovation starts with a definition. “Innovation is the process whereby we satisfy a new and emerging client need. One that they didn’t know they had,” says Ola Klingenborg.

He should know. Clear Channel works in the world of outdoor advertising, a sector once dominated by print-based billboard posters. Faced by increasing competition for advertising spend, Clear Channel had to innovate. The business now boasts an array of eye-catching digital displays delivering advertising messages in high definition and video, including the world’s largest outdoor screen revealed during November 2014 in Times Square, New York.

The innovation doesn’t stop with big displays. Clear Channel has pioneered interactive advertising with Connect, a product that allows smartphone users to link directly with the brands they love through outdoor wi-fi connections. This development means that outdoor, no matter how advanced its screens, is no longer just about reaching a mass audience with stunning images. It can now provide direct engagement with customers. Even the giant screen in Times Square is interactive.

“It is transformative,” says Ola. “Our ability to generate mobile search and traffic at online stores through our interactive screens means that we believe the time of outdoor is really now. We can do both engagement and reach.”

But digital innovation is not just about the products. It’s also about work processes for Clear Channel’s staff. All planning in Clear Channel’s back office has been digitalised so the business can produce highly targeted campaigns across its assets at an accelerated pace.

“Innovation doesn’t have to be a breakthrough product. For us it’s also about how we fine-

tune what we do. It’s about how we work with processes. How we make sure we deliver to clients the things they need in an efficient way, so that we can spend more of our resources meeting and talking to them,” explains Ola.

A KPI close to the heart of Clear Channel is, therefore, the time that staff spend in direct contact with clients. Ola insists this is one of his most significant indications of innovation having an effect on the business. “Innovation that leads to more client interaction, or happier clients. That’s what we are looking for,” he says. The measure is supplemented by a client satisfaction survey asking

if Clear Channel’s service remains relevant, and a regular study asking employees if they believe they are working on new things.

“If we stagnate and stick to what we’ve always done, it’s impossible to keep the very best talent,” says Ola.

Staff figure heavily in Ola’s view of innovation. The organisation is

decentralised and workers are empowered to make decisions which, Ola says, means “pushing responsibility down in the organisation”. But an innovative culture, he insists, starts with the right executives who come to know clients in depth.

“The executives really have to understand the clients, it cannot be something delegated to sales. All innovation has to start and end with a client need.

“The other important thing is courage to take risks. When you are dealing with innovation you need to know that half, or more, of all projects won’t succeed. But that’s the nature of things. You have to accept it’s not a failure, it’s an opportunity to learn. That’s a very different mindset from a production environment.

“Then it’s about inspiring. If you want people to innovate, you need to be able to inspire them to think about the future and what the client is dreaming about. It’s really important.”

Innovative organisations empower staff to make decisions

EMPOWERMENT


DIGITAL CHANGE

Given the ubiquity of the internet it comes as a jolt to learn that not all business takes place online. Indeed, as one of Sweden’s veteran e-commerce entrepreneurs, Niclas Huerlin, points out, around 90 per cent of all sales remain “physical”. That means there is still room for development in most business sectors, though sometimes the incentive may be

slow to emerge.“As a general view, nothing is better

than it has to be,” says Niclas, suggesting that without competitive pressure businesses in many verticals fail to invest in digital trading.

Even so, the switch to e-commerce is happening at a rapid pace. So much so that digital trading has rapidly evolved from e-commerce to m-commerce (smartphones) to an omni-commerce approach in which businesses use multiple channels to serve customers’ needs. The urgency to master digital

trading means it has to be on the agenda at board level and mould business models for the future.

“When a customer wants to buy something the decision starts online,” says Niclas. “And in many cases it actually ends up offline. But if a business doesn’t exist online, or have a good presence there, you won’t be getting those sales.”

MODEL BUSINESS: WHY BOARDS SHOULD GRASP THE DIGITAL CHALLENGENiclas Huerlin is a highly regarded e-commerce executive, with more than 20 years experience in a range of high profile digital Nordic businesses. He believes a lack of board-level engagement presents the biggest risk to delivering digital innovation projects.

Digital innovation is a strategic issue and demands board-level engagement


DIGITAL CHANGE

For Niclas this is a broad question about mature organisations reacting to accelerated change among competitors and markets. Change, according to Niclas, can be hard to make, especially if a company is heavily invested in physical infrastructure, such as a chain of stores.

The biggest impediment to transformation, Niclas says, is being “strategic” and at boardroom level, where he says there is a shortage of e-commerce competence.

Resolving an internet business strategy therefore has to take place at the most senior levels of management.

“It has to be at board level,” says Niclas, “because all of those investments are strategic, long-term and signed off by the board. If boards don’t have the competence to see where this is going, they could jeopardise the whole company.

“The knowledge and operational skills are fairly easy to solve on a company level. You hire a person, you buy a system. But that doesn’t solve the problem. The whole business model has to be solved. And that can’t be done by a young person in the marketing department – it’s at the wrong level.”

IMPACT JOURNAL SAYS: When a customer wants to buy something, whether B2B or B2C, the decision starts online.

With so much trade still to convert to e-commerce, Niclas believes there is a bright future and the West must grasp the opportunity it offers to become digital knowledge economies. Smartphones will become the “hubs” for wearable technology, he believes, as well as providing the infrastructure for a host of new products that can be commercialised digitally. E-commerce is increasingly global, he says, insisting that online start-ups must think of themselves selling to the world, not just local markets.

But he also believes that people working in e-commerce will have to acquire patience. “The young managers of today are native in digital. The concept of not having an online connection is incomprehensible to them.

“But one thing that needs to improve is that they expect everything to happen now. That means a lot of very good people and good ideas are being wasted because people cannot wait. They give it six months, but in my opinion it takes five years to build something. If you are not there for the whole ride you will never reap the benefits.”

Digital ventures can be instantly global, but they still take time to mature

IMPACT JOURNAL SAYS: With the pace of technology change becoming ever-more rapid there is a greater urgency to understand and commercialise digital platforms.

Niclas has watched and influenced developments in online business for the past 20 years. His career has included time as European director of business development at Microwarehouse, an online retailer of computer equipment, and a stint as CEO of inWarehouse, the second largest digital retailer in Sweden. He has also been a board member at Familjeapoteket, Sweden’s first online pharmacy. He spent four years running an e-commerce module for Hyper Island, a private college teaching digital business in Sweden, the USA, UK and Singapore, and is the founder of Roombler, a provider of cloud-based hotel management software. His latest venture is as senior partner at Enferno, a provider of back-end platforms for webshop developers.

But if Niclas is serious about anything it is the belief that e-commerce is about more than taking orders on the internet. He reels off an impressive list of Nordic players – in music Spotify, among telcos Rebtel and Skype, in payments Klarna and in gaming Mojang, the producer of Minecraft – and points out that what they mostly have in common is being “disruptive” in traditional markets. They prove that “you can reinvent a traditional business by addressing it in a very different way – digitalisation is a very important part of that,” he says.

All these companies emerged as start-ups run by talented people that came across investment capital at a critical stage in their development, he observes. It begs the question whether existing market players can adjust to make advances in digital markets.


CULTURE

THE SPOTIFY

WAYInterview with Katarina Berg, Spotify

Words: Gavin Hinks

If there is one company in recent years that has embodied the spirit and values of innovation it is the online music streaming service Spotify. The brainchild of Swedish founders, Spotify has been a revolution in the music industry.

Launched in 2008, the company now has more than 12.5 million paying subscribers but more than 50 million active users across 58 countries. It has gone from 29 employees to around 1,500 around the world today, including staff based at offices in Sweden, London and New York.

With such stellar growth, recruiting the right staff and maintaining the company’s innovative culture has been one of Spotify’s key objectives and a task handed at the end of 2013 to Katarina Berg, who took over as the company’s VP of global HR. Impact Journal spoke to Katarina about finding the right people and maintaining an innovation culture.


CULTURE

Impact Journal (IJ): Tell us about the core values at Spotify and the objectives that drive recruitment.Katarina Berg (KB): Recruitment at Spotify is a journey and we will probably never reach our final destination. Talent acquisition in a highly competitive market, a digital and 24/7 connected world, means that the core values and objectives that drive our Talent Intelligence (data gathering for potential Spotify recruits) are adapted and tweaked constantly. We need to move fast and find the right talent – speed and quality are at a premium. With this in mind the main objective has been to provide the organisation with the right ‘band members’ (employees) as well as a tight cultural fit. We believe in providing a forward-looking and personal experience and to do this our way – the Spotify way.

IJ: What are the qualities you look for when seeking leaders and executives in an organisation like Spotify?KB: We look for strategic and disruptive thinkers, people with proven leadership success at other companies. Preferably they have experience in high-growth situations and understand environments that are fluid and flexible. They must be open to change.

Since our management service-level agreement is important to us we search for leaders and executives that can deliver on, and embrace, our leadership criteria.

Furthermore, we look for operational excellence, subject matter expertise (such as Agile management skills), the ability to adapt, an understanding of streaming and digital, and with a creative eye. Diversity of all kinds is key to our success.

IJ: So, how do leaders influence Spotify’s culture, especially innovation?KB: Innovation is in our DNA. It can’t just be communicated. It has to be demonstrated. Whether it be by product changes, our Hack Weeks (dedicated time set aside twice a year for Spotify teams to explore new ideas), or process developments. And the leadership have to be the ones in the forefront, actively supporting these things.

Great ideas and innovation come from everywhere. Leadership should set the tone of the organisation and the framework for teams to thrive. We focus on the 70/20/10 framework for learning and development.

IJ: Can a company hire its way to innovation?KB: If a company fosters an environment of innovation, even the least innovative people can soon find themselves transformed. We have non-tech people participate in Hack Week. We think innovatively not only in technology, but also in how we do business, how we operate, how we support our staff.

The term culture of innovation does not fully jibe with me. A culture of innovation has almost

no meaning unless you put principles in place to support the culture and enable, learn and encourage both success and failure. Action must be taken.

We need to encourage and enable people to make bold decisions and support as well as celebrate success and failure. You can create a framework, priorities, and strategies for people to thrive in and drive innovation.

IJ: Spotify has grown so fast – how does it keep the innovation culture intact?KB: It goes back to a non-negotiable culture. This is who we are. It’s how we operate. If we promote innovation in all the ways we work, it doesn’t matter how many people you have. Even those hired specifically to develop process, procedure and framework... they do so in a spirit of innovation.

We work to ‘hit, re-hit and remind’ with our core messages. We also give everyone a voice, such as in our Global Passion Tour (just ended) in which we invited everyone to redefine our values and to spend time together connecting to our Vision and Mission.

In addition, our Town Hall meetings help us stay on track. They take place every third week and this is when all staff are invited to a live meeting with our CEO Daniel Ek and have a chance to take part in a Q&A with our leadership team. These are just a few examples of how we invest in our culture and internal communication.

IJ: Do you look for innovation as a quality in the leadership of all departments?KB: Since innovation can be defined in many ways it is a tricky question. But to give you an answer, yes. We look for experience in specific fields, but we look for people who are problem-solvers, change-makers who can adapt and develop. We look for people driven by results, who think creatively to achieve goals and push the limits in their industries.

IJ: Spotify now has staff across the world. Has that complicated the effort to maintain an innovative culture?KB: The key is not to force the exact same culture on every country or region. There is a ‘Spotify way’... a look, a feel, a DNA. And that is a global thing. But we allow for autonomy and individuality in each of our offices and regions as well.

Culture is at the heart of successful innovation

Innovative businesses recruit 'disruptive thinkers'


Over the past three years Impact Executives have tracked the leading business challenges as articulated by hundreds of senior executives from around the world.

The lack of visibility for future demand has consistently topped the list of worries, however, for the first time in three years it does not occupy the top spot. Senior executives today are most concerned about the squeeze on profit margin (18 per cent) compared to 17 per cent who cite future visibility.

Also weighing more heavily on the mind of business leaders in 2015 is an increasing regulatory burden and ongoing economic

uncertainty, both likely to be seen as threats to profitability.

With external factors having a greater impact on 2015 concerns, those that can be managed internally – such as cost over-runs, response to global and local competitors, and skills shortages – are all receding.

Business leaders seem to have more faith in their own ability to overcome challenges they can manage, such as cost control, but are increasingly pessimistic about the impact of external challenges not of their making, such as geo-political decisions that are impacting economic stability or regulatory control.

SURVEY

What is your single biggest challenge?

TOP BUSINESS CHALLENGES FOR THE YEAR AHEAD

2012

2014

2013

18%

16%17% 17% 17%

12% 12%

15%16%

8% 8% 8% 8% 8%9%

7% 7% 7%6%

5%4% 4%

2% 2% 2%3%

11%10%

5%

Margin pressure

Future visibility

Skills shortages

Economic uncertainty

Cost concerns

International competitors

Regulatory burden

Local competitors

Acquisitions Poor productivity


GROWTH ADMIDST CONSTANT CHANGEDespite concerns about profit margin durability and worsening global economic uncertainty, a growing majority of business leaders are shifting their focus to growth related endeavors, up by 10 per cent in the past three years.

During the same period, consistently high levels of instability have been experienced by more than eight in ten senior executives, as whole economic regions shift restlessly between recessionary and growth environments.

Managing change appears to be the constant imperative in the modern business atmosphere.

SURVEY

Comparing experience of growth strategies and managing change

Shift to growth

Experiencing more change

86%

63%

87%

53%

84%

62%

2014 2013 2012

Successful change is a result of clarity of purpose and determination to succeed.Paul Stevens, COO, RedPixie


SEARCHING FOR PROJECT SUCCESSEffectively delivering projects within an increasingly turbulent economic environment has become more challenging in recent years, but remains a critical component of business success. As such, change management skills are more critical than ever, with organisations using ‘project success’ as an important benchmark to identify future leaders.

However, the reality is that the proportion of projects being successfully delivered is falling.

While almost two thirds of business leaders (63 per cent) experienced project success in 2013, this had dropped to just over half (56 per cent) in 2014, crashing 7 per cent in just 12 months.

Four in ten senior executives (42 per cent) are now achieving project success in fewer than half of their initiatives. Yet only 26 per cent will admit to project failure. These results suggest that, for a significant 16 per cent of business leaders, project failure is not being recognised or addressed.

ENGAGE WITH STAKEHOLDERSIneffective engagement of stakeholders has been a top reason for project failure since tracking began in 2012.

However, more than half of all business leaders have recognised this and are focused on advancing engagement skills; 51 per cent will invest to further engagement skills this year.

Poor scoping is another contributor to project failure, yet only four in ten (38 per cent) believe strategic thinking can help improve scoping success.

Even fewer (25 per cent) believe planning and organisation skills can help improve project success.

The responses by business leaders to ensuring project success appear contradictory. While many recognise the root causes of project failure too few are investing in change management skills that can improve the likelihood of success.

Those who are able to take action to improve the probability of project success will be better positioned to deliver business value in what is expected to be an increasingly uncertain economic environment.

SURVEY

Project achieved most / all original aims and provided good ROI

Unrealistic timings

Stakeholders not engaged effectively

Poor initial scoping

58% 57%

39%

54%

66%

40%

54%

64%

39%

2014 2013 2012

Top reasons for project failure

56%

2014

63%

2013


OPTIMISTIC FOR AN INNOVATION FUTUREDespite the challenges, business leaders remain an optimistic group on the whole. Whilst acknowledging increasing levels of change and project risk to contend with, senior executives remain positive about 2015.

A large majority (65 per cent) foresee better trading conditions during the year ahead, the same proportion as in previous years. A small minority (9 per cent) predict worsening circumstances, but this has dropped since 2013.

DELIVERING INNOVATIONIntegrating an innovation culture is seen as the best method for creating innovation success. However, embedding an organisation-wide culture can take time and patience, both of which are often in short supply when business change is constant. Establishing a formal system for creative ideas or defining innovation requirements in the job of key staff can be set up quicker, but more than one in five business leaders (21 per cent) are placing their faith in giving staff time off to pursue their own innovation projects, anticipating the external perspective gained during this activity will add value to their organisation.

SURVEY

2014 Business Outlook (next 12 months) 2013 Business Outlook (next 12 months)

Better65%

Same26%

Worse9%

Better65%

Same24%

Worse11%

Staff given time forown innovation projects

Innovation in keystaff job role

Formal systemfor ideas

Pursue innovationculture

72%

30% 26%21%

Favoured strategies for delivering innovation success in 2015


BOOK REVIEW

THE BOOK REVIEW OF BOOK REVIEWS

What makes a great change leadership book? Ever since 2007, when Impact Executives started reviewing and summarising key business publications for its clients and interim managers, we have been asking ourselves that very

question. Surprisingly there is no simple answer. In fact many books on change leadership simply aren’t good at all – filled with jargon, generic language and written by authors seemingly more interested in word count than content. But every now and then certain publications do stand out. So here we present our top five books for change leaders, as well as a 200-word summary of what their 2,000 pages of text really mean. If you are to read just one business publication this year, make it this article!

IMPACT JOURNAL INSIGHT – WHAT WE THINKThe thread that runs through all these excellent books binds together the idea that effective leadership and planning

can balance the turbulence that environmental change brings at every stage of business development.

As Collins says, senior executives feel calmer today managing turbulence: “Not because we believe life will magically become stable and predictable; if anything the forces of complexity, globalisation and technology are accelerating change and increasing volatility. We feel calm because we have increased understanding of what it takes to survive,

navigate and prevail. We are much better prepared for what we cannot possibly predict.”

The authors of these books highlight many interesting examples of business leaders overcoming challenges, managing monumental change and still delivering success. Partly they win because they have had some personal

luck but then utilised their skill to take advantage of an opportunity, but just as often victory is achieved through a well-organised team, effectively led, applying a new perspective to overcome a stubborn problem.

Impact Executives has seen this approach work in many client organisations, delivering results time and again. When interim executives enter an organisation and review a challenging situation in flux, their fresh eyes are often able to

help develop an immediate, clear and motivating action plan.


BOOK REVIEW

The Heart of Changeby John P. Kotter and Dan S. Cohen

SynopsisReal-life stories of how people change their organisations.

Best Bit Most people do not handle change well, mainly because they’ve had little exposure to successful transformations – clear and strong leadership is required to deliver effective change.

Nudgeby University of Chicago academics Richard H. Thaler and Cass R. Sunstein

SynopsisImproving decisions about health, wealth and happiness in business and at home.

Best Bit: The authors argue that effecting a change in behaviour depends on a coordinated effort by managers influencing an often invisible myriad of stimuli to affect how employees embrace change.

Great by Choiceby Jim Collins

Synopsis: Explores why some companies thrive in chaos and uncertainty and others don’t.

Best Bit: The dominant pattern of history isn’t stability, but instability and disruption. Therefore, managing the tension between consistency and change is one of the great challenges for any enterprise.

The Success Equation: Untangling skill and luckby Michael J. Mauboussin

Synopsis: Investigating how much skill or luck – and usually a combination of both – contribute to results.

Best Bit: How one of the greatest computer programmers of all time, Gary Kildall, failed to capitalise on an offer by IBM in the 1980s, opening the door to ‘second choice’ Bill Gates to introduce his Microsoft platform.

Switch – How to change things when change is hardby Chip and Dan Heath

SynopsisIf people have the ability to think logically, why do we find changing for the better so hard?

Best Bit: Based on psychologist Jonathan Haidt’s analogy ‘direct the rider’ – give very specific goals that people can achieve, like ‘drink low fat milk’ rather than ‘eat healthily’.


EXPERIMENTATION

Managing innovation is the talk of academics and business leaders alike. As technology develops at an accelerated pace, and digital businesses like Facebook, Google or

Spotify dominate headlines, it’s no wonder that corporate leaders across the world ask where the next innovation is coming from to secure competitive advantage.

In many places innovation is no longer the preserve of techies in the lab; it has become the focus for senior staff developing strategy. A study from global professional services firm PwC in 2013 found that 79 per cent of the most innovative companies have well-defined innovation strategies while a huge 93 per cent of chief executives believe organic growth through innovation would drive revenues.

These insights raise two questions: how is innovation achieved and are there enough leaders around to do it?

The answer to how innovation is achieved is the subject of endless discussion but one of the latest additions to the debate comes in a book published last year, The Innovator’s Method, from Nathan Furr and Jeff Dyer, both of Brigham Young University. The pair conclude that the way to “sustainable innovation” is through a four-step process: generate insight of a customer’s problem; deeply understand it; rapidly develop a variety of prototype solutions; only build the business model once you know what pleases the customer.

Through this process Furr and Dyer conclude that the leader’s role in an innovative company shifts to be one of coach and facilitator of quick and low-cost experiments.

“To apply the innovator’s method requires a new style of leadership. In the age of uncertainty, leaders are no longer chief decision-makers. Instead, they’re chief experimenters who formulate hypotheses with their team, conduct experiments, and let the data speak for themselves,” they write.

THERE’S NO SUCH THING AS FAILURE, ONLY FEEDBACKWords: Gavin Hinks


EXPERIMENTATION

TALENTOf course, this begs a question about the kind of personal qualities a business leader brings to the process. One of the many complaints is that there are not enough people who can lead in a high-tech environment, a domain driven by innovation. When global market researchers GfK surveyed business leaders in London’s Tech City (an area promoted by the UK government as Britain’s nascent equivalent to Silicon Valley) they were told by one e-commerce entrepreneur: “We’ve found sourcing world-class C-level hires consistently challenging and have had to resort to relocating people from the USA.”

Corporate leaders are not unaware of the problem. In another study PwC finds that chief executives are taking “personal responsibility” for innovation as it becomes “an ever more vital element of business survival and success”. The firm’s report reveals that, among CEOs, “strong visionary business leadership” and having the right culture to promote innovation are the most important ingredients for successful innovation. Elsewhere though, people are asking where the leaders are in the tech sector or, at least, why there seems to be a shortage?

Robert M Fulmer and Byron Hanson of Duke Corporate Education asked themselves the question and concluded that part of the problem was personality types. Techies love data and detail and are drawn more to designing new products than they are to managing people in teams.

DESIGNING FOR DELIGHTFor Furr and Dyer, the software developer Intuit is a good example of a company moving to integrate innovation into company processes and leadership. By 2008, Intuit was struggling and looking carefully at what was going wrong. Execution, it found, was subordinating innovation and changes were required. It borrowed from design thinking and developed a training programme dubbed Design for Delight (D4D) with three principles: gain deep understanding of customers; generate many potential solutions before narrowing down to successful options; experiment rapidly and seek feedback early. Intuit organised forums for thousands of employees to learn the principles, appointed more than 200 D4D coaches (or catalysts, as they became known) and assigned them to projects. Despite the introduction of the coaches, Intuit found it needed something else and turned to “lean experimentation” ideas, outlined by the writers Eric Ries and Steve Blank, and began a series of “lean start-up” workshops in which employees tackled a customer problem and moved to experimenting with potential solutions in two days.

“As managers were adopting ideas from design thinking and lean start-up, they were learning to systematically experiment their way to success. Moreover, they began to create start-up teams throughout the company that used a similar process to that used by start-ups to bring new products to market,” write Furr and Dyer.

PARADIGMS AND PRIORITIESThe big problem for companies is making innovation something that happens on a regular basis. Having just one big idea is not enough. Competitors soon catch up. But how do you make the inspiration come when you want it? Understanding client needs, as Ola Klingenborg makes so plain in his interview here, is crucial. Intuit’s approach, cited by Furr and Dyer, places the same element at the heart of efforts to innovate. But it’s also worth noting that Intuit does not appear to be trying to reinvent the wheel each time it innovates. The word "innovation" here means addressing client problems. That could mean incremental improvements to an existing product, not necessarily new paradigms.

But there is a human element to innovation: personal qualities in leaders including, as Klingenborg puts it, having the courage to take risks and getting beyond narrow technical priorities. For data-driven technical staff that may be an issue. Intuit’s D4D solution aims to create a culture in which people draw on those qualities to innovate.

IMPACT JOURNAL SAYS: The personal qualities of a business leader make a transformational difference to an organisation’s ability to innovate.

IMPACT JOURNAL SAYS: Chief executives need to regard themselves as chief experimenters.

IMPACT JOURNAL SAYS: Innovation goals need to address both the long-term strategic objectives of your organisation and the short-term imperative of solving your client’s problems.


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Impact Journal - Change in an Age of Innovation

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