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Archive for March, 2013

Don’t think about innovation like a CEO

leadership & innovation

Short-term thinking by business leaders is the enemy of innovation and competitiveness.

American business leaders have a perception problem about how innovative we really are. Harsher critics might call it denial.

Recently, Forbes ran an eye-opening article on American competitiveness that is must-reading for every CEO and front line marketer in business today. It is a detailed assessment of a Harvard Business Review study that explores the causes behind lagging growth in business and job creation in the U.S. over the past decade.

Two findings from the study point to startling disconnects between business leaders’ perceptions and reality. While businesses are not competing globally:

  • Leaders rate management as both strong and improving
  • Leaders rate innovation and entrepreneurship as strong and improving

What do leaders think are the reasons we don’t compete or innovate as we should?

The most common problems business leaders cite are government regulatory policies, tax and fiscal policies and an inadequate talent pool. These are all factors, but the researchers identify a root cause leaders will not like hearing: short-term thinking by leadership.

You are what you measure

The study tracks how corporate governance began to change in the 1980s. In response to globalization, managers adopted a mindset focused on stock price and short-term growth and profitability. Over time, innovation came to be about achieving greater efficiencies and cost reductions more than creating value to customers.

At the same time, business schools reinforced this mindset. By defining profitability in terms of ratios to be measured across industries, they trained a generation of MBAs to measure short-term performance as the gauge for success.

As a result, business leaders define innovation as incremental process improvements rather than breakthrough product ideas. That is how they can determine they are strong innovators when their companies are not competitive.

Think like an innovator

To revive innovation in business, leaders have to change the way they think. Beyond resetting priorities to more long-term objectives, they need to start using the other side of their brain.

Singular focus on productivity and profitability metrics give a limited perspective of your business. Creative inspiration does not fall out of a spreadsheet or accounting ledger. 3M learned this the hard way. In the last decade, it applied Six Sigma principles for manufacturing to the innovation process, and severely stifled new product development.

Analysis has its place, but innovative ideas come from the side of the brain where you explore, experiment and imagine.

For many, this is a new approach to problem solving.

leadership & innovative thinking

Research by psychologists Joy Paul Guildford and E. Paul Torrance has identified two primary thought processes we use for solving problems: convergent and divergent thinking.

In business, we are most familiar with convergent thinking which is analytical and logical. It is characterized by arriving at the one right solution. Accountants and business analysts excel at this kind of thinking.

The other, divergent thinking is flexible, intuitive and based on associations. It is characterized by arriving at multiple, unique solutions. Artists and inventors excel at divergent thinking. This is where we get innovative ideas.

Research shows remarkably few people engage in divergent thinking. This has to change starting with the C-suite.

Leaders have to lead

This shortsighted focus is nothing short of a leadership crisis. As the proverb says, “Where there is no vision, the people perish.”

To bring about a revival of business growth and competitiveness, leaders must make a dramatic shift away from the short-term vision that has dominated the past 20 years. Awareness of the problem is the first step. But leaders must lead change.

The starting point is a renewed vision for serving customers, workers and shareholders. That means putting the wellbeing of the business ahead of their short-term rewards. Leaders must challenge the status quo of compensation that drives their behavior.

The Forbes article provides a stark account of this situation:

In his book, Fixing the Game, Roger Martin notes that between 1960 and 1980, CEO compensation per dollar of net income earned for the 365 biggest publicly traded American companies fell by 33 percent. CEOs earned more for their shareholders for steadily less compensation. By contrast, in the decade from 1980 to 1990, CEO compensation per dollar of net earnings produced doubled. From 1990 to 2000 it quadrupled.

With incentives based on short term value and stock price, executives earned more while shareholders earned less and companies innovated less. Leaders have to turn this around. They have to start thinking – and leading differently.

We need from them a new vision of success and innovation, and how to achieve it.

Without it, the people – workers, shareholders and society at large – as well as the economy will perish.

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The paradox of scarcity on the social Web

social networking-scarcity

When is scarcity the wrong persuasion tactic for social networking?

Maybe it’s more a paradigm shift than a paradox, but scarcity as a persuasion technique seems to have lost some of its luster in our social networking age.

At least where exclusivity in wielding social influence is concerned.

This observation began with something I experienced on Twitter the other day.

I was checking out new followers to decide if I should follow back. I was pleased to see one of them is a former associate who I haven’t heard from in a long time. What a great opportunity to reconnect!

That opportunity was thwarted when I tried to follow back. I was notified that the account is locked, the tweets are protected, and my follow is pending approval. I’ll take a pass.

It seems to me this approach is anti-social. It runs counter to the fundamental idea behind social networking. The message it sends is “I don’t trust you and what I have to share is so awesome, you have to qualify to see it.”

That might work for selling luxury items, but it doesn’t make sense on social networks.

What does work on social media is accessibility, sharing, connecting and responding. Trust and generosity are the underlying values enabling that.

RELATED: Going the extra mile activates the butterfly effect

The paradox of scarcity is that its power lies in limiting those things in order to create desire for them.

I have an ongoing story arc in my own home that illustrates this paradox.

A tale of two kitties and social influence

social networking - cats

Bela & Uma, social influence coaches

I have two feline housemates that allow me to share living space with them. If you are a cat owner, you know what I mean.

One is a Russian Blue named Bela. A characteristic of that breed is they are very shy, untrusting and only bond with one human. I didn’t learn this until I brought him home.

I’ve had him more than 10 years and most of my friends and family have never seen him. At the first sign of a stranger he hides in the basement. My mom refers to him as my imaginary cat, since she’s come to doubt his existence.

Because of his limited access, he has succeeded in generating curiosity and desire to see him and experience his presence. He is anti-social, but esteemed from a distance.

My other cat is a Siamese named Uma. A characteristic of that breed is they are very talkative and social. She makes her presence known in every situation, constantly underfoot, demanding attention and engaging in every conversation despite the language barrier.

Because she has greater trust, she is accessible to everybody. She connects with a wide variety of people in far greater numbers than Bela.

Social success belongs to connectors

Connectors are critical to spreading word-of-mouth epidemics on social networks. Malcolm Gladwell describes them as:

  • Gregarious and intensely social with a knack for making friends
  • Knowing a lot of people
  • Knowing a variety of people from different worlds and subcultures

Bela, with his limited access, will never have the social influence or reach Uma does.

Another example of this is Amanda Palmer, performance artist, musician and social media innovator. In a recent TED Talk she told her story of building a tribe through connection and extraordinary trust. It’s a great message. What do you think?

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