Creating Fresh Growth within CCC
In May of 2005, I was flying to New York to help lead the art portion of the Tribeca Summer Project (a pioneer effort to be and make disciples of Christ through the integration of art, art making and faith). In the airport I picked up the May 2005 issue of Harvard Business Review (http://hbr.org).
I found two articles that address creating change (fresh growth) within an established organization.
see:
hbr.org
May 2005
pg. 58 "Building Breakthrough Businesses Within Established Organizations"
pg. 73 "Your Companies Secret Change Agents"
The first article ("Building...") examined what it takes for new initiatives to become effective within established organizations. They called the hypothetical new initiative "NewCo" and the established business "CoreCo" for the purpose of the study.
Important Notes from "Building Breakthough Businesses Within Established Organizations" :
"I came to the conclusion long ago that limits to innovation have less to do with technology or creativity than organizational agility. Inspired individuals can only do so much." -Ray Stata, cofounder of Analog Devices, $2 bil. semiconductor co.
"Emphasis must shift from ideas to execution and from leadership excellence to organizational excellence" pg 58.
Three components for success: forgetting. borrowing. learning.
Forget.
Change Behavior
Forget CoreCo's model
who do we serve?what do we offer?how do we deliver?
Because of this a different set of skills and competencies are most valuable.
+++Too Often NewCo will talk like New Co but act like CoreCo.
"Many firms make the mistake of duplicating CoreCo's organizational design when they create NewCo. Doing so minimizes hassels, since making NewCo an exception to the rule about things such as hiring, compensation, and status can lead to resistance, even resentment , within CoreCo. But the only way to erase memory is to overhaul NewCo's organizational design."
How to Forget:
Hire Outsiders in Key Roles. Outsiders challenge institutional memory
Dont Assign status based on size. NewCo. should report at least one level above CoreCo in order to reduce the pressures on NewCo for short trem results and to ensure tha CoreCo does not hoard resources.
Rearrange the moving parts. NewCo must reconsider how major business functions such as marketing and product developmetn interact. Established patterns are usually incompatible with the new business model.
Build a new dashboard: NewCos performance should nbot be based on CoreCo's metrics. Doing so reinforces CoreCo's formula for success not NewC's.
Dare not to make complex judgements. The company should not judge the performance of New Co's leader too heavily against plans.
Promote new thinking about success. New Co's leader should create a unique set of beliefs about actions that lead to success and regulary reinforce them. CoreCos beliefs may not apply in NewCo's environment.
Borrow.
CoreCo's tremendous resources are too invaluable to ignore.
New Co should only borrow when it can gain a crucial competitive advantage-crucual enough that the company would highlight it to investors
Example: NYTimes Web team ended up serving a completely differnt set of readers than the print team and met distinct needs. "us versus them happened" between web and print though.
How to Borrow:
Balance the yin of forgetting with the yang of borrowing. Create links, yes, but only to lend New Co a crucial competitive advantage . Avoid links to the IT or HR departments.
Find Common Ground. Reinforce values that Core Co. and New Co share. Senior management can create a "metaculture" composed of more general values.
Be careful what you ask for. Eval. and Reward Core Co managers in part with their willingness to cooperate with NewCo. Avois strong incentives toed strickly to CoreCos short term performance.
Co-opt Core Co. Make borrowing as painless as possible so Core Co can focus on Core Co. Replenish CoreCos resources when NewCo borrows heavily. Core OC will always be more enthused about helping NewCo when there is evidence of success.
Be alert to tremors. Anticipate tensions between NewCo. and CoreCo. and intervene when tensions become destructive. Senior exectives must continually explain the rationale for the differences between New Co and Core Co.
+++Warning Signs+++
>Core Co perceives the New CO will cannibalize CoreCos revenues
>CoreCo perceives that NewCo could render CoreCo obselete
>CoreCo perceives that NewCo might damage CoreCo assets, such as brands or customer relations
>Resources are scarce as CoreCo goes through a downturn and is resistant to allocating anything to NewCo
CoreCo management is unaware of the needs of an emerging NewCo
>CoreCo managers are jealous of NewCo
>Stereotypes persist about the capabilities of new and old Co.
Force authority uphill. Unless NewCo. is in danger of damaging one of CoreCos assets, particularly a brand, empower NewCo in its interactions with CoreCo. Without intervention, power will naturally shift back to the larger, more entrenched CoreCo.
Learn.
Reliable Forecasts are the best indicators that a new business is learning.
Stategic experiments are highly uncertain endeavors. The faster New Co can resolve these unknows, that is the faster it learns, the sooner it will zero in on a winning business model or exit a hopeless situation.
Learn to predict NewCo's business outcomes. These will be wild guesses. These are important not because of their accuracy but because of the learning opportunities they present.
It is a crucial learning step for New Co to analyze disparities between predictions(about unknowns) and outcomes. This must be done with openness and candor...speed, rigor, discipline.
+++Mistakes of Hasbro example:
It ignored its own predictions
Planning (like most companies was annual)...learning slowed to a crawl
Measured success of new venture short term
Didnt revise predictions to outsiders...Rigid predictions lead to "gaurd rail to guard rail
" decision making - that is agresive investment followed by complete abandonment
How to Learn.
Dont Mix Oil and Water. Hold seperate meetings to evaluate the business performance of New Co and Core Co. Combing can be impracticle and destructive.
Protect Predictions. New Cos leadership must understand the value of improving predictions and be aware of how the learning process can go astray if predictions are ignored.
Avoid Being too defensive. Evaluate the leader not on results but on their ability to learn and make good decisions. Accountability to plans may be effective in mature business practices but crippling to a new high potential business.
Do Less, Faster. Simplify Plans...but plan more often. Each cycle through the planning process creates a learning opportunity so planning more frequently increases the learning rate. Detailed plans (broken down by region, product line, sales channel, and so forth) are useful for mature businesses but New Co should focus on critical unknowns.
Analyse through a New Lens. Compare predicted and actual trends.
Measure what you dont know. Identify metrics that are useful in resolving critical unknowns.
I found two articles that address creating change (fresh growth) within an established organization.
see:
hbr.org
May 2005
pg. 58 "Building Breakthrough Businesses Within Established Organizations"
pg. 73 "Your Companies Secret Change Agents"
The first article ("Building...") examined what it takes for new initiatives to become effective within established organizations. They called the hypothetical new initiative "NewCo" and the established business "CoreCo" for the purpose of the study.
Important Notes from "Building Breakthough Businesses Within Established Organizations" :
"I came to the conclusion long ago that limits to innovation have less to do with technology or creativity than organizational agility. Inspired individuals can only do so much." -Ray Stata, cofounder of Analog Devices, $2 bil. semiconductor co.
"Emphasis must shift from ideas to execution and from leadership excellence to organizational excellence" pg 58.
Three components for success: forgetting. borrowing. learning.
Forget.
Change Behavior
Forget CoreCo's model
who do we serve?what do we offer?how do we deliver?
Because of this a different set of skills and competencies are most valuable.
+++Too Often NewCo will talk like New Co but act like CoreCo.
"Many firms make the mistake of duplicating CoreCo's organizational design when they create NewCo. Doing so minimizes hassels, since making NewCo an exception to the rule about things such as hiring, compensation, and status can lead to resistance, even resentment , within CoreCo. But the only way to erase memory is to overhaul NewCo's organizational design."
How to Forget:
Hire Outsiders in Key Roles. Outsiders challenge institutional memory
Dont Assign status based on size. NewCo. should report at least one level above CoreCo in order to reduce the pressures on NewCo for short trem results and to ensure tha CoreCo does not hoard resources.
Rearrange the moving parts. NewCo must reconsider how major business functions such as marketing and product developmetn interact. Established patterns are usually incompatible with the new business model.
Build a new dashboard: NewCos performance should nbot be based on CoreCo's metrics. Doing so reinforces CoreCo's formula for success not NewC's.
Dare not to make complex judgements. The company should not judge the performance of New Co's leader too heavily against plans.
Promote new thinking about success. New Co's leader should create a unique set of beliefs about actions that lead to success and regulary reinforce them. CoreCos beliefs may not apply in NewCo's environment.
Borrow.
CoreCo's tremendous resources are too invaluable to ignore.
New Co should only borrow when it can gain a crucial competitive advantage-crucual enough that the company would highlight it to investors
Example: NYTimes Web team ended up serving a completely differnt set of readers than the print team and met distinct needs. "us versus them happened" between web and print though.
How to Borrow:
Balance the yin of forgetting with the yang of borrowing. Create links, yes, but only to lend New Co a crucial competitive advantage . Avoid links to the IT or HR departments.
Find Common Ground. Reinforce values that Core Co. and New Co share. Senior management can create a "metaculture" composed of more general values.
Be careful what you ask for. Eval. and Reward Core Co managers in part with their willingness to cooperate with NewCo. Avois strong incentives toed strickly to CoreCos short term performance.
Co-opt Core Co. Make borrowing as painless as possible so Core Co can focus on Core Co. Replenish CoreCos resources when NewCo borrows heavily. Core OC will always be more enthused about helping NewCo when there is evidence of success.
Be alert to tremors. Anticipate tensions between NewCo. and CoreCo. and intervene when tensions become destructive. Senior exectives must continually explain the rationale for the differences between New Co and Core Co.
+++Warning Signs+++
>Core Co perceives the New CO will cannibalize CoreCos revenues
>CoreCo perceives that NewCo could render CoreCo obselete
>CoreCo perceives that NewCo might damage CoreCo assets, such as brands or customer relations
>Resources are scarce as CoreCo goes through a downturn and is resistant to allocating anything to NewCo
CoreCo management is unaware of the needs of an emerging NewCo
>CoreCo managers are jealous of NewCo
>Stereotypes persist about the capabilities of new and old Co.
Force authority uphill. Unless NewCo. is in danger of damaging one of CoreCos assets, particularly a brand, empower NewCo in its interactions with CoreCo. Without intervention, power will naturally shift back to the larger, more entrenched CoreCo.
Learn.
Reliable Forecasts are the best indicators that a new business is learning.
Stategic experiments are highly uncertain endeavors. The faster New Co can resolve these unknows, that is the faster it learns, the sooner it will zero in on a winning business model or exit a hopeless situation.
Learn to predict NewCo's business outcomes. These will be wild guesses. These are important not because of their accuracy but because of the learning opportunities they present.
It is a crucial learning step for New Co to analyze disparities between predictions(about unknowns) and outcomes. This must be done with openness and candor...speed, rigor, discipline.
+++Mistakes of Hasbro example:
It ignored its own predictions
Planning (like most companies was annual)...learning slowed to a crawl
Measured success of new venture short term
Didnt revise predictions to outsiders...Rigid predictions lead to "gaurd rail to guard rail
" decision making - that is agresive investment followed by complete abandonment
How to Learn.
Dont Mix Oil and Water. Hold seperate meetings to evaluate the business performance of New Co and Core Co. Combing can be impracticle and destructive.
Protect Predictions. New Cos leadership must understand the value of improving predictions and be aware of how the learning process can go astray if predictions are ignored.
Avoid Being too defensive. Evaluate the leader not on results but on their ability to learn and make good decisions. Accountability to plans may be effective in mature business practices but crippling to a new high potential business.
Do Less, Faster. Simplify Plans...but plan more often. Each cycle through the planning process creates a learning opportunity so planning more frequently increases the learning rate. Detailed plans (broken down by region, product line, sales channel, and so forth) are useful for mature businesses but New Co should focus on critical unknowns.
Analyse through a New Lens. Compare predicted and actual trends.
Measure what you dont know. Identify metrics that are useful in resolving critical unknowns.
posted by Melinda at
12:11 PM
1 Comments:
this is amazing. I know I've been out of the loop for a while, but this stuff seems so directly related to our ministry situation. It pretty much answered all the questions I asked in above comments. I gotta chew on it more. I think Core Co needs to read this. It might take some of the sting off the new shift that seems inevitable if they really want effectiveness with this generation. Why the heck did you pick up that HBR? I mean, I know, but that's awesome. I feel energetic, like something's going to happen. Or at least seeing that it can. Someone's done it. ..that guy-the $2 bil. guy did it. and then wrote a model of sorts. hmm.
Post a Comment
Subscribe to Post Comments [Atom]
<< Home