Building an entrepreneurial society

Archive for the month “June, 2013”

Leadership with a 20 year horizon

We have talked about the need for a 20 year horizon to bring about systemic changes that are badly needed.  One of these changes is a building an entrepreneurial society in a region.  What we also need to consider is how, in this world of short attention spans and 144 character messages, that we do that.  Let’s start by considering the type of leadership we need.

When we turn to our existing leaders we run into the limitation of four year terms or the need to hit the next quarterly results.  We also tend to find people more into their own image or well-being than that of the people they are supposed to be serving.  So we clearly need a new leadership model.

When we go about trying to make a change with a 20 year horizon we can’t just come up with a 20 year plan and then execute.  Most of us don’t know what will happen in the next six months to a year let alone 20 years.  So we need someone who can start the process and continue to drive it using vision and experimentation.  This person has to be comfortable with learning as they go and with a lack of structure.  They also have to recognize that they may not be driving the bus when it starts to demonstrate the envisioned impact.

The process has to be designed in a way that people who take over in the future build on the learnings and progress made by those that came before them.  The current leader has to build such a system and the future leaders have to accept and build from there.  Contrast this style to the throw it out and do it my way of many politicians and business leaders.

One person does not have the time, knowledge and energy to make these kinds of changes on their own.  They need to let people in; lots of them.  Some of the people will be long time, fully committed participants while others will be more transient.  As the path winds towards its destination there will be a need for changing skills.

While the end result may be years away there have to be interim measures along the way that help us determine our progress and make course corrections as required.  It is not practical to wait twenty years before we find out if something has a desired impact.  We need to set interim steps with measures and use these to learn and act.  Based on the results of a chosen path we can decide if it had the impact we expected and if it appears to be moving us in the long term direction.

The leaders have to be able to communicate the vision and the short term measures to keep their teams, funders, beneficiaries and other stakeholders interested.  There will be times when this leader will have doubts and will need to dig deep to keep the faith.

There are many traits of great leaders that are discussed and researched by a vast array of people and I won’t repeat them here.  I wanted to highlight the unique elements a leader will need to drive a long term systemic change.  Anyone fitting this description can send their resumes to me or better yet to those organizations that need this type of leader for their future success.

Misuse the term disruptive at your peril

The term disruption comes up constantly in the world of innovation but often in the wrong context.  Most people think of it as a big, breakthrough technology that will become the next big thing.  Most of the time it isn’t that at all. It usually starts out as something very unremarkable but has the ability to unseat market leaders over time.  It is because of its humble beginnings that a disruptive technology or business model is so dangerous.  By the time you recognize them it is too late to respond.  That is why it is also important to have a solid grasp of the concept.

The term was made famous by Clay Christensen in Innovator’s Dilemma and expanded by him and his colleagues in several works since.  A disruptive innovation is most often cheaper and of lower functionality than incumbent products.  They are aimed at the low end of the market who can’t afford the existing solution or don’t have the ability to use it.  The market leaders don’t pay much attention to the product or the market segment since they are focussed on building increasingly better versions of the product sold to the high end of the market.  But two things end up happening over time.  The increasing features of the existing products begin to exceed the ability of the market to absorb them and the product becomes more expensive and complex to use.  Secondly the disruptive product has improved over time so that it is now good enough for the mainstream market and usually at a lower cost.  The disruptor often has a lower cost structure than the incumbents and can make profits at lower margins.  It is almost impossible to companies used to high profit margins to lower their cost structure.

An established company with existing products aimed at existing customers could come up with a breakthrough on that product line.  But that breakthrough is not disruptive.  It is a sustaining innovation since its impact is to make the existing product better.  Companies should be looking for ways to improve their key products keeping their most profitable customers happy.  But they also need to set up a separate group with its own funding to find the disruptive opportunities.  Those that don’t often find themselves being blind sided by true disruptive products or business models.

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