Dr. Jules Goddard has no problem navigating avenues of business thinking that challenges popular management concepts and acceptable business models. Dr. Goddard is currently a fellow at the London Business School and his involvement with The Management Lab engages him in experimenting with partner clients in radically different ways of managing talent and organizing work. During our interview we inquired about his insights and experience with the ability of management to leap ahead of their business competitors.
Illustra.tv: How would you distinguish the common traits of a losing company from the winning companies?
JG: One of the features that losing companies have in common is what might be called the “emulation of best practice”. Losing companies often find that most of the agenda that they are pursuing is based upon the notion of pursing what they call “best practice”. The problem with this is that all competitors in a given industry will tend to define best practice in the same way, almost by definition.
If all competitors pursue the same destination through this elusive concept of “best practice”, they will become more and more alike and therefore destroy more and more value. The game of business is not to do what competitors are doing, no matter how well they may be doing it. The game of business is to be unique. To win you need to have proprietary knowledge and proprietary information in order to separate and differentiate you from your competitors. Pursuit of best practices is one of those things that brings competitors closer together and is therefore the source of huge value destruction.
The other thing that I think losers have in common is that they often outsource their thinking. They overuse consultants who are, after all, trading in second hand ideas. I sometimes say that there’s a distinction to be made between “thinking” and “thoughting”. “Thinking” is thinking for one’s self. It’s first hand thinking. “Thoughting” is simply using other people’s thinking as your own thoughts – and business does not award “thoughting”. Business awards thinking – first hand thinking. Losers pursue a “thoughting” strategy. They often become fashion victims to whatever is the latest management fad whether it’s management by objectives or business process, reengineering, customer relationship management systems or six sigma. Companies that come late to those fashions are also companies that are too late to be winners.
Illustra.tv: Then, what are the skills and attitudes required for management to differentiate their business model from the competition?
JG: Two absolutely essential skills are what we may call creativity and courage. It’s part of thinking. Thinking from oneself, being able to frame one’s own ideas, seeing the world afresh. Being able to see something in customer behavior that provides insights can set you apart from your competitors and can be the basis for a very interesting strategy.
Courage is the attribute that enables you to not only think great thoughts, but to actually apply them in the real world. Sometimes businesses lose the courage to enact what it believes it should do – sometimes called the “knowing/doing gap”. Many of us know absolutely what we should be doing but perhaps don’t have sufficient courage to do what we know needs to be done.
In opposition to creativity and courage is an attitude of compliance. Following instructions, doing what everyone else is doing, benchmarking the competitors and simply imitating their actions, policies and strategies is all part of compliance. Creativity and courage set themselves apart from an attitude of compliance or reliability purely on competence.
JG: I don’t see much of an increase in innovation in large companies. Almost all the innovation I see is at the level of the new enterprise but staffed up. And, it’s a puzzle as to why large corporations are not finding it easier to be bold, entrepreneurial and innovative.
Of course, most of the thrust in business schools today is around innovation; sometimes called “strategic innovation” or “management innovation”. There’s a huge demand placed on the schools by companies to help them become more entrepreneurial and more imaginative. And I suspect what’s holding back large companies is the fear of making mistakes. We can become very paranoid in large organizations especially with so many people watching our actions. We would prefer to play it safe and take failsafe decisions that have little likelihood of going wrong. But those safe decisions also have very little likelihood of creating a disconnect and great leaps forward.
There was a very interesting study conducted by Richard Rumelt some time ago in which he asked CEO’s of major enterprises who they most admired in business. Of course they named people like Steve Jobs, Jack Welch and others. He then asked them why these people were such heroic figures and their answer was that they were entrepreneurial, they exhibit great courage, they do things differently, they are their own man and they have a kind of authenticity about their actions and strategies. And then Rumelt asked the same CEO’s what they were doing in your own businesses to emulate these people they so admired. The answers were things like, 360 feedback, outsourcing, shared services, and all these standard, fashionable management tools. Rumelt then makes the distinction between those companies that don’t have a “predatory posture” and those who make the predatory leap, the great imaginative leap that advances their competitive position. The predatory leap is in contrast to what he called “door knob polishing”. An awful lot of what managers in large corporations are doing is the equivalent of polishing door knobs and in a sense, strategy is meant to be the antidote to the door knob polishing.
Question: Would you say that the lack of innovation and boldness you are observing is a reflection of today’s business education?
JG: Yes I do. I think that in the business schools we tend to make two classes of mistakes that do not promote innovation in business. The first class of mistake is the belief that what managers lack is theoretical knowledge. There’s no evidence for this by the way. There’s no evidence that if executives knew what professors know they would be more effective as the leaders of these great enterprises.
I think the second generic mistake that we make is the belief that there are winning formulas; that as professors we can advance standard solutions to all business problems. But the truth is that the solutions to business problems are never part of a recipe or a generic solution or formula. Business is not a kind of cooking where there are recipes that can be reliably counted upon to produce a delicious dish. Business is more like a game, a game of chess for example, where there are no standard ways of winning. Every game requires proprietary, first hand thinking. I think that in business schools we tend to believe winning solutions, generic formulae and theoretical knowledge is the answer. I just don’t think it is the answer. If we believe those are the answers we’re certainly not promoting entrepreneurship and innovation in the businesses of the clients we are trying to serve.
JG: One role of education may be to replace fear with curiosity. I think that when managers operate in the world with curiosity they want to explore, they want to discover fresh insights; they want to try new things out and want to be more experimental. Education can be very powerful by encouraging that urge, and by supporting experimentation in the marketplace. Where we fail is when we use education to pretend that the world is much more difficult than it really is or that management is exceptionally complex. Management, in one respect, is one way of being playful. It’s one way of experimenting in the world and trying things out. Children have little difficulty with the notion of “having a go”. If you invite a class of school children to try something out they’ll all put up their hands and they’ll all want to have a go at it. The same question put to adults will produce a rather different response. Where I think education can really help business is by encouraging this spirit of “having a go”; trying things out. Framing an interesting fresh idea and encouraging the business to experiment with that idea in the way that scientists experiment with hypotheses. Try it out in a small part of the business where if it goes wrong it has few repercussions. If it goes right you’ve learnt something, and that learning can then provide the encouragement of the management team to roll out that provisional solution across the company as a whole. Education that emphasizes curiosity and that plays down fear can be very, very powerful in promoting innovation.
Illustra.tv: can you give an example of a company or team that displayed bravery and innovated successfully?
JG: In my work at the London Business School I specialize in what I call “the discovery method”. I try and take executives out of the classroom. I frankly don’t believe that many useful or productive things can happen in a lecture theater. Practitioners learn the most from real practitioners and so therefore I see it as my role to introduce teams of executives to other practical people in the world often in very interesting cities. These are cities where those executives may never have been before, and so, delight of the sense of unfamiliarity. They are meeting people for the first time. They are spending time in a country they’ve never visited before. And under those circumstances, as human beings, we are very much alive to what’s happening. We open our eyes, we open our ears and we listen more intently. We observe things more intently. Under those conditions business people are encouraged to be more inventive and more innovative.
As an example, I’m thinking of a large Swiss pharmaceutical that has experimented in some very interesting ways. Different ways of communicating with one another. Different ways of designing products. Different ways of compensating the sales force. They come back from these experiments with fresh hypotheses and fresh insights. We then support these executives in the design and conduct of experiments from which they can then learn. So for example, a recent experiment with this pharmaceutical company was to see who would come up with the best answer to quite a complex scientific question that was troubling one of the laboratories. The same question was posed to their 3800 R&D staff, their scientists. But that same question was put out on the net for response by other scientists some of which were amateurs. These were scientists who were not employed by this company and who had no reason to come up with answers. I think there was a prize for $50,000 for any outsider who could solve this problem.
Of the 3800 insiders, only 3 responses were forthcoming, one of which was quite an interesting idea. But, based on the net, 150 different scientists from around the world came up with answers, one of which was a 50 page monograph, which effectively solved the problem and won for that scientist the monetary prize.
Now that was an experiment that was put together and conducted by a small team of middle managers on behalf of the organization as a whole on the back of a management program that was designed to encourage managers to be more entrepreneurial in their behavior. And there are many similar cases where this discovery style of education is having the effect of encouraging managers to try brave ideas within their own company. Dr. Goddard’s Bio