"Innovation is CREATIVITY that ships" (Steve Jobs). Not a PowerPoint slidedeck.

In 2011 the management team at NASCAR realized that the company had become dangerously irrelevant. The old way of engaging the fans, who were mostly millennials, was creating a “disjointed user experience that discouraged online exploration of the sport.”

nascar

A state of dangerous irrelevance is every CxO’s nightmare. Yet it is often too easy to miss during the daily demands of business as we fall prey to being “present-biased” and defer the need to compete for the future. Richard Thayer, University of Chicago, would probably agree that this is an example unconscious “misbehavior.” We recommend pausing periodically and taking a deep breath to process and reflect how things are unfolding and nudge the organization to take calculated risks to enhance competitive advantage.

East of Amazon.com, across Lake Union, the stay awake at night moments of Microsoft’s founders revolved around:

  • What are the things that make our organization unique?
  • Where do we focus?
  • What is unique about our people?
  • What is unique about our culture?
  • What are our core values and core competencies?
  • Are we building a company that will still be around well after Bill Gates and the founding management team are gone?

How were Gates, Grove and Jobs (The Founders’ Touch) able to steer their companies (Microsoft, Intel, Apple) through the volatile ups and downs of decades of changing technologies and mitigate dangerous irrelevance?

Founders Keys to Success

After consuming my “bowl of Kellogg today,” I had the following epiphany:

Anchoring the mental model of the Founders’ Touch is the “pre-URL” strategy for nurturing disciplined imagination and sensemaking, minimizing coordination deficit and positioning the organization to be fit for growth.

A survey by Boston Consulting Group of about 1000 senior managers around the globe reported that “lack of coordination is the single biggest barrier to innovation.” Various studies have validated Conway’s Law which states that product design mirrors the organizational and communication structure of the organization creating a product. As a result, the communication structure is a non-obvious product design constraint. Conway’s law reversed states that you won’t be able to establish an efficient organization structure that is not supported by your system design (architecture).

Mismatches between product architecture and the organizational structure is called the coordination deficit and is positively associated with quality problems. A metric of organizational misalignment (i.e., coordination deficit) can be computed by examining the number of change orders impacting the product (service). The impact of organizational complexity on failure proneness has also been empirically validated in one of the largest studies of “commercial software—in terms of code size (> 50 Million lines of code), team sizes (several thousand), and software users (several Million).”

Nachiappan

According to American business icon Robert Half, “The search for someone to blame is always successful.” Since it is a reliable outcome, it fosters a culture for working in silos, a low appetite for taking risks and negatively impacts organizational productivity and innovation.

The success of open source software such as Linux has confirmed that a product developed by a loosely-coupled organization is significantly more modular than the product from a tightly-coupled organization.

The first realization regarding applying Conway’s law is that all connections made in an organization from a communication perspective are not equal. The second realization is that every product will have a knowledge structure that underlies the final product.

Loosely coupled organizations are more empathetic than tightly coupled organizations. Any product (or service) is an integrated version of the knowledge structure, and the associated communication /relational functions that preceded it. The types of empathy include the following: (1) subconscious empathy (mirroring behavior), (2) emotional empathy (function of both verbal and non-verbal communication enhanced by shared presence), (3) conscious empathy (process contextual information and emotional response) and (4) global empathy (larger levels of self-awareness).

The successful delivery of a software solution is not purely a technical endeavor. Since an organization is a socio-technical system, it is vital to reframe the view of solution as consisting of a social side and a technical side.

How can a manager utilize Conway’s law and shape an empathetic organization and raise its collective intelligence? While there is no silver bullet per se, managers have an opportunity to practice empathy, lead by example and create the structure of the organization, which will then drive the structure of the product (service) in order to enhance value co-creation. In an organization with a shrinking core and an expanding periphery, governed by a number of strategic alliances, there is a need for empathetic thinkers on both sides of the supply chain during the innovation process.

In a volatile environment, strategic dissonance is a “cloud in the head” as managers struggle to make sense of conflicting information in an attempt to discern the newly emerging strategic picture. The management of strategic dissonance (actions leading or lagging the strategic intent) is a messy and unstructured process. Intel’s transformation from a memory company into a microprocessor company (a disruptive innovation) was not initiated through a structured change request process. An emotional attachment on the part of top management to the business that made the company once successful can impact corporate survival.

Astute managers often ask: Are there any early warning signals that are flying at low altitude that we’ve missed while being immersed in the daily operating details of the business? In an era of information overload and reduced attention spans, there is also a business need to increase the comprehensiveness, depth and rigor of the intellectual debate among middle and top management in order to recognize and manage strategic dissonance. Leaders have the challenge of encouraging vigorous debates, devoted to exploring different issues, independent of rank with a long-term goal of building an adaptive (learning) organization at an operational level. While capitalizing on the strategic inflection points, it is imperative to bring these debates to closure so that there is also an equal emphasis in building products that are “good enough” for emerging markets and enter a new era of profitable growth.

Sensemaking is about contextual rationality and is built out of vague questions, muddy answers, and negotiated agreements that attempt to reduce confusion. In a forest fire the old playbooks no longer work. Creativity is defined as figuring out how to use what you already know in order to go beyond what you currently think. Poor sensemaking cause an organization to be strategically adrift, distracted or capacity constrained.

sensemaking - ready for growth

According to a study by Forrester: “Alignment is dead: it is time for integrated strategic thinking with end-to-end process ownership”. Strategy is the meeting point of different logics of the various stakeholders. It is not how your strategy counts but rather how those logics are reconciled that counts. The reconciliation process is demanding and requires a higher level of organizational maturity. The engagement to deal with contrasting logics is the root of the strategic execution complexity and requires sensemaking.

Computational thinking, pioneered by Jeanette Wing (Microsoft Research), is a proven enabler for understanding the value and use of modeling techniques and transfer into a context that engineers, managers, non-engineers and customers discover new knowledge and enhance collective sensemaking.

Managing strategic dissonance requires a cadre of Activist Turnaround Managers (@ATM) whose skills and abilities include the following:

  • Acting like a leader; Thinking like a leader (@) (i.e., improvising and learning by doing with an outside in perspective)
  • Perceptual acuity
  • A growth mindset to see opportunity in uncertainty
  • The ability to see a new path forward and commit to it
  • Adeptness in managing the transition to the new path
  • Skill in making the organization steerable and agile

Let’s anchor the role of an @ATM from the rowing sport. A coxswain is a person who steers the shell and is the on-the-water coach for the crew. A swing is the hard-to-define feeling when near-perfect synchronization of motion occurs in the shell, enhancing the performance and speed.

An @ATM acts as a coxswain and orchestrates the swift replacement of a traditional order with an improvised order. Akin to the Boys in the Boat, the team remains resilient with a conscious preference for the strength of the whole rather than the versatility and resourcefulness of the parts. @ATMs are creative under pressure, precisely because they routinely act in chaotic conditions and create order out of available resources or insights while striving to achieve a nearly perfect swing.

“Harmony, rhythm and balance. There you have it. That is what life is all about.”

George Pocock

“Real life can be complicated and chaotic. Rowing is beautifully simple”

Katherine Grainger

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