Tuesday, September 9, 2008

Look forward to spur innovation

Companies that experience high levels of success often build models upon which to generate future growth. As success often becomes a byproduct of a new way of thinking, companies typically adhere to the principles that became pillars of growth in the past. In a constantly changing business environment, however, organizations must exercise a high degree of caution in adhering to the old ways of doing business. The reason is simple. What propelled a company to success in the past, might not work in a competitive business environment that’s changing at a seemingly exponential rate.

Moreover, organizations that implement processes and build infrastructure must always keep the end objective in mind. This means that the executive team must continuously reevaluate existing structures to ensure that they facilitate the end objectives with the highest degree of precision. Leonardo Da Vinci once said that “inaction saps the vigor of the mind."(1) In large organizations, processes and infrastructural components often become layers of bureaucracy that sap the vigor of innovation. With added layers of bureaucracy, organization are often confined to thinking within the structural components of the organization instead of mapping out a future based on changing marketplace dynamics. This type of inactive thought impedes innovation.

As a company moves forward, it’s imperative to ensure that an infrastructure is built on a forward-thinking philosophy and not the old ways of doing business. Remember, processes are a means to an end. Once a company becomes focused on the means instead of the end, it can lose sight of its vision for the future. In short, past successes can impede progress because there is propensity to adhere to things with a proven track record. Since companies are competing in an evolving competitive environment, it’s important to look forward on an ongoing basis to open up the doors to innovation—and not simply look backwards to open the new doors of success in today's changing marketplace.

Footnote (1): http://www.legacyproject.org.

2 comments:

Gata said...

I think that is exactly what happens with the US Auto Makers. Other than paying their bills, what do you suggest they should implement to get independent and avoid bankruptcy? There must be a way to re-structure their financial problems within their corporation.

Jade Bunke said...

I agree that the large automakers are strangling themselves in a web of self-created bureaucracy. The problem with the U.S. automakers, however, started several decades ago when Edward Deming introduced innovative manufacturing methods to Japanese automakers, thus streamlining processes. The American companies, meanwhile, appeared content with the status quo until it became apparent that the Japanese companies were threatening to gain ground on dominate market positions.

Today, the automakers requesting federal funds are lacking from the foresight and creativity to compete at an optimal level in an evolving marketplace. Answering your question about what specific strategies to implement is difficult without a thorough internal investigation; however, it is clear that the executive team is unable to compete effectively to today’s competitive environment. As a result, I think the first strategic move comes with an evaluation of which leaders to keep and which leader to remove in order to implement an executive team who can demonstrate a certain intellectual capacity and visionary foresight to outthink the competition.

Federal funding is an option for avoiding bankruptcy at this particular time. The question, therefore, becomes can the automakers avoid bankruptcy in the future with the same executive team if funds are received. There is no reason to take this risk. As a result, a company seeking a bailout must look at the following:

1.Request federal funds to procure the required capital to avoid bankruptcy (which is happening).

2.Reposition the bailout as an investment in which organizational gains will result in rewards to the government and taxpayer, thus gaining public and Congressional support.

3.Replace the executive team with more visionary and creative leaders who are more capable of leading in a competitive business environment.

The third recommendation provides a multitude of problems that are beyond the scope of this posting. Job loss for the executive team, for example, means that it repels the incentive to ask for federal funding if it is required to serve both the organization the greater good of the economic system. At the same time, there must be severe consequences for companies that are unable to compete effectively in a capitalist marketplace with sufficient funds (at a particular time). The goal to determine how an investment package to the automakers can (1) fundamentally change the way they do business, (2) determine which quantitative and qualitative variables are used to measure success, and (3) outline how the investment is advantageous for the taxpayers, organization, government, and overall economy.