The Organization of the Future 2

Visions, Strategies, and Insights on Managing in a New Era

Frances Hesselbein, Marshall Goldsmith, Frances Hesselbein, Marshall Goldsmith

• Publisher: Jossey-Bass
• Year: 2009
• Print ISBN: 9781119009375, 9780470185452
• eBook ISBN: 9780470525524
• Edition: 1
• Topic: Business
• Subtopic: Organisational Behaviour
• Index: Business

With 26 inspiring chapters, this book celebrates the wisdom of some of the most recognized thought leaders of our day: emerging and established experts who share their unique vision of what the organization of the future should look like and must do to survive in the turbulent 21st Century.

• Outsmart Your Rivals by Seeing What Others Don't, Jim Champy
• Organization Is Not Structure but Capability, Dave Ulrich & Norm Smallwood
• The Leader's Mandate: Create a Shared Sense of Destiny, James M. Kouzes & Barry Z. Posner
• A Different Kind of Company, Srikumar S. Rao
• Free to Choose: How American Managers Can Create Globally Competitive Workplaces, James O'Toole
• Managing the Whole Mandate for the Twenty-First Century: Ditching the Quick-Fix Approach to Management, Paul Borawski & Maryann Brennan
• The Values That Build a Strong Organization, Thomas J. Moran
• Revisiting the Concept of the Corporation, Charles Handy
• Mobilizing Emotions for Performance: Making the Most of the Informal Organization, Jon R. Katzenbach & Zia Khan
• Beyond Retirement: Mature Workers Are Essential Talent for Organizations of the Future, Richard J. Leider
• The Best Hope for Organizations of the Future: A Functioning Society, Ira A. Jackson
• Reframing Ethics, Spirit, and Soul, Lee G. Bolman &Terrence E. Deal
• Environment Drives Behavior and Expectations, Bill Strickland with Regina Cronin
• Dynamic Organizations for an Entrepreneurial Age, Christopher Gergen & Gregg Vanourek
• Multidimensional, Multinational Organizations of the Future, Jay R. Galbraith
• Designing Organizations That Are Built to Change, Edward E. Lawler III & Christopher G. Worley
• Refounding a Movement: Preparing a One-Hundred- Year-Old Organization for the Future, Kathy Cloninger
• Three Challenges Facing Nonprofits of the Future: People, Funding, and Strategy, Roxanne Spillett
• Pioneering the College of the Future: Building as We Walk, Darlyne Bailey
• The Organization of the Future Will Foster an Inclusive Environment, Lee Cockerell
• The Leader as Subculture Manager, Edgar H. Schein
• The New High-Performance, Horizontal Organization, Howard M. Guttman
• The Leadership Blueprint to Achieve Exponential Growth, David G. Thomson
• Leadership Judgment: The Essence of a Good Leader, Noel M. Tichy & Christopher DeRose
• The Leader of the Future, William A. Cohen
• Leadership by Perpetual Practice, Debbe Kennedy

PART ONE

STRATEGY AND VISION

Setting the Direction of the Organization of the Future

The six chapters that open this book cover a broad cross section of topics related to the direction that organizations should take in order to succeed in the future. Strategy guru Jim Champy shows how organizations of the future need to “change or die,” and they can change by seeing new ways of doing things that their rivals have missed. He cites three companies as fascinating illustrations of this idea: for example, who would think that ER medicine could learn anything from the Jiffy Lube approach to servicing a car? Read Chapter One, and you’ll find out!

Leadership consultants Dave Ulrich and Norm Smallwood describe five qualities that organizations of the future need to have. These have little to do with the structure of an organization (that is, the traditional “roles, rules, and routines”); instead, organizations of the future need to focus on their capabilities: their leadership, their agility, the talent of their employees, their relationships with stakeholders, and the strategic unity regarding their future goals and direction.

Leadership experts James M. Kouzes and Barry Z. Posner have surveyed thousands of people on what qualities their leaders should have, and “being forward-looking” ranks at number two. Unfortunately, Kouzes and Posner also found that “today’s leaders stink at it.” Fortunately, their chapter describes some of the reasons why, and they offer great ideas on how to overcome this challenge.

Business professor Srikumar S. Rao has surveyed more than a thousand of his students to ascertain what the “ideal job” is and what they seek in the organizations they work for. His chapter provides intriguing insight into what makes organizations great and successful—and it’s not just about the bottom line. There are “good profits” and “bad profits,” so an organization’s success comes from its relationships with and attitudes toward its employees, customers, suppliers, and shareholders.

Business ethics professor James O’Toole focuses his chapter on organizations that pay lip service to their employees but then outsource jobs, cut employee benefits, and replace permanent employees with contract workers. O’Toole contrasts these companies, which claim that these tactics are necessary for keeping costs low and competing globally, with what he calls “high-involvement” companies, whose strategy is to treat their employees fabulously—and make money doing it.

Quality experts Paul Borawski and Maryann Brennan have seen too many companies focus on “spot management,” trying to apply a quick fix to solve problems immediately, without considering any longer-term implications. They cite examples of Baldrige National Quality Award winners who have fought that tendency—including Ritz-Carlton Hotels, Boeing, a regional fast-food restaurant chain, a health care facility, and many others. These organizations have banished the “factory” approach to running their businesses in favor of a holistic approach that enables them to work better and be more successful. That’s a vision worth pursuing.

CHAPTER ONE

OUTSMART YOUR RIVALS BY SEEING WHAT OTHERS DON’ T

Jim Champy

Jim Champy is chairman of Perot Systems Corporation’s consulting practice and head of strategy for the company. His latest book is Outsmart! How to Do What Your Competitors Can’t. Champy is also the author of the three-million-copy international best-seller Reengineering the Corporation: A Manifesto for Business Revolution, as well as Reengineering Management, X-Engineering the Corporation, The Arc of Ambition, and Fast Forward. He contributes regularly to leading publications and is in high demand as a speaker around the world. Champy earned a BS and MS degree in civil engineering from MIT, as well as a JD from Boston College Law School. He lives in Boston, Massachusetts.

Seeing what others don’t. It’s a neat trick if you can pull it off. The companies I describe in my book Outsmart! have done just that by focusing on societal trends and unmet needs. And by sharpening their vision, they have achieved phenomenal growth rates and blown past competitors in a time of uncommonly rapid economic upheaval. They are literally changing the way business is done. Among this new breed of eagle-eyed entrepreneurs is MinuteClinic.

MINUTECLINIC SOLVES EVERYDAY HEALTH CARE PROBLEMS IN A NEW WAY

For entrepreneur Rick Krieger, the flash of insight followed an exasperating hospital emergency room experience one winter weekend in Minneapolis. His expanded view led him to conceive of the idea that became MinuteClinic, now a subsidiary of CVS Caremark following its $170 million acquisition in 2006. It’s one of the companies featured in my new book, Outsmart!

After spending two hours waiting to find out if his son’s sore throat was strep, which would require an antibiotic (and it wasn’t strep), Krieger began thinking way outside the hospital. Why in this world of harried and hurried families wasn’t there a quick and convenient way to get treatment for common medical problems like sinus infections, strep throats, and allergy flare-ups? Krieger’s questioning of seemingly sacrosanct medical procedure—and his and his associates’ willingness to buck the medical profession by applying retail practices to health care—spawned what is now a squadron of highly trained nurse-practitioners treating a range of ailments from kiosks located in scores of retail stores.

Why do the Rick Kriegers of this world spot opportunities where others see only obstacles? The answer begins with the human penchant for living in a bubble—an airtight cocoon of assumptions, beliefs, or worldviews. The exciting thing about business bubbles is that they invite inventive minds to insert pins.

MinuteClinic’s original creators and veteran marketer Mike Howe are bubble bursters: their customer-centric ideas about responding to complaints helped expand the retail treatment concept into a national operation that serves half a million consumers annually. They are creative guerrillas who thrive by outsmarting complacent companies in industries that run on tired ideas. They see what others can’t, and they act on what they see by applying proven practices from other fields that everyone else dismisses as irrelevant.

In MinuteClinic’s case, the notion that you don’t need a physician or a hospital emergency room to treat many common ailments sounds more like common sense than a revolutionary idea. In fact, the model owes a lot to Jiffy Lube’s insight that you don’t need a fully trained mechanic to change the oil in your car. But until Krieger came along, no one would have dared to suggest that health care could learn a thing or two from the car maintenance business. And with the addition of Howe’s superb marketing acumen, a second bubble—the one that encapsulates medical providers and so often makes them oblivious to customer needs—collapsed with a loud pop as MinuteClinic personnel began focusing on how they delivered health care.

The success enjoyed by MinuteClinic presents not a business anomaly but, rather, a lesson for leaders in how to compete in today’s ever-changing global economy. Like the founders of MinuteClinic, you must look beyond the parameters of standard operating procedure in your industry to see what you can borrow from the Jiffy Lubes of this world as they capture similar opportunities within their areas of expertise.

CHANGE OR DIE: GOOD ADVICE FOR ORGANIZATIONS OF THE FUTURE

MinuteClinic exemplifies the creative strategies that smart organizations are using to compete in a time of unparalleled change. Change, of course, is nothing new. It is one of life’s givens. But today, those who fail to adapt face extinction in a much shorter time frame than ever before. “Change or die,” as the saying goes—and to judge from the 157 million entries dredged up by a Google search of that phrase, no one from diet counselors to partisan political pundits doesn’t believe it. But nowhere is change more rampant and potentially deadly than in the twenty-first-century, globalized business environment. Leaders are grappling with mind-boggling upheaval, and they’re scrambling for every advantage against competitors that, just yesterday, were considered moribund and economically backward. Just a few short years ago, who would have named Brazil, China, India, and Russia as among the brightest stars in today’s economic firmament? Yet in recent years, the so-called advanced economies have struggled to keep up with the astonishing rise of these economic powerhouses.

There is certain danger in this hypercompetitive world, but there is also a degree of excitement that is hard to quantify, as opportunity like that discovered by Rick Krieger and MinuteClinic shows itself in unlikely places. Innovation and expansion opportunities abound for leaders who know where to look and how to coax growth out of what they find.

Certainly, there’s no shortage of powerful new business practices designed to hone a company’s competitive edge. Or, as I often like to say, management theory may be stagnant, but there’s plenty that is new and exciting in business practice. Take growth strategy, the linchpin of any successful company. What’s out these days? The pronouncements of men with monogrammed cuffs reigning from secluded aeries. What’s in? The hard-won strategic wisdom borne of in-the-trenches combat.

It’s a trend I salute. In my more than three decades as a consultant and author, I’ve learned a few things, not least among them this simple and pragmatic notion: whatever works is the right thing to do. Moreover, I’m convinced that the very best management ideas come not from observers like me or from the old-style managers whose track records and egos make them resistant to change, but from the people who do the real work inside companies—people who are challenged on a daily basis and who not only survive but thrive in today’s complex, volatile, and demanding global marketplace.

How do I know that this new breed of manager is leading the way today? They have the growth rates to prove it. Put another way, what they are doing works; therefore, what they are doing is right.

Keeping that proposition in mind as I set out to write Outsmart! , I could think of only one place to look for the best, most practical strategies, and that was inside companies whose plans of action have arisen organically in accordance with the opportunities grasped and challenges encountered. Hence, these creative companies are outsmarting and outgrowing their competitors by finding distinctive market positions and sustainable advantages in myriad ways. They are thinking innovatively, simplifying complex problems for customers, and finding ways to tap into the success of others. Better yet, their revenue-producing ideas don’t require hundreds of millions of venture-capital dollars or IPO proceeds to get them airborne, and their strategies can be easily and immediately understood by any business leader.

SONICBIDS.COM FOUND A MUSIC MARKET NO ONE ELSE SAW

Boston-based Sonicbids.com is another new company that is thinking outside the music box. Sonicbids was founded by thirty-five-year-old entrepreneur Panos Panay in 2001; over the four years from 2004 through 2007, the company enjoyed a growth rate approaching 400%.

Panay, a guitarist who never made his mark on stage, became a successful online talent agent by parlaying his knowledge of the music business and his empathy for musicians hungry to connect with promoters into a $10 million enterprise. Taking advantage of new technology to span the world from the confines of his office, Panay now connects 120,000 musician-members with more than ten thousand promoters who have gigs to fill. The individual engagements may be small, but together they add up to a huge market: $2.5 billion annually for wedding bands alone, plus another $11 billion in bookings at small bars, clubs, coffeehouses, festivals, and such. Panay also helps his musician-members prepare electronic press kits that can quickly be placed in the hands of promoters via e-mail.

Panay’s insight enabled him to connect the music industry’s dots, or points of dysfunction. Having worked as a traditional talent agent, he knew it was impossible to listen to every tape and CD and view every video that pours into an agent’s office, meaning that musicians—even great ones—may never get a hearing. And if they do get heard, they may still endure endless waits before they secure a booking. Panay knew that this frayed connection between musicians and their would-be audiences only worsened the struggle for struggling artists. For promoters, the promise of Panay’s service was the help he could give in simplifying the often tedious search for the right artist to fill a gig and, in effect, do it at no cost, because Panay’s fees come from the artist.

Often people who get caught up with a new business model or technology shortchange their customer service, and those who run technology-based businesses are particularly susceptible to this error. They seem to think that technology itself will solve customer problems. But you need only think of those despised customer service centers with no-service people and endless automated transfers to know just how wrong such assumptions are. Panay instinctively understood that an online business lacks the legitimacy that comes with a physical presence, so he insisted on a proactive customer service operation that emphasizes respectful and sympathetic human interaction with both promoters and musicians.

Struck by the disconnects in the music business and realizing that once-separate products and services could be brought together on the Internet, Panay conceived of Sonicbids and developed a whole new business model to profit from his revelations. And thanks to his knack for recognizing a market no one else saw, and then figuring out how to serve it efficiently and profitably, Panay’s upstart now ranks eighty-eighth on Inc. magazine’s list of the top five thousand privately owned businesses in the United States.

With far-reaching vision, Panay is looking to extend his business to other neglected markets. He’s already signed up ju...

Table of contents

• Other Publications from the Leader to Leader Institute
• Title Page
• Copyright Page
• About the Leader to Leader Institute
• PREFACE
• Introduction
• PART ONE - STRATEGY AND VISION
• PART TWO - ORGANIZATIONAL CULTURE
• PART THREE - DESIGNING THE ORGANIZATION OF THE FUTURE
• PART FOUR - WORKING TOGETHER
• PART FIVE - LEADERSHIP
• INDEX