In an era of the most rapid pace of change in business, the challenge for startups is to scale by adding professional management without losing the innovative edge – and for large companies to retain their productive edge while also re-connecting with their startup roots.
In his new book, Accelerate: Building Strategic Agility for a Faster-Moving World, change expert John Kotter spells out eight steps for companies to blend innovation and productivity. Organisations need to have not just change projects, tiger teams, task forces and M&A strategies, but a dual operating system: a traditional management hierarchy along with an agile network-like structure. Both operate in concert to help companies capitalise on rapid-fire strategic challenges, seize new windows of opportunity and still meet their formal targets.
Traditional management approaches are noted for their efficiency and reliability – but startups are noted for creativity, speed and agility. It has not been easy for companies to blend the two approaches, as seen in the struggles of companies such as RIM and Border’s Books. In contrast, the kinds of successes that companies like Google and Facebook have achieved within just five to ten years have never existed before. Some companies such as GE have been relatively successful in blending these approaches (eg. see my review of the book Reverse Innovation).
The tension between focus on old and new products and between meeting previously set targets and identifying new ones can be hard to balance. Kotter proposes eight accelerators to bridge this gap.
1. Create a sense of urgency around a Big Opportunity. Based on market research and internal insights, see if there is a prize out there to catch for which there is a only a fleeting window of opportunity – but which can be seized if you move fast and smart, eg. new avenues for profitability, emerging innovations, a new way of giving back to society.
2. Build and evolve a guiding coalition. Ask for and recruit members to the guiding coalition who are credible, inspired by the additional opportunity, and can devote time and energy to the task. These members do not have to be the current top managers in the company.
3. Form a change vision and strategic initiatives. Define the vision in a concise and bold manner, avoiding the usual fluff. The vision statement should be memorable: short, rational, compelling, positive, authentic and clear.
4. Enlist a volunteer army. Go beyond the usual managers and tap the length and breadth of the organisation to enlist volunteers who are truly passionate about the cause. Five to ten per cent of the overall workforce of the organisation is usually enough to make the dual mode work, and they should be able to devote at least five per cent of their time to this initiative.
5. Encourage action by removing barriers. Provide the extra budget needed to drive the initiative. Provide tools which break down communication barriers and facilitate easy sharing of knowledge. Use coaching if necessary to reduce stubbornness from uncooperative managers.
6. Generate and celebrate short-term wins. Ensure that some smaller goals can be achieved early on before the grand vision is achieved. These can include, for example, designing a more effective tool, creating a new partnership or identifying new customers.
7. Sustain acceleration. Look for things that can be done each day, and stay the course. Do not try to create a false sense of urgency, that may become counterproductive. Include emotional aspects in communication, not just business numbers; bring out the human passion and not just the business case. Key drivers of the initiative should themselves become role models of the change they want to create.
8. Institute change. Evolve a different set of metrics for the dual modalities: one for enterprise mode and another for startup mode. Move more high-paced activities with uncertain outcomes to the startup side, and keep more routine predictable activities on the enterprise side of the organisation.
The book ends with a historical overview of business trends and research. On a larger scale, countries such as the US were disrupted by the rise of Japanese companies in the 1960s, leading to business research on strategy, core competencies and management structure. Globalisation, digital technology and the rise of China and India are calling for new approaches to blending 20th century management with the 21st century entrepreneurial movement.
Adopting the proposed dual mode system will be “much less difficult for successful entrepreneurs and the young,” says Kotter. “Leadership is the central force mobilising people to create something that did not previously exist,” he concludes.
About the author:
John Kotter is an author on leadership and change, a business entrepreneur and Harvard Professor. In 1980, at the age of 33, Kotter was given tenure and a full professorship – the youngest person ever to have received that award at the Business School. He has authored 18 books, including ‘A Sense of Urgency,’ ‘The Heart of Change’ and ‘Leading Change.’
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