How to Lead Tomorrow: New Age Leadership For Future Startups
Past Leadership Lessons For The Millennial Generation
Steve Jobs adopted an ethos which he described as “the reality distortion field”, a phrase he admittedly borrowed from Star Trek. Jobs sought out attributes associated with creative destruction amongst his followers and set about surrounding himself with ‘growth-hackers’, like minded thinkers so that Apple could become Disruptive Innovators, the company that they are today.
“Mr. Jobs was neither a hardware engineer nor a software programmer, nor did he think of himself as a manager. He considered himself a technology leader, choosing the best people possible, encouraging and prodding them, and making the final call on product design” — New York Times, 2011
Like the founder of Amazon, Jeff Bezos, who “had the vision to spot the opportunity of internet retailing and grasp it”, jobs was a visionary, a non-conformist, who rejected the status quo, the way things were in exchange for the way that things could be (Hartford, 2011).
Steve Levy, a former colleague Jobs, described him in his book Insanely Great that chronicles the creation of the Mac:
“He was the most passionate leader one could hope for, a motivating force without parallel” (Levy, 2000).
Management academic, Gary Hamel, made the observation that:
“One doesn’t have to be a Marxist to be awed by the scale and success of early-20th-century efforts to transform strong-willed human beings into docile employees” (Hartford, 2011, p 211)
Jobs (and others) are examples of leaders who contradicted Hamel’s perspective, outliers, through their innovative leadership style (Tessa Palmer). The type of leaders that Startups must produce in Ireland to retain our position as the Digital Hub in Europe.
Porter — Three Types Of Competitive Advantage
For Ireland Competitive Advantage is a crucial ingredient for home-grown leaders to attain a sustainable business model. Porter identified three competitive strategies applicable to any business across any industry. These are:
- Cost Leadership Strategy — As the name implies, cost leadership is a competitive edge by manipulating costs.
- Differentiation Leadership Strategy — Differentiation method focuses product features: Design, uniqueness and attractiveness to convert consumers.
- Focus Leadership Strategy — Focus approach aims for mass appeal through efforts toward a niche market.
Apple initially adopted Product Differentiation while occasionally migrating to Niche Focus as the LMAX (Leader-Member-Audience-Exchange) effect, discussed in another post, took hold in which customer intimacy and brand interaction excelled beyond that of its closest competitor (Porter, 1985).
Jobs’ ability to transfer his strategic vision in a seamlessly cascading fashion throughout the organisation demonstrated Locus of Control in action.
In contrast, the corporate graveyard is abundant with commercial failures, organisations that lacked a visionary leader who could strategize, reinvent the company and indeed the marketplace in the process, in the way Jobs did. Companies like Polaroid, Kodak and Enron are but a few examples.
Recent research however by “L.G. Thomas and Richard D’Aveni suggests that industry leadership is changing hands more frequently, and competitive advantage is eroding more rapidly, than ever before. Today not just the occasional company gets caught out by the future, but entire industries — be it traditional airlines, old-line department stores, television broadcasters, the big drug companies, America’s carmakers, or the newspaper and music industry” (Hamel, 2006).
The E-commerce world is in need of agile leadership, those who can quickly evaluate Ansoff’s Matrix as discussed by Clay from Peer Insight. Leaders who can identify and pursue more attractive opportunities of the future, keeping in mind what Thomas and D’Aveni forewarned as regards the complex challenges that await indigenous protégés.
Energy For Renewal (or not)
Enron proved that greed can become endemic within companies and industries, a fatal leadership flaw, will this and their “arrogance…was Enron’s great failing” (The Economist, 1 June 2000).
On the topic of energy, industry heavyweight Shell installed ‘scenario planning’ teams to investigate potential outcomes of future events (Shell), a strategic move to preserve the company’s’ future it would seem. From a public relations perspective this enhanced their Corporate Social Responsibility; their motivations however are unclear. It is also unclear what scenarios were being investigated.
Energy companies are frequently associated with environmental issues given their invasive probing of the planet. In a report, Unburnable Carbon 2013, it was estimated that the global stock market value for coal, oil and energy reserves of fossil fuels is based on the assumption that it will all be burned. The fact is:
“Only 40% could ever be used if the world is to cap the increase in global temperatures by 2°C this century” — The Guardian, 2013.
The top 200 fossil fuel companies are valued at a staggering $4 trillion, carrying debts of $1.5 trillion. A valuation based on the assumption that energy companies will in fact burn all their reserves that will have a catastrophic impact on Earth, our planet and indeed the global economy. If this was to happen the impact would increase “global temperatures by at least 6°C, with untold consequences for life on Earth” (The Guardian, 2013).
What’s truly absurd is the fact that the same energy companies spend $600–700 Billion a year searching the globe for new reserves, dwarfing what was channelled into sustainable and renewable energy research. Considering that existing fuel reserves can never be burned the act of searching for more is ludicrous.
Green opposition claim that the clouds (no pun intended) are looming for the global stock markets when acceptance dawns on these irrational valuations and the carbon bubble bursts. The financial impact will see $2 trillion or more wiped off the combined share price overnight — this awakening could occur at anytime.
Evidence also suggests that financial and competitive anomalies exist because “BP, Statoil and Shell are being investigated for suspected oil-price fixing after the European Commission confirmed it carried out unannounced inspections on several companies active in and providing services to the crude oil, refined oil products and biofuels sectors” (The Journal, 2013).
It seems that the leadership strategy in the energy sector is fixated on short-term return and share price, a finite game. This raises the question whether energy leaders are acting in the best interest of all stakeholders — I society include society in this — given that we share the same planet.
The Boston Cash Cow
The Boston Consulting Group matrix points towards a fundamental flaw in the strategic vision of energy leaders. These companies operate in the Cash Cow quadrant under the illusion that a single event or renewable breakthrough does not pose a high enough risk to relegate their model into the Dogs quadrant, when nothing could be further from the truth.
In the digital world, Microsoft was guilty of a similar faux pas in the recent past, the impact however, although unfavourable, was contained to the organisation and its shareholders. At the end of the last century Microsoft Outlook was by far the superior email product available. At the time webmail servers were cumbersome with limited storage space. They were also slow over dialup connection. Outlook was entrenched in corporate email. When technology enabled webmail to compete Microsoft acquired “Hotmail, quite early in the game, and even though webmail wasn’t a complicated technology for Microsoft software engineers to master; Hotmail’s features were eclipsed by that of Google’s Gmail” (Daily Mail, 2014).
Clayton Christensen from Harvard Business School discovered that it isn’t always “the cutting-edge technology that tends to undo the market leaders. It is often the totally new approach” (Harford, 2011). The fact is Microsoft didn’t anticipate the internet becoming what it is today, there was no scenario planning, visionary leadership had become dormant. Google on the other hand did not; their corporate strategy was aligned with what was to come.
Satya Nadella’s, CEO at Microsoft said that the “first major move after taking the helm was to make Office available on the iPad, which has attracted 40 million users. By downloading a free app, users could read Office documents in Word, Excel and PowerPoint but had to buy a subscription, starting at $7 per month, to create or edit them; from Thursday (2014) that will now be free” (Daily Mail, 2014).
This new strategy is Nadella’s recognition that the dominance of Windows and Office on PCs has not translated to the fast-growing mobile arena, where Apple’s phones and tablets and devices run Google’s Android rule.
John Case, Corporate Vice President at Microsoft stated that “Anytime someone has an idea or an inspiration, we want to empower them to take action”, he added that, Microsoft “with over a billion Office customers worldwide, and over 40 million downloads on the iPad, it’s clear that Office applications are what people want to use to get things done” (Daily Mail, 2014).
This is further evidence to supporting a LMAX model (Leader-Member-Audience-Exchange), whereby Microsoft are bringing something new to their customers, something free, reinforcing Brand loyalty and raising the stakes in terms of their Emotional Contract.
The Challenge — Desire, Insight & Vision
The challenge however for market leaders today, with old(er) technology, is not that they lack the resources or capacity to innovate. In fact the opposite is true, they simply lack the desire, or insight, at leadership level — limited vision to invent the future.
“When a disruptive technology appears it may confound an existing player because the technology itself is so radically different. More often, Christensen found that the problem was not technological but psychological and organisational: it is hard for an organisation to pay much attention to a piddling new idea that makes little money and invites a yawn or a blank stare from important customers. Microsoft bought Hotmail, yes — but it was always going to be hard for Microsoft to pay more attention to Hotmail than Outlook. Microsoft core corporate customers saw Hotmail as an irrelevance. Googles users did not. Google only made web applications and Gmail was a natural fit” (Hartford, 2011).
The Digital Age
Another very interesting occurrence is that successful E-commerce companies in the digital age have gone full circle, back in time as it were. Almost a century ago the concept of Scientific Management, by which Fredrick Taylor “believed that an empirical, data-driven approach to the design of work would yield big productivity gains. As the father of Scientific Management, Taylor battled against wasted motion, poorly designed tasks, lax or unrealistic performance standards, misfits between job requirements and worker capabilities, and incentive that discouraged best efforts — adversaries that any 21st Century Manager would instantly recognise” (Hamel, 2006).
Or would they?
Taylor’s ideas were intrinsically driven, he laid the foundation for modern day strategists. Modern technology captures data much in the way Taylor did, intrinsically and extrinsically (the Audience).
Big data is commonplace across modern day organisations. In principle the iPhone was developed with Taylors concepts in mind. ‘Wasted motion’, ‘poorly designed’ and ‘unrealistic performance standards’ were three key elements that jobs identified from a user-interface perspective, designing features like this out of mobile phone technology. The iPhones single button operation is one obvious design feature that resonates with Taylor’s concepts.
Depleted Energy
Energy companies have made various sallies into wind farms, solar and other forms of renewable energy but nothing substantial has come of it, despite the urgency. There’s no evidence to indicate that energy companies will disrupt renewable energy technology despite ‘Scenario planning’ adopted by Shell.
That’s not what they do.
They negotiate with oil rich governments, drill for oil, operate refineries and sell through consumer distribution channels, like forecourt gas/petrol-stations, for Profit … not our Planet.
It’s worth noting that there’s nothing to suggest that Oil companies can or will live forever.
Atari and Gateway Computers, the latter had operations in Ireland in the 1990s, are examples of organisations that were the innovators of their time but, with the same information to hand as Apple, lacked strategic vision and leadership to redefine their business model. Similarly, should a renewable energy firms like Cynar (Portlaoise, Ireland), deliver on their vision (below); it’s quite plausible that BP, Exxon and Shell will either evolve … or … die!
“We are modern day alchemists. We do something extraordinary which is to take what the world thinks of as problematic rubbish and we turn it into something of value: we provide a technology for transformation.“ (Cynar, 2014)
Guiding a company towards extinction is not leadership; not enough energy leaders seek “technology for transformation” like Michael Murray at Cynar.
Final Thought
Leadership ceases to exist when it’s purely driven by money, a concept that John Kay proposed in the Principle of Obliquity. Kay argues that the singular pursuit of profit is an ill-advised strategic objective and ultimately fruitless; he backs up this claim with reputable examples like his observation that “Boeing created the most commercially successful aircraft company, not through love of profit, but through love of planes’ (Kay. 2010).
Then again Boeing has since contradicted Kay’s initial observation of late.
Steve Jobs exemplified this principle when he returned to Apple. On a nominal one-dollar salary he set about reinventing Apple to bring innovative products to the world … as we now know, he delivered on his goal.
“Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful … That’s what matters to me” — Steve Jobs
The outcome for Apple was that “stock price rose from a low of $3.19 in 1997, when Jobs returned as CEO, to $365 when he retired in 2011” (The Guardian, 2011).
Ireland needs more E-commerce and Digital Leaders of the Future — modern day alchemists. Emerging Leaders, masters of the right type of Energy … their own (Sebastian Martin). Visionary Individuals with Entrepreneurial traits in abundance and a dollop of dissatisfaction, like the Collision brothers, who created The Startup — Stripe — to exploit a gap in the payment services market and launched a solution to fill that gap.
“Millennials are more aware of society’s many challenges than previous generations and less willing to accept maximizing shareholder value as a sufficient goal for their work. They are looking for a broader social purpose and want to work somewhere that has such a purpose.”
— Michael Porter
