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Leadership in tough times
Innovating your way out of recession
Lessons about customers from the world's best companies
JLA: What advice do you have for businesses with no experience of recession?
MM: Survival comes first, but it isn't just about cash today. It's also about cash tomorrow, and how you will emerge from the recession ahead of the competition. Investors, customers and employees need answers to today and tomorrow, and to what happens next.
Great things have always happened during tough times. Use the crisis to reduce waste, stimulate new thinking and instill urgency.
JLA: Which entrepreneurial skills are most needed in a growing public sector?
MM: The ability to connect each part of the value chain (what we do for our customers) from the front line all the way back, so public sector spending actually improves our economy and our life-styles.
Public sector leaders also need to engage employees and bring out the best that everyone can think and do, making sure they don't shut off and let 'the latest change programme' pass them by. They need a style of leadership that overcomes indifference and understandable change fatigue.
Everyone needs to tell the difference between change and progress, and make sure their own experience doesn't get in the way of better solutions to overcome seemingly insurmountable problems. How many times can the same problem occur before you try something different?
JLA: Will lack of available credit impact on entrepreneurial activity?
MM: Easy credit has diminished, but funds for real entrepreneurial activity are still there. There may even be more money for good ideas, because the number of people trying to be entrepreneurs has fallen due to the lack of confidence. So the task for government is to (1) encourage hope among would-be entrepreneurs and (2) distinguish between the "I've lost my job" type and the "I can change the world" brigade. The investor should remember that the best of the best are still out there. They simply have to find them, encourage them and turn their ideas into world-beating businesses.
JLA: How can you stay ahead of the competition in a serious downturn?
MM: As ever, the competition is asking itself the same thing! The difference now is that the penalties for being in last place or the bottom 20% are more serious.
The way to stay ahead (or moving ahead) is to figure out how to increase the perceived value premium of your service. How much more is it worth than you charge for it. The answer involves hundreds of small and big, CLEVER changes that your competition doesn't understand because they are focused on margins rather than value. Cut what customers don't notice. Find out what they hate and what costs them time, and figure out solutions - including solutions for people facing tough times! A beautiful idea is never perfect, which means there are always ways of improving what you do that will revolutionise your offer in your customer's eyes.
JLA: Should the focus be on core competencies or innovation?
MM: Both. The main focus should be on using existing competencies to innovate in ways the customer values and that move you ahead of the competition. To do that involves changing the way you run meetings, planning and execution to instil urgency and creativity - leading to high-energy, high-value solutions. "It's not what you do, it's the way that you do it!"
JLA: Is technology the starting point for innovation?
MM: No - but it has to be in the mix. Ignorance of technology is losing companies and governments serious amounts (trillions) of money. You should never start with a blank sheet of paper. Modern technology allows answers off the shelf that are many times more powerful than custom-built solutions.
Customer needs are the starting point for innovation, but these must be matched to answers. It's the garbage can approach. If you have enough smart answers floating around then you will be able to solve the problems that are facing you!
JLA: Is turning around an organisation like turning an oil tanker?
MM: Only if you insist on trying to turn it around rather than making the small changes that matter. It's rare that the oil tanker is facing completely the wrong direction, so don't waste time and patience trying to turn it 180 degrees. Instead figure out how to adjust it quickly by a few degrees with the help of employees and the few experts who really know what they're talking about. Apple did it in 12 months. Disney did it in 6 months. Nissan did it in 3 months. It's possible, and there's a recipe for doing it right and wrong.
JLA: Should our attitude to risk change dramatically in a recession?
MM: Our attitude to stupidity, ignorance and willful indifference should change dramatically. They are all risks. If you mean should we invest less in ideas because we don't have any money then that depends on the risks involved with doing nothing, or doing nothing special. Woolworth's didn't go bust because of too much innovation! They went bust because they did the same old things in the same old ways while the world changed.
JLA: Which leadership qualities come to the fore when pressure mounts?
MM: Calm helps at first (as in the Obama vs McCain race), but it's not enough. Leadership is about describing a destination and figuring out road maps to attract engagement. Some leaders keep going in the same direction because they fear looking weak, or because they can't figure out a new direction that makes sense. Top leaders notice trends and patterns before the competition, and then adapt the resources of the company accordingly. Think Gerstner at IBM. You can't control the waves but you have to be able to surf them. It stops being about managing your career and starts being about how to share hope.
JLA: How do you deal with scepticism, cynicism and defeatism?
MM: First, hope has to be restored. That includes general hope by giving a perspective on other success stories, breakthroughs, accomplishments and inspiring achievements. It also includes specific hope by giving a perspective on the current situation for your particular team, department or company.
Secondly, a change in pace, style, tone and content of meetings is necessary. The divisions between levels of hierarchy and the deference given to leadership have to change. Get people talking. Create cross-functional teams. Introduce big, fast paced meetings focused on building a bigger brain of collaboration between groups, internally and externally. Part of this is building relationships, putting fun back in the workplace. It's also about developing ideas from vague, unpolished off-the-top-of-head remarks into polished, specific, complete, change-the-market plans in a matter of hours, days and weeks.
If you want to overcome scepticism you must engage the sceptic. If you want to overcome cynicism you must make the situation appear possible.
JLA: What skills and attributes should employers now be looking for?
MM: An understanding of trends, technology, fashion and 'possibility'. You want people who want to work hard to achieve amazing things. You want people who might not be listened to in normal times but who can be heroes in a time of crisis. You want curious people, and you want people who like other people; those who make others laugh, who make them feel better about themselves and who oil the wheels of collaboration. And you want people who have seen impossible things achieved before. Bring together a mixture of these people and then get someone to mix them all up into a resilient, adaptable alloy.
JLA: How do you retain and motivate key staff when times are tough?
MM: It's an unhelpful paradox that sometimes the best staff go off to do great things when times are tough, while the worst bunker down and stay where they are. Don't assume that the best people will be scared at a time like this; they may feel liberated to go and try something new. For them to stay requires a belief that this time something is going to change. And think carefully about who are the key staff - perhaps they have changed in tough times. It may not be last year's top money earner. It may be the black sheep, the background genius, the visionary or the crank. Create an environment where the people who matter feel engaged and hopeful and do their best work.
JLA: Will recession dramatically change medium and long-term trends?
MM: That's a big question. It will speed up existing trends in value, design and technology. People will turn to brands offering well thought-through solutions and excellence of design delivered at superb value/price combinations. But recession will temporarily reduce unthinking spending and investment, and it will paralyse some necessary investment with significant long-term consequences. (It will also speed up the cull of organisations that are unfit for purpose.) On the other hand there will be great opportunities to capitalise on trends that demand increased intelligence per dollar, pound, euro or yen that we spend.
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