Issue 7 (version 2), Weds August 30, 2000
Made in New Zealand - twice winners of the America's Cup

"Experienced decision makers see a different world than novices do, and what they see tells them what they should do. Ultimately, intuition is all about perception. The formal rules of decision making are almost incidental."
Gary Klein, cognitive psychologist, Klein Associates Inc


Welcome to the seventh issue of EDGE FIRST, an email magazine dedicated to making you a better leader by providing:
- provocative thinking about what it means to be a leader
- the tools, techniques and best-practices that drive leadership improvement
In this issue
Competing for the future - Hamel is THE MAN, embrace innovation!
Women and leadership - for real progress ... give men the nappies
Quick case study/Jennifer White - on picking winning teams

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We think Gary Hamel is THE MAN (and said so in EF 2).

By himself, and with co-authors (notably C K Prahalad, Competing for the Future, Harvard Business School Press, 1994), he's published a series of papers and books that are milestones in the literature of the twentieth century corporation.

Leading the Revolution (Harvard Business School Press, $29.95, buy it at Amazon.com) is the latest, and (just in case you've been living in a cave – or on holiday) it's getting BIG ink. Hamel is great at marketing ideas – big hairy audacious ideas – and getting those ideas into the mainstream, accepted as conventional wisdom, really quickly.

“The first sentence of your book is a shocker,” said Fortune's Thomas A Stewart, in a September 4th issue interview, “The age of progress is over. What do you mean?”

What Hamel means, apparently, is that the organizational preoccupations of almost all of the twentieth century are history.

The century began with Taylorism and the search for inefficiency – taking time and motion out of process – and ended with reengineering and supply-chain integration, and with an army of process-chart champions excising inefficiency wherever it was to be found. Lots of innovation, lots of progress, but the focus was on scale and diligence and exactitude and replication.

A big step up from the craft-based organizations spawned by the industrial revolution. And – here's his point – the industries of this century will be as different again.

Business concepts and business models are becoming obsolete at an accelerating rate, Hamel says, product lifecycles – and strategy lifecycles – are shrinking. Companies are having to reinvent themselves much more frequently than before.

But is that true? Are we entering a period of relentlessly accelerating change, with no prospect of a slow-down and new equilibrium, or are we rock and rolling through a tough transition, about to emerge onto the sunny uplands?
Editorial aside - the idea that evolution is episodic – that it occurs in bursts, with not much happening for long periods in between – is intuitively attractive to a one-time earth scientist. Maybe the evolution of 'the organization' happens the same way. What's driving change now is the knowledge revolution. We're all rapidly adjusting to fit a significantly different environment. Some will adapt and prosper, some will go the way of the Dodo. Maybe, just maybe, it'll settle down, the dust will clear, and there'll be a different, but stable, landscape.
That's not just a philosophical question. How you lead whatever it is you lead through the months and years ahead will be influenced by which view you take. Leadership for continuous revolution is not the same as leadership through a short-term crisis. It's the difference between abandoning all your assets and throwing yourself at the mercy of innovation and continuous re-invention; or holding on tight and riding out the storm, to arrive well-equipped for whatever happens afterwards.

You can read the tea leaves either way. Hamel offers three case studies – the stories of three activists who changed the direction of huge corporations: Ken Kutaragi of Sony, who created the PlayStation and started what is now Sony's second-largest division; Louise Kitchen, who pushed gas company Enron (number 29 on Fortune's list of fastest-growing companies) to become a leading online trader of hundreds of products; and Georges Dupont-Roc, who convinced Royal Dutch/Shell that renewable energy could be big business.

Just take Enron. The internet was about to sink their gas trading business. Big change – really big change – was needed. Fast. A loud-talking, talented, driven woman made it happen. Now Enron works differently. They trade anything that moves, on-line, in micro-seconds, and make heaps of money. The transition could just as easily have failed.

So where's Enron now? On a treadmill of continuous, gut-wrenching transformation, or out on the sunny ($1b worth of transactions per day) uplands? You decide. How Enron's senior leadership makes that call that will influence how they lead from now on, won't it? And whether they continue to succeed.

Hamel gets himself in a bit of a bind on the question of 'quality' as well. He says that a key competency for new-economy companies will be mastering some of the skills of the old – like 'operational excellence,' (as good a, partial, definition as any for 'quality'). But he also seems to say, in effect, abandon 'quality.' It's a given, forget it. Innovation is where the effort has to be focused.

My response is one word, by the way: Firestone. Say it again, louder: FIRESTONE! The Firestone/Bridgestone tyre recall will, believe me, be the 'cost of quality' story of the decade. Sure, Firestone is not a new economy outfit, but new economy firms need legacy skills (first-class fulfilment, exemplary customer experience, leadership, strategy ...), done to world class standards (because it's about the whole world, right?).

We're not saying you can discount all this new economy stuff. When Hamel says companies that succeed in the internet age will be like the internet itself – open, flat, non-hierarchical and experimental – we're right with him. That's the way it is, and will be. But that's not an anti-gravity black hole. The rules are the same, it's just the environment that's different.
Hamel's three ways to get to the internet future:
1. Capability – people need to be de-institutionalised. Forget about sustainable competitive advantage, about incremental improvements (whoops – there goes the Baldrige Award). Educate heretics. “We've reached the end of incrementalism,” Hamel says, “and only those companies that are capable of creating industry revolutions will prosper in the new economy.” Rule-busting innovation is the way to win
2. Connectedness – any individual (do you hear me down there Shayne) should have the same potential to shape the destiny of the organization as the chairman. In the networked, team-working, constantly shifting and re-forming corporation, intra- and extra-workplace alliances are all that matter
3. Climate – reengineer management processes for innovation in the same way you recently reengineered core business processes for efficiency.
Fred Andrews of the New York Times spoke recently to Gary Hamel (Looking at Change From Both Sides Now, August 27), and asked: Your earlier book [Competing for the Future] was directed at the company. This one is directed at the individual. What happened?

The first book was aimed at a senior, strategic planner, audience, Hamel replied, this one is for any individual anywhere who has a passion for creating something new.

Two things changed my thinking, he said: First, a realization that despite all the aphorisms to the contrary, change does not start at the top. Look at how some really large companies have dramatically changed their identity and their sense of direction, and you discover that it often didn't start at the top. It was started by people low down who lacked any kind of formal power.
Sidebar – in an interview with Amazon.com's Susannah Ketchum, on the subject of change from below, Hamel said: “The world is changed not by people with positional power, but by people who have moral authority and intellectual authority. Those two forms of authority are open to everybody. What I wanted to do was produce a guide for people who want to change their organizations, who want to change their world, but who don't feel that they know how to do that. There's a glib attitude … that says if you get frustrated with your company, just leave. The issue here is not how do I change companies, but how do I change my company? And if you want to do that, you have to learn how to think like an activist, and how to exercise moral and intellectual authority in the service of your ideas.
And, second, there was a sense that many people in organizations had become cynical, frustrated, even angry, at the sense of not being in control. The gap between rhetoric and reality inside large companies has increased. We no longer call employees 'employees.' We call them 'associates' and 'members' and so on, and yet they're more expendable than ever.

You say innovation is everyone's challenge, said Andrews, how so?

If you went back to the 1950's and asked somebody where does quality come from, they would have said either from the artisan or from the inspector, Hamel replied. Either from somebody with magical hands making luxury goods or from somebody at the end of a production line weeding out the bad products.

Deming and the other quality gurus of the mid-50's said it doesn't have to be this way. We can make quality everyone's job. It is hard to understand how radical that thought was. “I remember,” Hamel said, “… Deming … presenting his ideas to the top management of one of America's big car companies. The audience there literally thought he was nuts. They said: 'Now tell us again, we're going to take people with eight years of formal education and teach them statistical process control? We're going to let employees stop a billion-dollar production line?' Now we take that for granted, but [it was] radical at the time. And today the challenge is not quality; the challenge is innovation. we need to do for innovation what we did for quality."

Resources
>> ON GARY HAMEL'S BOOKSHELF – “Stuart Kauffman's At Home in the Universe was the last thing I read that changed my worldview. He's one of the pioneers of complexity theory, and a lot of my thinking about strategy has been changed by the idea that if you create the right pre-conditions, and if you set the right simple rules, you can provoke complex, interesting behavior.”
>>THE HANDS-ON WORK OF LEADERSHIP - HBR ONPOINT ”One view of corporate leadership - call it the mythical hero model - assigns a slightly magical, hands-off role to top executives. By contrast, a newer management style seeks to foster grass-roots participation; but doing that requires the hands-on involvement of senior executives. The three articles in this collection maintain that top executives should expand their role beyond influencing how people interact - they must get involved in the details of products, customers, and markets.”
Women and leadership
In EDGE FIRST 2, we led an item on women leadership with a few words by Gail Evans, an executive VP at CNN, who's written Play Like a Man, Win Like a Woman: What Men Know About Success That Women Need to Learn (Broadway Books, $23.95).

Turns out the sisterhood has been less than complimentary about Evans' book (and about Esther Wachs Book's Why the Best Man for the Job Is a Woman, HarperBusiness, $24) both of which, according to Fast Company reviewer Pamela Kruger “serve up the same tired advice that was being peddled to women 20 years ago.”

In a story titled “Why Aren't There More Women at the Top?”, Kruger says “That question has been asked ever since women began flooding the workforce in the 1970s. Unfortunately, it remains just as relevant today: Women make up 3% of the top corporate officers in the companies that comprise the Fortune 500. And only 6% of the CEO slots in Internet companies that are financed by major venture-capital firms are held by women.

“Sometime during the 1980s, the book-publishing industry caught on, and a cottage industry of career books was born – each one cheerily promising women that they could beat those dismal statistics, if only they would follow 10 simple steps.

“Now,” she says, “come three new books that purport to be cutting-edge treatments of the issue. But only Peggy Orenstein's Flux: Women on Sex, Work, Kids, Love, and Life in a Half-Changed World (Doubleday $25) offers a fresh analysis. Which is? Focus on the most obvious difference between women and men: Women bear children and are more involved in raising them than men are.

Why is it, Orenstein asks, that women still find that having a career and having a family are at such odds? Interviewing high performers in various circumstances – from a 26-year-old junior executive who vows never to have kids to a 38-year-old prosecutor who quits a job that she loves in order to care for her kids – Orenstein argues that women's work-family conflicts have as much to do with their own perceptions of motherhood as with the attitudes of corporate America.

Here's a hi-lite summary:
- Although thousands of women have flooded into professions that were once dominated by men, those women still make up only 13% of law partners, 26% of tenured professors, and 12% of corporate officers
- Organizations continue to be structured around men who have stay-at-home wives. And with so few mothers sitting in executive offices, younger women are making choices based on an idea that they will be the primary caregiver to their children. By picking more flexible careers that are also likely to be lower-paying (and by choosing husbands who earn more than they do), women ensure that they will be the ones who make the career sacrifices down the road
- Women need to give up the Perfect Mother syndrome – the notion that a good mother is completely responsible for managing family life. And women need to allow the men in their lives to be equal partners at home. “Until men fully understand what it means to straddle two worlds, women who pursue 'life balance' will continue to sacrifice career advancement.”

Resources
>> WOMEN'S LEADERSHIP PROJECT – The purpose of the Harvard-Radcliffe Women's Leadership Project is to foster the effective leadership of a diverse group of women. The Project impacts both individuals and organizations at various developmental stages in order to nurture meaningful experiences on campus and beyond. The Project is committed to the following services: participating in the personal and professional development of women, providing opportunities and access to critical resources, strengthening the network of supportive and positive role models, and creating forums for discussion about the complex issues and choices that many women face.
>> The WOMEN'S HEALTH LEADERSHIP PROGRAM, at the Center for Collaborative Planning in Sacramento, California, works to improve the health status of low-income women in California by recognizing and supporting the leadership capacity of ethnically diverse, emerging women leaders working at the community level. This one-year statewide training program, developed in 1995, teaches women to recognize their ability to effect change, to communicate effectively for women's health needs in their communities, and how to participate in policy decisions that effect women's health.
Quick case study
We've quoted Jennifer White in past issues. She's a leader, and a nationally syndicated columnist, who – as the JWC Group – operates an executive coaching business. In THE POWER OF A GROUP, distributed last week, she offers some insights into female 'leadership'.

“I just spent three full days training six new coaches who recently joined my team,” she says. “They flew in for an intense weekend session to learn the coaching philosophies we use with our clients.

”There was a time in my life when I believed success came down to one thing: me,” she said. “I was the one who left my secure corporate job to risk everything to be an entrepreneur … the one who put my neck on the line to start this business… the one who woke up in the middle of the night worrying about cash flow. I felt responsible to come up with the ideas, strategies and processes to grow my business. And I'm the one, I thought, who would make it all happen. “

She quickly learned that her success was to be largely out of her hands. First came an assistant “who forced me to give up the non-revenue-producing activities.” Then there were a publicist, agent, consultants, editors, coaches, attorneys, bookkeepers, more staff ... a whole team of people. “Yes, I had to give up control,” she said, “but they brought their ideas, strategies and visions. Together, we created something even more powerful. And it's much better than I ever could have done on my own.”

So what has she learned?
- Give up your need to have all the answers - no one likes to be around a know-it-all, and as the leader of the group, it's your job to let other people's brilliance shine through. You can't do that if you're attached to doing and knowing it all
- Select wisely – the only way to build a powerful group is to make sure you select the right people. It may slow progress, but set the highest standards. Who is on the team is even more important than the work you're doing
- Let chaos and structure exist side-by-side – find the right balance. Well-run groups will be chaotic, flexible and ever-changing. But they also need structure and solid processes to drive outcomes. Don't give up one for the other. You need both if you want to produce the right results from your team.
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Version 2 - published noon 31st