Gary Hamel. Leading the Revolution. Harvard Business School, 2000. (331 pages)
…the most successful companies weren’t obsessed with their competitors; instead they were following the polestar of some truly noble aspiration. What counted was not so much how they positioned themselves against long-standing rivals, but how creatively they used their core competencies to create entirely new markets. (ix)
Of course there is a dividing line between companies that venerate the past and those that invent the future. But that line is not between the old economy and the new economy, it is between those that are capable of profound innovation and those that are not. (xi)
Indeed, the real story of Silicon Valley is not “e,” but “i,” not electronic commerce but innovation and imagination. (xi)
…my central argument is that radical innovation is the competitive advantage for the new millennium. This is a book for those who want to make a difference–in their world and in their organization. it is a manifesto and a manual. It is book for those who refuse to surrender to Dilbert-style cynicism. it is a book for those who believe the future is something you create, not something that happens to you. It is a book for those who believe passion is just as important as profits. … This is a book for those who are tired of playing it safe. It is a book for those who are unwilling to sacrifice their dreams on the altar of accepted wisdom. It is a book for those who care so much about their customers, their colleagues, and their own legacy that they simply can’t imagine not leading the revolution. (xii)
1 THE END OF PROGRESS
The age of progress is over. (3)
There is a gnawing sense that while humankind continues to improve its mean, it does not always improve its purposes. …The age of progress began in hope–it is ending in axiety. (4)
Yeah, our backs were straighter–the age of progress lightened the physical load–but our minds were numb and our spirits were anywhere but at work. (4)
Limited Only By Imagination
For the first time in history we can work backward from our imagination rather than forward from our past. …We have not so much reached the end of history, as Francis Fukuyama would have it, as we have developed the capacity to interrupt history–to escape the linear extrapolation of what was (10)
Our heritage is no longer our destiny. Today we are limited only by our imagination. (11)
Those who live by the sword will be shot by those who don’t. (11)
The difference between being a leader and a laggard is no longer measured in decades, but in years, and sometimes months. (12)
Organizational learning and knowledge management are first cousins to continuous improvement … Yet in the age of revolution it is not knowledge that produces new wealth, but insight–insight into opportunities for discontinuous innovation. Discovery is the journey; insight is the destination. You must become your own seer. (13)
The world is increasingly divided into two kinds of organizations: those that can get no further than continuous improvement, and those who’ve made the jump to radical innovation. (15)
Industry revolutionaries take the entire business concept, rather than a product or service, as the starting point for innovation. Revolutionaries recognize that competition is no longer between products or services, it’s between competing business concepts. (15)
Industry revolutionaries don’t tinker at the margins; they blow up old business models and create new ones. (16)
Yet today’s visionary is often tomorrow’s intellectual straightjacket. (21)
If you’re going to pour out your life into something, why can’t it be into a chalice rather than down a drain hole? …Never has it been a more propitious time to be an activist:
- Intranets and corporate wide e-mail are creating something close to an information democracy. The information boundaries that used to delineate corporate authority are more permeable than ever.
- More than ever, senior executives know they cannot command commitment, for the generation now entering the workforce is more authority averse than any in history.
- It is universally apparent that we are living in a world so complex and so uncertain that authoritarian, control-oriented companies are bound to fail.
- Increasingly, intellectual capital is more valuable than physical capital, and it is employees who are becoming the true “capitalists.”
There are always two parties–the party of the past and the party of the future, the establishment and the movement. – Ralph Waldo Emerson
I am no longer a captive to history. Whatever I can imagine, I can accomplish.
I am no longer a vassal in a faceless bureaucracy. I am an activist, not a drone.
I am no longer a foot soldier in the march of progress.
I am a Revolutionary.
2 RISING EXPECTATIONS, DIMINISHING RETURNS
There is an ever-growing population of mediocre companies and an ever-diminishing population of truly great performers. (36)
Growth is the scoreboard; it’s not the game. Profitable growth is a derivative of innovation. Focusing on growth, rather than on the challenge of business concept innovation, is more likely to destroy wealth than to create it. (39)
Without radical innovation, a company will devote a mountain of resources to achieve a molehill of differentiation. (51)
If you want to escape the cul-de-sac of diminishing returns, the first step is to admit that your current strategy, your dearly beloved business model, may be running out of steam. Sooner or later, every business model reaches the point of diminishing returns. And these days, it’s more often sooner than later. Working ever harder to improve the efficiency of a worn-out strategy is ultimately futile. (53)
Dakota tribal wisdom says that when you discover you’re on a dead horse, the best strategy is to dismount. Of course, there are other strategies. You can change riders. You can get a committee to study the dead horse. You can benchmark how other companies ride dead horses. You can declare that it’s cheaper to feed a dead horse. You can harness several dead horses together. But after you’ve tried all these things, you’re still going to have to dismount. (54)
In the age of revolution, the future is not an echo of the past. (55)
So start with the truth [VIA: cf. “Face the Brutal Facts” of Good To Great]. Yet history suggests that top management has an enormous capacity for denial.
In the age of revolution, every company must become an opportunity-seeking missile–where the guidance system homes [sic] in on what is possible, not on what has already been accomplished. (57)
3 BUSINESS CONCEPT INNOVATION
In most organizations there are few individuals who can think holistically and concretely about new business concepts, or envision radical adjustments to existing business models. (61)
A business concept comprises four major components:
- Core Strategy – …the essence of how the firm chooses to compete. (71)
- Strategic Resources – …core competencies, strategic assets, and core processes. (75)
- Customer Interface – …fulfillment and support, information and insight, relationship dynamics, and pricing structure. (80)
- Value Network – …suppliers, partners, and coalitions
4 BE YOUR OWN SEER
The goal is not to speculate on what might happen, but to imagine what you can actually make happen. (119)
Companies fail to create the future not because they fail to predict it but because they fail to imagine it. (120)
You must be as perfectly attuned to the timeless as to the ever-changing. (130)
People don’t embrace an opportunity because they see it, they embrace it because they feel it. (132) [VIA: I have recently been musing about the concept of “emotional exegesis.]
The real issue is not the present versus the future but the orthodox versus the heterodox. (134)
You can, and must, regain your lost curiosity. Learn to see again with eyes undimmed by precedent. (144)
5 CORPORATE REBELS
A middle-aged woman who takes on the Marcos oligarchy in the Philippines. An African-American woman who refuses to sit in the back of the bus. A group of mothers who press lawmakers to stiffen drunk-driving penalties. A 12-year-old kid who founds an environmentalist group that ultimately attracts 25,000 members. A Czech poet who stands up to totalitarianism. These are the people who change the world. And you can’t change your own company? Give me a break. (148)
Where in the pyramid are you going to find the least genetic diversity? Where are you going to find people who have most of their emotional equity invested in the past? Where will you find the folks who are most tempted to venerate history? The answer to all three questions is “at the top.” Now ask yourself, Who holds the monopoly on setting strategy and mapping out corporate direction? The same small group. Is this stupid or what? (148)
After two or three decades of industry experience, am I more radical or more conservative? Am I more willing to challenge conventions or less willing? Am I more curious than I’ve ever been in my adult life, or less so? Am I a radical or a reactionary? Am I learning as fast as the world is changing? (149)
…precedent and a narrow distribution of strategy-making power is a very bad thing for anyone who wants to create a new future. (149)
In this sense, you can’t have innovation in business models without innovation in political models. (149)
You won’t succeed in changing your company’s mental model unless you first push the political model off-kilter and temporarily redistribute the power to make strategy (150)
…you must become an activist. You must build a powerful grassroots constituency for business concept innovation. You must help to build a hierarchy of imagination, where an individual’s share of voice in strategy making and innovation is a function of imagination and passion, rather than position and political power. (151)
The good news is this: rule-busting change can start anywhere. Ever hear someone say, “Change must start at the top?” What utter rubbish. How often does the revolution start with the monarchy? Have you ever seen Queen Elizabeth II out in front of Buckingham palace, waving a placard that reads, “We want a republic”? Nelson Mandela, Vaclav Havel, Mohandas Gandhi, Susan B. Anthony, Martin Luther King–how often has profound change started at the top? … It is not Congress that sets the social change in America, it is activists. (151)
Do the names Peter Benenson, Florence Kelly, Samuel Hopkins Adams, Irving Stowe, Sarah Brady, and Linda Carol Brown mean anything to you? Perhaps not, but you may well have enjoyed the fruits of their activism. Benenson was the founder of Amnesty International. Kelly was a consumer and labor activist who established the National Consumer’s League and fought for the passage of minimum wage, child labor, and working hour laws. Adams was a muckraking journalist who was instrumental in getting the Pure Food and Drug Act passed in 1906. Stowe helped organize Greepeace. Brady, whose husband James Brady was shot during the attempted assassination of Ronald Reagan, is one of the most effective gun-control activists in America. Her lobbying helped bring about the Brady Bill, which requires a five-day waiting period on all gun purchases. Brown was the gutsy, young African-American student who tried to enroll in an all-white school in Topeka, Kansas, in 1950, prompting the landmark Supreme Court case Brown vs. Board of Eucation of Topeka, which declared the racial segregation of schools to be unconstitutional. These individuals and thousands of less celebrated activists badgered, harangued, organized, plotted, schemed, and ultimately prevailed. What they lacked in power they made up for in passion. They were citizen-activists. (151-152)
If you exercise the rights o citizenship only once every four years, at the polling station, can you really claim to be a citizen? Likewise, if you willingly relinquish your responsibility to influence the destiny of the organization to which you devote the majority of your waking hours, can you really claim to be anything more than an employee? (152)
…if companies are going to thrive in the age of revolution, they are going to have to become less like autocracies an more like democracies. (153)
…there are three good reasons to put your head above the parapet.
- You deserve something more than a paycheck and stock options. … Ask yourself, Have you ever done anything in the last three years that you will talk about for the rest of your life?
- The organization isn’t “them,” it’s “you.” Stop whining about “them.” That’s just an excuse you use to justify inaction.
- You owe it to your friends and colleagues.
6 GO AHEAD! REVOLT!
HOW TO START AN INSURRECTION
Step 1: Build a Point of View: A point of view must meet four tests: it must be credible, coherent, compelling, and commercial. To be credible it must be based on unimpeachable data. (188)
Step 2: Write a Manifesto: If you can present your POV as a story (what happens to the world if we don’t harness renewable energy sources) or as a picture (like the Web page featuring Grossman’s six-year-old son), it will be that much more emotionally compelling. (190)
Your manifesto must build a case for your intellectual authority. The depth of your analysis, the quality of your thinking, and the clarity of your reasoning must shine forth from every page. It must also wrap you in a cloak of moral authority. …Your manifesto must capture people’s imagination. It must paint a vivid picture of what could be. It must inspire hope. Your manifesto must challenge people to look the future in the eye, however disconcerting it may appear. It must deal forthrightly with the little lies that people tell themselves to avoid the discomfort of change. It must make inaction tantamount to corporate treason. But most of it all, it must ignite a sense of possibility. (193)
In building a coalition, you transform individual authority into collective authority. it is easy to dismiss corporate rebels when they are fragmented, isolated, and don’t speak with a single voice. (194)
Step 3: Create a Coalition: Most new opportunities don’t fit neatly into any of the existing organizational “boxes.” (194)
It’s easy to shoot one pheasant out of the sky; it’s a bit harder to bring down an entire flock. Keep building your flock. (195)
Step 4: Pick Your Targets and Pick Your Moments: Sooner or later, the movement has to become a mandate. (196)
Step 5: Co-opt And Neutralize: You are trying to disarm and co-opt, rather than demean and confront. Temper your indignation with respect. (198)
Step 6: Find a Translator:
Step 7: Win Small, Win Early, Win Often: People can argue with position papers, but they can’t argue with success. (201)
Step 8: Isolate, Infiltrate, Integrate: Experiments that stay experiments are failures. (202)
You need a set of values that set you apart from the courtiers and the wannabes. Honesty, Compassion, Humility, Pragmatism, Fearlessness. Courage is, perhaps, the most important attribute of all. …In the end, every argument is so thoroughly padded with contingencies and qualifications that they might as well be firing cotton-ball bullets.
Let them call me rebel and welcome, I feel no concern from it; but I should suffer the misery of devils, were I to make a whore of my soul. – Thomas Paine
7 GRAY-HAIRED REVOLUTIONARIES
Make no mistake, incumbents can be revolutionaries. (240)
8 DESIGN RULES FOR INNOVATION
DESIGN RULE #1: UNREASONABLE EXPECTATIONS. No company outperforms its aspirations. (244) Beliefs set the upper limit on what’s possible. (245)
Table-ready lettuce. $1.4 billion. if someone can do this with a vegetable, what the hell is our excuse?”
Never, ever believe you are in a mature industry. There are no mature industries, only mature managers who unthinkingly accept someone else’s definition of what’s possible. Be unreasonable! (246)
DESIGN RULE #2: ELASTIC BUSINESS DEFINITION. Too many companies define themselves by what they do, rather than by what they know (their core competencies) and what they own (their strategic assets). (247)
DESIGN RULE #3: A CAUSE, NOT A BUSINESS. Without a transcendent purpose, individuals will lack the courage to behave like revolutionaries. (248)
Yet if we rob them of the chance to feel they are working on something that really matters, are we really so enlightened? …What we need is not an economy of hands or heads, but an economy of hearts. Every employee should feel that he or she is contributing to something that will actually make a genuine and positive difference in the lives of customers and colleagues. (250)
Do you have a calling, or do you just have a job? (250)
DESIGN RULE #4: NEW VOICES. There are revolutionaries in your company. But all too often there is no process that lets them be heard. They are isolated and impotent, disconnected from others who share their passions. Their voices are muffled by layers of cautious bureaucrats. They are taught to conform rather than to challenge. And too many senior executives secretly long for a more compliant organization rather than a more vociferous one. (251)
It is ironic that the very group with the biggest emotional stake in the future–young people–is typically most likely to be prevented from contributing to the process of strategy creation. (252)
While at Siemens Nixdorf, Gerhard Schulmeyer instituted a process of “reverse mentoring” where twenty-somethings got the chance to teach senior executives a thing or two about the future. (252)
The kind of diversity that really counts is not gender diversity or racial diversity or ethnic diversity. it is, instead, a diversity of thinking. (253)
DESIGN RULE #5: AN OPEN MARKET FOR IDEAS.
DESIGN RULE #6: AN OPEN MARKET FOR CAPITAL.
DESIGN RULE #7: AN OPEN MARKET FOR TALENT. Let’s be clear, what matters in the new economy is not return on investment, but return on imagination. (263)
If an idea has merit, it will attract resources in the form of venture capital and talent. (264)
DESIGN RULE #8: LOW-RISK EXPERIMENTATION. In the end, though, companies don’t need more risk takers; they need people who understand how to de-risk big aspirations. (267)
DESIGN RULE #9: CELLULAR DIVISION. Division and differentiation–that’s the essence of growth.
DESIGN RULE #10: PERSONAL WEALTH ACCUMULATION.
9 THE NEW INNOVATION SOLUTION
Industry revolutionaries are like a missile up the tailpipe. Boom! You’re irrelevant! (280)
Whenever you find a brick that is old and fractured, kick it out and push a new one in.
Old brick: Top management is responsible for setting strategy. New brick: Everybody can help build innovative strategies.
Old brick: Getting better, faster is the way to win. New brick: Rule-busting innovation is the way to win.
Old brick: Information technology creates competitive advantage. New brick: Unconventional business concepts create competitive advantage.
Old brick: Being revolutionary is high risk. New brick: More of the same is high risk.
Old brick: We can merge our way ot competitiveness. New brick: There’s no correlation between size and profitability.
Old brick: Innovation equals new products and new technology. New brick: Innovation equals entirely new business concepts.
Old brick: Strategy is the easy part, implementation is the hard part. New brick: Strategy is easy only if you’re content to be an imitator.
Old brick: Change starts at the top. New brick: Change starts with activists.
Old brick: Our real problem is execution. New brick: our real problem is incrementalism.
Old brick: Alignment is always a virtue. New brick: Diversity and variety are the keys to innovation.
Old brick: Big companies can’t innovate. New brick: Big companies can become gray-haired revolutionaries.
Old brick: Incumbents will always lose to entrepreneurial start-ups. New brick: You can bring the disciplines of Silicon Valley inside.
Old brick: You can’t make innovation a capability. New brick: Oh yes, you can, but not without effort.
If you want your company to be revolution-ready, no belief can go unexamined. (281)
There’s no place for elitism in the age of revolution. (282)
There are several ways in which management processes are inimical to innovation. First, most of them are calendar-driven. …Second, most management processes are biased toward conservation rather than growth. …Third, most management processes take the existing business model as the point of departure. …Champions of business concept innovation will, invariably, find themselves working against the grain of key management processes. (291)
Most management processes are focused on existing customers and markets. …Most management processes are controlled by the defenders of the past. …Finally, most management processes are implicitly risk averse. (292)
In the age of revolution, the challenge will be to marry radical innovation with the disciplined execution–to merge the efficiency of a Toyota production line with the radical innovation of Silicon Valley, to blend diligence and curiosity. To be a gray-haired revolutionary, a company must be systematic and spontaneous, highly focused and opportunistic, brutally efficient and wildly imaginative. (309)
While there is nothing new in saying that a company must be more than a sum of its parts, what is new is how the summing up gets one. It can’t start with some grand pronouncement from on high about “what business we’re in.” It can’t come from a bunch of senior vice presidents working to craft a common mission statement. It certainly shouldn’t come as the panicked reaction to demands from stock analysts for a strategy that will hold water. Instead, it has to be filtered out of the stream of innovation that flows from the fertile minds of individuals throughout the organization. (310)
So ask yourself, Do you care enough about your integrity to speak the truth and challenge the little lies that jeopardize your company’s future? Do you care enough about the future to argue with precedent and stick a thumb in the eye of tradition? Do you care enough about your colleagues to help them get off the treadmill of progress? Do you care so much about the magnificent difference you can make in this world that you’re willing to try and change it with your bare hear? Do you care enough about the creative impulse that resides in every human breast that you’re ready to help everyone be a revolutionary? Do you care enough about doing something so wonderful and unexpected for customers that you’re willing to put your comfy job on the line? Go ahead, ask yourself, Do you care enough to lead the revolution? (314)
— VIA —
While written as a business book, there are nuggets (listed above) that are applicable to all kinds of revolutions. This book also offers hope and strategy for the thousands who are “underlings” looking to be a part of so much more. May these notes and this book help all of us let go of reality and grab hold of our imaginations to bring about a whole different kind of reality.
Convergent Strategies is essentially when everyone in an industry followed an identical strategy and had similar resources. The textbook result is that every company made just enough profit to survive and no more. That’s the inevitable result of convergent strategies. (49) I opine that this may be why so many ministry practices, in an effort to be relevant, are off point.