Strategy, Leadership and Change Expert David Hurst helps organizations learn from the past, understand the present, and create the best possible future. In this Financial Post article, David tells us about how to kickstart a brand new perspective for your business:
If you paid attention in geography or science class, you may remember learning about climax forests: mature tree communities that grow so thick they crowd out every seedling and blade of grass. The forest floor is dark and dead until an outside force — a fire, perhaps, or a hungry beetle — levels the forest and kickstarts a sunny, active new ecosystem bursting with life and diversity.
Former steel executive turned management guru David K. Hurst thinks most organizations grow this way, becoming thick in the middle, and shading out new ideas. That, he says, is why many companies struggle with innovation. If his ecological view of business and leadership is correct, mature companies aren’t really cut out to renew themselves in the first place — an insight designed to help you suss out what your organization must do differently to remain healthy and relevant.
Hurst, the Toronto-based author of The New Ecology of Leadership: Business Mastery in a Chaotic World, will be conducting a $199 webinar June 23 through the Conference Board of Canada to help business leaders revise their growth strategies. I interviewed him this week to get a sneak preview of his innovation agenda.
“You need to understand business as a system,” Hurst says. As a company grows, it evolves from entrepreneur-led chaos to a rigorous set of processes enforced by no-nonsense middle managers. “Nothing fails like success,” he says. With success, “the whole culture becomes conservative. Management is all about enforcing rules when it really should be liberating people to take risks.”
Hurst says the best place to encourage innovation and renewal is in the middle of the organization, away from the wet blankets of senior administrators. Leaders and innovators need to immerse themselves in how customers use their products or services. “The only way to get value is to get fine-grained.”
Hurst recalls a time when the steel product distribution business was suffering from over-competition and its perception as a commodity business. His company fought back by asking people who called for a price quote, “What do you want to use this product for?” If the prospect wanted metal wire to build a fence, for instance, the sales person would quote a complete kit, including steel poles and pre-drilled holes. “Now you’re no longer in the commodity business,” Hurst says. “You’ve solved the real issue and you’ve created margin.”
This is innovation where it should be at the margins, he says, not the core. In this case, innovation developed because sales people were trained to ask questions and look for opportunities in every deal: “It was implemented every day in the minds of the sales people who got the phone calls,” Hurst says.
You can’t count on clients to ask for what they need, he adds. Organizations have to create it. “The customer isn’t meant to know what they need, because they don’t understand what’s possible.”
Hurst contends innovation begins with finding “places of maximum potential.” You have to get out of the office, and meet with customers to understand their needs and witness their problems. Innovation comes from movement, he says, not from structures.
Creation requires destruction
To find new opportunities, Hurst says, you have to look “one level down” at your existing products, services or technologies, and also “one level up” at the context in which you are operating, such as your company and its capabilities, your industry, and government regulation. “You always have to be asking, ‘What’s going to derail us? What’s going to kill us?’ ”
“Look for opportunities on disturbed ground: turbulent markets where information is poor,” Hurst says. “Creation requires destruction.”
Hurst blasts many myths of innovation, such as the idea that innovation comes from people who sit down to think through problems. Quoting from the latest findings in systems theory, he says, “Systems work when everyone talks to each other, when they communicate up and down.” If there’s a power imbalance (e.g., upper management isn’t listening to the middle), then innovation will suffer “because that cuts down on the level of interaction.”
Hurst acknowledges that all this mid-level motion, away from the sharp eye of the company accountants, has an ungainly, improvised complexity to it. But he says a business’s survival depends on such unnatural processes.
“Nature doesn’t really want large trees reinventing themselves. Usually it just sweeps them away.”