Thought Leader Interview:
Describe the universal challenge faced by today’s leaders.
Modern executives face two fundamental challenges: optimizing their existing business while at the same time, innovating to create new value for the future. The problem is, these challenges call for a completely different set of metrics, mindsets and leadership approaches. Managers and executives, consultants and academics have long wrestled with how to achieve this, and in response, some of them have embraced a concept known as ‘ambidexterity’ — the organizational capability to fulfill both the innovation and execution imperatives at once.
However, the challenge goes beyond managing today’s business while creating tomorrow’s. I have found that a critical third element is required, and that is proactively letting go of yesterday’s values and beliefs. The fact is, to get to the future, you must build it, day by day — and that means setting aside certain beliefs, assumptions and practices that will otherwise become obstacles between your business of today and its future potential.
You developed a new model to tackle this universal challenge. Please describe it.
I call it the Three Box Solution. In Box 1, you take the required steps to manage your present core business to its peak efficiency. In Box 2, you take steps to escape the traps of the past by identifying and divesting businesses, practices and attitudes that have lost relevance. And in Box 3, you generate breakthrough ideas and convert them into new business models. Leaders at all levels — but especially CEOS — must pay close attention to each box.
What are some of the best approaches for each box?
The strategy in Box 1 is to make linear innovations within your existing business model. The challenge is to focus on your customer’s near-term needs, optimize operations for high efficiency and align rewards and incentives with your strategy. Leaderly behaviour in Box 1 includes setting challenging goals for peak performance; analyzing data to quickly spot and address exceptions and inefficiencies; and creating a culture of doing everything smarter, faster and cheaper.
Box 2 involves building a support structure for non-linear ideas by letting go of past practices, habits and attitudes. The past will always ‘fight back’ — so you have to be prepared to make tough calls about your core values here. The leadership skills required in Box 2 include gathering and analyzing weak signals from the environment; championing the ideas of maverick thinkers; and publicly penalizing ‘foot-draggers’.
Box 3 strategy involves experimentation that resolves uncertainties and new learning that strengthens an idea or reveals its weaknesses. The challenge here is that it is not always clear which idea to pursue first: you will need a method to gauge relative value and priority. And keep in mind that the success rate for Box 3 experiments is quite low.