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Digital Skills Increasingly Important for Next Generation of Corporate Leaders
The importance of these skills today
- Next generation leaders are:
- Understand the importance of being digitally savvy
- Seek opportunity independent of the pandemic
- Aware of new societal norms and era of social distancing
Rating out of 9 on how senior level executives effectively deal with board issues (This is what separates digital savvy companies from those that aren’t).
- 4.8/9 on Strategy: Business-model issues of digital disruption and opportunity
- 5.5/9 on Oversight: Major IT/digital transformation projects and spending
- 6.4/9 Defense: Cyber risk, data privacy, outages, and regulation
Source: MIT, study off 22 companies, thousands of executives and studied biographies and ranked them.
Keys for ensuring a digitally savvy IT unit
- CIO working strategically with the CEO on the role of digital
- Building digital discipline across the enterprise
- Improving external customer engagement
- Relentless delivering operational efficiencies
- Many companies are significantly better at playing defense and quite poor at digital strategy. Great thought leaders understand where digital is going and how critically important it is to also understand the implications of digital changes and how to capitalize on them.
The vast spectrum of CEOs
→ Great CEOs
- Scott Cook, Intuit, Longest Tenure of any CEO. Calls himself the “Mentor and chief” rather than the CEO.
- Vas Narasimhan, Novartis
→ Bad CEOs
(In adoption and rigidity—very aggressive culture internally and externally; will not find place in future corporations)
- Corporate Fraudster, Adam Neuman, We-Work
- Bro-culture man, Travis Kalanick, Uber
→ Controversial CEOs:
- Elon Musk
- Mark Zuckerberg
- Bill Gates
- Jeff Bezos
- Amazon culture is like a cult because the 14 leadership principles are quasi-religious. Many who embrace Amazon culture, spout these principles often. You either completely devote yourself to amazon 24/7 or you leave.
- Amazon 6-Pager (Template to introduce a new idea or challenge an existing one to an executive)
Classic Disruption Cycle
- First part of the curve is where a company is overconfident.
- Example of this overconfidence: “We’re a Fortune 500 company! We’ve made it: a great brand and a large Customer Service base. All we need to do now is keep our head down and keep doing what we’re doing.
- That overconfidence leads to “Status-quo bias”. The problem is essentially “what got you to the dance is not going to be what gets you through the dance” and one must constantly revisit the core assumptions of their business.
- Status-quo Bias: A person’s innate preference for not doing something different from what they’re doing today. The simple answer is that people naturally view change as costly, unsafe, and risky. If the perceived benefits of a new or alternative solution don’t outweigh the perceived costs of changing their status quo, people tend to take no action to change. They prefer instead to continue on the path they’re already on—even if the alternative is objectively better.
→ Considerations
Preference stability | When people form an opinion or preference about a situation, they don’t like to change their mind. In fact, people filter out and discount information that runs counter to their opinion. If a customer’s preferences change less often, or remain static, they’re more likely to choose the status quo and stick with what they’re doing today. Conversely, if you destabilize their preferences, you increase their openness to change. |
Anticipated regret/blame | The possibility of regret brings up all sorts of negative emotions such as fear, dread, and anxiety. While the consequences of actual regret will play out in the future, the emotional experience of regret takes place in the present. Choosing the status quo may decrease the feelings of anticipated regret because there’s less risk involved, and therefore less of a chance that the decision maker is blamed for the negative repercussions of that decision. |
Cost of action/change | Changing the status quo often involves a cost of some kind—the transactional costs associated with the change, or the transitional resourcing costs of changing to something new. Change seems risky or costly, while sticking with the status quo registers as either neutral or even beneficial—even in the face of contrary evidence. Even when no explicit costs are associated with switching, uncertainty can stall the decision from moving forward. |
Selection difficulty | When prospects and customers are overwhelmed by too many options, they suffer from “choice overload.” This amplifies their tendency to view change as complex and costly. Decisions may also seem more difficult if there isn’t enough value associated with one choice versus another. |
Concept of Regenerative Trajectory = Thrive Forever
- Despite and in spite of the economic climate, organization must continue to regenerate themselves.
- The Yellow curve represents an organization that is on a regenerative trajectory, which is the ideal curve. An example of an organizaion that was and is on this trajectory is Disney. Started with one cartoon strip (Mickey Mouse) and have continued to innovate throughout the years, becoming one of the largest corporations in the world today.
- Today, product cycles are no longer measured in years, but in months. Innovation happens much faster and smarter.
“What got you here, won’t get you there” = If you are not regenerating, you are degenerating.
Think of how many companies were/are “one-hit wonders” or “one-trick ponies”. They had one good product and then they disappeared.
NEW Three Horizon’s Framework (adapted)
- If a company follows only one horizon, or one horizon for too long, it is said to be on a “degenerative trajectory”.
- Leaders that lead Horizon One businesses are “operators” where their inherent DNA is about meeting performance metrics and very clearly defined precise goals.
- Leaders that lead Horizon Two businesses are much more comfortable with ambiguity, change. They are much more about vision and driving market acceptance of new ideas, concepts and new approaches.
Framework & Tools for Leading Digital Transformation
Innovation: Real Innovation vs. Theatre
What is “innovation theatre”? It gives the CEO an opportunity to feel innovative; unfortunately, it is when a company just goes through the motions to look and feel innovative without providing any real innovation at all. This makes employees spend an exuberant amount of time into coming up with ideas on how to grow the business in the traditional 3-horizon framework. This leads employees to leave the company and bring those ideas into the marketplace.
Forbes Talk: Intuit's Scott Cook: The Boss Is No Longer The Caesar
Speaker: Scott Cook
Scott Cook uses two main examples to lllustrate how culture is changing the management landscape in China and the US, and how to grow by experimentation and decision thinking
Click for summary
The 3 Horizons of Growth
→ McKinsey’s Three-Horizon Model
- Each horizon requires different focus, management, tools, and goals. McKinsey suggested that to remain competitive in the long run, a company allocate its research and development dollars and resources across all three horizons: Near-Term → Mid-Term → Long-Term
- Three Horizons allowed senior management to visualize what an ambidextrous organization would look like — the idea that companies and government agencies need to execute existing business models while simultaneously creating new capabilities — and helped to prioritize innovation products and programs. However, in the 21st century the Three Horizons model has a fatal flaw that risks making companies lag behind competitors — or even putting them out of business.
About this model
This model is an organizational “pipe-line” in that Horizon 3 feeds Horizon 2 which feeds Horizon 1. If you are missing or ignoring a Horizon, an organization breakdown will occur. A break-down can be reasonably predicted by observing how much time corporate leaders or C-level executives spend on the various horizons.
Horizon | Stage | Goal | Actions |
Horizon 1: Managing existing Products and Services | “Execution” Stage (Most CEOs good at this) | Meet numbers and please shareholders | CEOs drive execution and ensure the organization moves like a well-oiled machine. The company continues to innovate its existing business model and core capabilities in the short-term. |
Horizon 2: Proving out new ideas | “Experimentation” Stage (CEOs have mixed success here) | Meet next year’s numbers | Here companies spend their time testing products and services to make sure they are ready for Horizon 1. This extends a company’s existing business model and core capabilities to new customers, markets, or targets. |
Horizon 3: Generating and discovering fresh and new ideas | “Ideation” Stage (Very few leaders thrive here) | Create new business | Develop new products, services, capabilities to take advantage of or respond to disruptive opportunities or to counter disruption. This horizon is typically two years out. CEOs generate new insights and spot new ideas. They are looking for products and services to test in Horizon 2. |
*Most common scenario seen in companies that use this model: In two years’ time, the new products and services that are ready to feed into Horizon 1 are insufficient; there are not enough of them and are not adequately differentiated to provide a competitive advantage, because: CEOs/organizations focus significantly more on Horizon 1 than 2 and 3 (virtually ignoring 3 altogether)
The traditional model is losing relevancy: New Way of Thinking > Old Way of Thinking
Old way of thinking: In the past each horizon relative delivery time.
Some organizations defined:
- Horizon 1 as new features that could be delivered in the short term of three to 12 months,
- Horizon 2 as business model extensions that will be ready 24 to 36 months out, and
- Horizon 3 as creating new disruptive products or business models 36 to 72 months out.
- “Business model” did not mean only private businesses, but also government agencies, nonprofits, etc.
This time-based definition made sense in the 20th century when new disruptive ideas took years to research, engineer, and deliver.
Hackathons
New way of thinking: The three horizons are no longer bounded by time
- While traditional analysis suggests that Horizon 3 disruptive innovations take years to develop, in today’s world this is no longer the case.
- Today, disruptive Horizon 3 ideas can be delivered as fast as ideas for Horizon 1 in the existing product line.
- Innovation Theatre: Most organizations do not have a culture that allows for innovation. Many employees, in order to innovate, have to go above and beyond their corporate culture and push boundaries. This makes innovation fail.
- Should be Horizons 2 and Horizon 3 projects only
- Companies that go through the motions and read about hack-a-thons and go and pretend to innovate (Innovation Theatre).
→ Hackathons are about Innovation
Most Important Skill | “The Ability to learn to change and grow” —Scott Cook |
Why? | To Delight customers in ways they previously could not imagine. |
What? | Customer Driven Innovation: (1) Find an important unsolved customer problem, (2) that we as a company can solve well, (3) in order to build a durable competitive advantage. |
How? (”design-for-delight” methodology) | Have deep genuine customer empathy, start broad and go narrow, conduct rapid experiments with customers. |
Environment that allows for innovation | Unstructured time, Innovation catalysts, Innovation awards, Brainstorm sessions, Horizon planning, Sandboxes and experiment systems |
Old way vs. new way | “What is your answer and analysis behind it?” to “Ok, what is the fastest way to get an experiment to test that idea?” —Scott Cook, CEO of Intuit |
Human-Centered Design
The difficulty of the HCD approach is that finding a diverse, talented group of individuals and have them be able to work together and build on each other’s ideas can be a daunting and difficult task; however, if done correctly, this model allows people to build on and branch off the ideas of others. You also can get to a place you just can’t get to in one mind.
Observe your consumers: Figure out what humans really want by watching them.
- For example, if you see someone using software and you see them grimace, try and correlate that with when that happens. Then you can fix it. Their experience will tell you what you need to focus on. Examples
- General: Netscape, Amazon, eBay, Netflix, Paypal, LinkedIn, Facebook, YouTube
- iPhone, Platforms & FinTech: iPhone, AirBnb, Uber, Slack, Rent the Runway, Venmo, Square, Strip and Zoom
- Companies that lost to disruption: Blockbuster, Polaroid, Blackberry, Motorola, Borders, Radio Shack, JC Penney, Sears, Toys’ R Us, Nieman Marcus
How we choose problems and solve them:
Customer-driven innovation and “Design-for-Delight”
HOW CHOOSE THE PROBLEM through Customer-Driven Innovation | Success is found in finding the following: (1) An important unsolved customer problem, (2) That we and those we enable can solve well, (3) And build a competitive advantage |
HOW WE SOLVE (Design-for-Delight) | We solve problems by: (1) Having deep customer empathy, (2) And Rapid expansion for our customers, (3) While going broad to arrow |
IDEO Framework
60-Minutes Talk: How to design breakthrough inventions
Speaker: David Kelley, CEO of IDEO
Global firm IDEO incorporates human behavior into product design -- an innovative approach being taught at Stanford. Charlie Rose profiles the company's founder, David Kelley.
IDEO’s Framework and Approach
Steve Jobs wanted IDEO to design a mouse for $17 and they would use it on all their computers. At first, Kelley wanted the mouse to be exact and accurate in terms of, if you moved the mouse an inch, it would also move the cursor an inch. After careful thinking, he realized that this was incorrect and that he just needed the process to be intuitive and easy for the human mind to process and understand. Jobs had one main issue with the first mouse in that he did not like the sound of the mouse when it moved so he commissioned IDEO to coat the trackball in rubber. IDEO also came up with a variety of other inventions: The Ice cream scooper, Defibrillator that talks to you in an emergency, TiVO remote thumbs-up/thumbs-down button and redesigned classroom chairs.
Empathy/Market Discovery Phase | This at the heart of this methodology where one has genuine compassion and concern for their users. You meet your user in the world where they live by conduct Interviews, shadows, constantly seeking understanding and by being non-judgmental |
Define Phase | In this phase, one attempts to synthesize all of the information they’ve gathered and frame the problem to be solved. More often than not, the problem will not be correctly framed the first time. Use: Personas, Role objectives, Decisions, Challenges, Pain Points |
Ideate (Brainstorm) Phase | Come up with many ideas (hundreds of ideas). Do not discount any ideas until all (and the flow of ideas) have been exhausted from a diverse group of people. Diverge & converge on what is believed is the solution that will be optimized to solve the defined problem. Do this by: Sharing ideas, remembering that all ideas are worthy, Diverging & Converging, using “yes and” thinking |
Prototype Phase | A representation of a full-scale working product, service or experience. Very close to what you would consider to be an end product. Do this by creating mockups, storyboards while keeping it simple, failing fast, and iterating quickly |
Testing Phase | Put it in the hands of your community or users and watch them to see if it is solving the problem that you believe they want solved and if they are solving it in a way that is helpful (or unhelpful) to them. This is a circular process, and you converge until you get it right. In this phase, your end goal is to understand Impediments, what works, what doesn’t work, to role play and iterate quickly. |
Open Innovation & Open-Source Economics: CoVent 19 Global Ventilator Design Challenge
Video: CoVent19 Challenge Full Presentation-Boston Celebrates Leading Innovators in Response to COVID19
Speaker: Mike Grandinetti
CoVent19 Board Member Mike Grandinetti shares the motivation behind the CoVent19 global rapid ICU-class ventilator design sprint, the novel open innovation approach on designing critical care medical devices, and the impressive progress to date and our long-term vision for reinventing medical device innovation, design, manufacturing and economics to serve the world.
“Powered by Techstars” Collaboration
→ Mission of Techstars:
We believe entrepreneurs can change the world. | From startup founders to corporate employees, to visionary dreamers, entrepreneurs hold the keys to the greatest challenges of our time. They see opportunities. They take risks. And they clear the path for entire industries. At Techstars, we help grow their ideas into world-changing businesses. |
We believe collaboration drives innovation. | The history of breakthrough technology is the history of people, teams, and partners working in sync to achieve their goals and scale their ideas. By bringing together ambitious founders and corporations, Techstars enables innovation through creative, powerful relationships. |
We believe great ideas can come from anywhere. | This means beyond Silicon Valley, even beyond developed countries. At Techstars, we actively cultivate startup culture at the local level, growing communities of entrepreneurs through life events, mentorship, and education to create a more sustainable and inclusive world. |
We give first. | We help others whenever possible, giving first to our community with no specific expectations of return. |
We act with integrity. | We are honest and strive to be clear and transparent in our behavior and communications. |
We treat others with respect. | We are committed to ensuring an inclusive work environment that values the diversity of people and cultures around the world. |
We are here to start a movement. | Techstars is igniting the global information economy. Creating opportunities in neglected communities. Advancing innovative teams and ideas, no matter where they originate. By supporting entrepreneurs at every stage of their journey, we work to create positive social and economic change, transforming the world by making innovation accessible to anyone, anywhere. |
Open Innovation
→ Strengths of an open innovator:
- An “open innovation” mindset is one where you begin to realize that the “not invented here” syndrome is perilous to your organization and does not serve it at all.
- As an open innovator, you believe that there are great ideas, beliefs, insights and wisdom all around the world and if you embrace them, you can benefit from them and increase your competitive footprint.
→ Embrace Open Innovation by:
- Working closely with equipment providers to deliver new products.
- Creating or participating in a “Hackathon” or innovation tournament. They are far more compressed, normally 24-72 hours.
- Hackathon: Participants come up with a “hack”, a quick solution to a problem and then engage in a marathon of sorts, going an all-out in a caffeine fueled three-day non-stop innovation exercise. This is an extremely effective way to drive rapid innovation throughout your organization.
- Example: EPIC games (who owns Fortnite) created Fortnite in a hackathon. It is one of the most successful games ever.
- Example: SalesForce $1 million hackathon. They wanted to demonstrate to the world that you could easily develop applications and extensions on top of this platform. This hackathon showcased the remarkable capabilities that could be developed.
- Example: MIT Hackathon
Lean / Agile Methodologies
Speaker: Gregory Schmidt, MD
Three methods that work well together within the same cross-functional team.
Original Article: Click Here
Design Thinking, Generate | Ideate, Define, Empathize |
Lean Startup, Develop | Learn, try experiments, Pivot and Persevere |
Agile, Transfer | Sprint planning, execution, review |
→ Each of these three methods are essentially different legs on the same stool.
Issues with the Gartner Diagram:
- Implies that three methods are separate from one another and occur on different teams and at different times.
- Implies that work happens linearly from left to right: from Design Thinking to Lean Startup to Agile. This is incorrect and the connection and flow between these three methods are much more fluid and freer flowing.
Gain Competitive Advantage by learning and experimenting, and leveraging Design Thinking, Lean Startup, and Agile.
- Design thinking works in close collaboration with the user to understand their pain points, problems and potential solutions
- Lean startup empathizes the need to test hypothesis through frequent experiments that reveal customer preferences and behavior through objective metrics.
- Agile Development is an idea where working in smaller batches with a focus on highest priority tasks and leading to shippable work.
→ The Lean Startup
Lean | Traditional Approach |
Hypothesis Driven Biz Model | Implementation Driven Biz Model |
Non-linear Customer development process | Linear product management process |
Hire for learning, nimbleness, speed | Hire for experience by function |
Metrics that matter — When you’re creating new innovation. Include: engagement with idea/prototype or minimum viable product; softer but critical at this phase that you hit the nail on the head. | Classic accounting; Specifically for operating businesses with operating history |
Lean is the perfect partner to design thinking (Design Thinking is about the desirability of the product while Lean is about the viability of the product (In lean, an idea may go through a significant amount of learn loops to see whether or not the product meets the need of the stakeholder, persona, consumer, user)
→ How to Validate your business Idea
User Experience Vision | Create a clear vision, come up with a step-by-step high-level plan for your project or idea |
Identify Critical Assumptions | Step back and look at the plan and identify and critical assumptions that you made. Critical Assumptions are ones that if wrong will result in a large amount of loss/time/effort. |
Build an Early Version to validate a critical assumption | Concierge MVP does manual work to test market (example: Zappos) whereas a Smoke Screen MVP creates hype and gets funding around the product before it is ever released (aka a “Pre-order”) |
Release and Measure | Show MVP to small segment of customers. (Think Kickstarter and rewards if they pre-order) |
Pivot or Persevere | Persevere always if you see potential in your product; however, it may be time to pivot if in the long-term, if your pre-order to click ratio is low. “The sign of a successful pivot is that these engine-tuning activities are more productive after the pivot than before” —Eric Ries, CEO of IMVU |
*MVP or Minimum Viable Products: Product made with a minimal amount of effort used to test specific assumptions regarding the value of an idea.