Leadership: Innovate or be the next dodo

After last week's Potshot (based on an outstanding article by Shoshana Zuboff)

, I searched for this one, which I wrote back in April. I discovered it never got posted. But, I think it's still worth publishing, since it touches on the same life-and-death commercial imperatives that Professor Zuboff presents so starkly.

I ran a venture capital company in Australia in the early 1970s. Our key investors were English and American. I soon learnt to fly from east to west globally: visiting the UK and Europe before the US. Most people in the old-world seemed to see things in terms of a pessimistic "why?" "We've tried that and it didn't work; why invest so much in that venture?" Our US hosts though responded with an upbeat "why not?" Now, a third of a century later, The Economist article above moves the global compass further. Speaking of China and India, it says "this is a region that, to echo Churchill's phrase, sees opportunities in every difficulty rather than difficulties in every opportunity". In leadership terms, are you an optimist or a pessimist? Part of the problem or the solution? Part of the past or the future?

The Economist article summarises the market-changing American innovations of Henry Ford (mass production) and Alfred Sloan (divisional organisation). Then, in the 1960s, came Japanese lean production that almost destroyed the US car and electronics industries. Now, the ferment is in emerging markets. And, not just based on cheap labour but increasingly on disruptive innovation. And, innovation as by Wal-Mart or Dell: making things available at lower prices. But, in this case: $3,000 cars, $300 computers and $30 mobile phones.

Supporting this trend, major US and European companies are now doing much of their innovation in the emerging markets with their largest offshore research facilities in the region.

For those of us with time left in our careers, this is a serious matter. As a leader, how will you upskill (and mentally reorient) to remain worth following? If I asked your people, would they say you're up-to-date? How often do they turn to you for comment on global trends, competitive developments and strategic options? Or, do they feel they're spending more time coaching you than the other way round?

The locus of competitive advantage is shifting. Innovation is still critical but not just about flashy new technologies. The huge growth markets need products we in the West take for granted but at a tenth of the cost. This is about rethinking production, distribution and other strategies. And, in many cases, I suspect the newly rethought model that sells in China or India will also find a market in the US, Europe and Australia! With more safety requirements, etc. but still cheaper than we now imagine. Will you and your business be part of this future or another buggy-whip casualty?

What to do? Monitor developments relentlessly; rethink strategy and your business model; make innovation a way of life; and, develop staff. Above all, set new, different and tougher goals. As the Red Queen said to Alice: it takes all the running you can do, to keep in the same place; if you want to get somewhere else, you must run at least twice as fast!

Leadership: Innovate or be the next dodo

By: Tim Pascoe

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