Success thought Co-Creation

“Two heads are better than one.”  — John Heywood

 

The organizations that Thomas Lockwood and I researched were not bound by the limitations of their structure or the defined roles people find themselves in. Rather, they invite inclusion, and bring together diverse groups and parties to collaboratively produce mutually benefitting and jointly valued outcomes. Both internally and externally, they deliberately engage people in the act of co-creation, eventually making it a key attribute of their innovative cultures.

The idea of co-creation is not a new concept. In its first forms, it focused on bringing together broader groups of consumers and customers, thereby enabling the provider of a product or service to generate new ideas. It offered a means of bringing together different parties to produce a mutually benefitting outcome. Over time, this resulted in an increased appreciation of the value of understanding the unique experiences and perspectives of customers.

What followed was the acknowledgment and use of co-creation in innovatively thinking about business strategies, structures, systems, and eventually, organizational cultures. Throughout our book, Innovation By Design, there are examples of how organizations use the pull factor to multiply the engagement of the variety of contributors to their design thinking processes.

THE PHILIPS STORY

One of the powerful examples of what happens when an organization takes the idea of co-creation and expands the process to a broader set of participants and applications is Philips, the Dutch technology company that, through its divisions, now focuses its innovation in the areas of health and wellness technology.

Sean Carney is the chief design officer of Royal Philips and is responsible for building the design thinking capabilities throughout the Philips organization. Philips created a branding for their design thinking process. In the spirit of greater involvement, they call their program the Co-Create process framework.

The framework is an embedded component and competency within the company that is forwarded through a company-wide training program and that is part of Philips University and the Philips Business process framework.

Sean joined Philips in 2011, succeeding Philip’s design leader Stephano Marzano. Sean arrived at a time when the company needed to create a shift in its broader business strategy. Over Marzano’s two decades of influence, and following the pioneering design leadership path set by Robert Blaich, Philips had become a design powerhouse and the envy of the product design world. During Marzano’s tenure, Philips Design operated as an internal service provider to the various divisions of the electronics giant, operating essentially as a design agency within the larger organization.

Now the company needed more: a broader and more integrated use of design thinking that would also influence the company’s business strategy.

Integrating design into strategy and practice

Under Sean’s leadership, design has been integrated as a strategy and a practice throughout Philips, contributing to the transformation of the company from being a consumer electronics product and lighting company, into a focused leader in health technology.

This is a dramatic strategic shift and is coupled with how design thinking is now used in the company and its influence on how the company focuses its innovation capability.

The change in separating health technology and lighting also helped move the company from a financial under-performance in 2011 to a return to delivering higher financial returns. According to the Philips Annual Report, in 2016 the company’s net income more than doubled (to €1.5 billion, or $1.8 billion USD) from the previous year and its income from operations increased from €1.0 billion to €1.9 billion, the equivalent of an increase from approximately $1.2 to $2.27 billion USD.

philips healthcare co-creation

As is often the case, though design thinking is credited with the creation of powerful innovation in products and services, it is also a key contributor to the creation of innovative organizational strategies that result in financial outcomes. As is so often the case with strategies that fall into the realm of human resources and organizational development, and that are difficult to track in terms of ROI and measurable financial value, the results at Philips demonstrate a more-than-significant effect on the financial bottom line.

Design thinking is also a key contributor to organizational transformations that get greater financial results.

Success through co-creation

A key to success in engaging the various groups in the co-creation strategy was recognizing the need to position the training in the Philips Academy, thereby allowing it to be scaled throughout the organization. At that time, HR was building a Philips Academy, and the principles of design thinking fit perfectly into that curriculum. Frans van Houten, the CEO of Philips, who was very intrigued about the use and influence of design thinking, assured that the Academy would receive the proper funding. Design and HR worked together to ensure that design thinking was developed and implemented in the organization properly.

The result was the establishment of a “10%–20%–70%” training model—that is,

  • 10 percent of the design thinking team became moderators and co-create leaders,
  • 20 percent of the team acted as coaches, and
  • 70 percent of the team actively focused on the principle of learning by doing, and co-creating with people internal and external to the company.

Important to the successful and meaningful implementation was that the training was applied on real-life challenges, mainly in the healthcare domain.

The different types of challenges varied in the areas of innovation for business strategy, new value propositions, business transformation, and customer engagements.

Design thinking was used to reframe the challenge of how to compete in the sector and to come up with a shared vision from which both internal groups and external partners and stakeholders could explore possible strategies and value propositions. By working on real-life business challenges, the Co-Create program delivered measurable impact and achieved sustainable change for the organization in the transformation of moving from a product company into a healthcare solutions provider.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

CREATING A CHANGE IN MINDSET – THE HUNGER PROJECT

In our book, Innovation by Design, Thomas Lockwood and I identified 10 attributes that give remarkable power to the human-centered aspects of design thinking organizations. Curious confrontation, that is, facing differing ideas and mindsets with the desire to investigate and learn, is one of these aspects.

Throughout our research we found this attribute to be consistently present. Though we can safely say that it isn’t 100 percent of the time present in how things get done, it almost always exists when people are applying design thinking to a problem. And, it is especially valuable when design thinking is used to confront differing viewpoints and conflicts.

Creating a change in mindset – The Hunger Project

Some 40 years ago, in the wake of the Bangladesh famine crisis, the founders of the Hunger Project took on one of humankind’s greatest challenges, ending human hunger. It wasn’t long before they came to the realization that the usual charity responses and resolutions wouldn’t work. They recognized that past efforts did not provide the right solutions because the right problems had not been identified. The key question that needed to be answered was not “How do we do what is being done better?” but “What’s missing in the work of ending hunger?

To broaden and deepen their problem-solving capability, and to think more creatively, they engaged the help of a group of experts and consultants. With the help of the group, they began a deeper inquiry and concluded that it wasn’t a matter of throwing money, and more money, at feeding people.

At that time, they concluded that the real problem was the lack of political will.

In Africa, where women were in the role of farmers, they found poor leadership and a lack of government focus on agriculture. When they confronted this issue further and followed their curiosity, they realized that the real problem was a matter of gender relationships. Though women had the primary responsibility for the feeding and care of the communities they lived in, they were the least empowered.

Confronting the truth and continuously acting from a place of curiosity is not easy.

By looking for what was missing, the Hunger Project found the path to strategically reinvent, shifting from the putting of time and energy into education in richer and wealthier countries, to bottom-up development in underdeveloped and impoverished areas of the world.

Each time the organization reinvented itself it required the ability to confront itself, and its stakeholders, to look for what is true.

As John Coonrod, the Hunger Project’s executive vice president, explains:

Learning how to reinvent has been part of our process. We had to stop doing what we thought we were good at and start addressing what was missing. Not knowing what was next can be hard sometimes. We had to accept that we didn’t know what was next always or how to get there. We referred to it as “climbing a mountain in the fog.” We had to shift our resources and get everyone on board. And then we found out that while leadership was on board, we had failed to engage donors. They didn’t understand the change. To do that, we had to educate them and shift their mindset. Instead of calling them “donors,” we started calling them “investors.” What we learned was that in making strategic shifts, we have to include everyone.

curious confrontation mindset helping to improve humanitarian aid

In the 1990s, the Hunger Project once again reinvented itself.

To confront gender issues at the local and individual levels, the strategy shifted to focus on the transformation of gender relations. However, this time they started with a focus on the broad engagement of investors and creating internal and external alignment. As John points out:

At the heart, ending hunger is about unleashing the human spirit and human dignity. The key to ending hunger is knowing who hungry people truly are. If given a chance, they will end their own hunger. It is about people being able to be in charge of their own lives and destiny. To not be denied the most basic of human rights and principles so that they can be able and capable of taking action in their own lives. Awareness creation is the starting point of a staged program of building people’s confidence, leadership, organizations and skills so that they can set and successfully achieve their own goals. We have a range of capabilities and structures to get things done.

In 1990, in response to typical top-down and charitable responses to hunger, which were often too inefficient and inflexible to meet the challenge of hunger, the Hunger Project, together with the Planning Commission of India, pioneered a new, decentralized, holistic, people-centered approach known as Strategic Planning in Action (SPIA).

This methodology turned traditional planning on its head: The Hunger Project would bring all sectors together, identify a critical gap or opportunity for synergy, and then launch catalytic projects, which would reveal new pathways for action.

More than 20,000 communities in Asia, Africa, and Latin America have applied SPIA to empower people to achieve lasting improvements in health, education, nutrition, and family income.

The leadership of the Hunger Project shows the ability to confront the truth about the context that they were operating in and, through being curious, inquire and explore what changes they and the organization needed to go through. They also had to confront the organization’s myriad stakeholders—some of which could be resistant to change—asking them to also face the current realities, investigate and learn about the different viewpoints that emerged, and be open to the new ideas that offered the possibilities for finding the right solution. Each reinvention of the organization reflects a deeper exploration and understanding of the right problem to be solved.

For the Hunger Project, to create such a change in mindset requires the attribute of curious confrontation.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

DESIGN THINKING AS A CONFRONTATION TOOL

One of the culture keys, and a cornerstone to how people interpret culture, is how disagreement and team conflict are managed. It has a great deal to do with how people feel safe in a culture, including their experience of what is acceptable and safe behavior, and what is considered unacceptable and unsafe. More than at any other moment in time, people learn about the culture they’re in when they experience conflict.

Curious Confrontation:

Facing differing ideas and mindsets with the desire to investigate and learn.

One of the questions that Thomas Lockwood and I asked when researching our book Innovation by Design focused on the influence that the use of design thinking has on how people manage disagreement and conflict. This ended up providing us one of the key attributes consistent across our study group organizations,

We ended up five insights that stood out as being the most significant:

  1. Design thinking provides an effective tool for confronting and managing disagreement and conflict.
  2. Organizations using design thinking have a belief in and positive mindset about curiosity.
  3. People who use design thinking demonstrate better inquiry and listening skills, which is the key to effectively managing disagreement and conflict.
  4. Because design thinking skills can be applied to dealing with disagreement and conflict, confrontation happens in a more timely and healthier manner, thereby avoiding much of the dysfunction and consequences associated with it.
  5. Design thinking is a valued process for confronting disagreements and misalignments among functions, and their leaders, and effectively breaking down unhealthy silos.

One of the greatest challenges any organization or team will face lies in how it effectively manages disagreement and conflict.

The process of design thinking creates a platform for the constructive management of diverse thinking and strategies, and the conflict that often naturally results. Viewing disagreement and conflict as an opportunity is a quality design thinking organizations can engage in. It’s an aspect of creativity and innovation that is natural to any environment in which people are committed to finding and creating the best solutions possible.

team conflict and the benefits of design thinking

Team Conflict, Competition and Creativity

When managed properly as part of an organization’s culture, the commitment to viewing team conflict and disagreement as an opportunity for creativity can be leveraged as a means to drive more innovative solutions to market. When teams compete with one another, it can also add to the speed at which innovation takes place.

A good example of such an environment is at some of the Samsung research and design centers. Here, several design thinking teams are established to work on the same challenges, at the same time. The teams work independently, don’t communicate with one another, and often don’t even know about the work of other teams. Their goal is to use design thinking to discover new products and services needs and solutions within a specific domain. This does not appear to be a case of lack of management coordination, but rather a case of putting more resources into solving a given problem area to increase the probability of success.

In this environment, internal design thinking team competitiveness is encouraged, and it seems quite practical in that corporate culture. This may be one of the reasons Samsung innovation seems to be far outpacing Apple innovation in recent years.

Although internally competing groups and teams—when clearly articulated as part of an organization’s culture and led in a healthy manner—can provide a great benefit, it can also backfire, leading to a lack of information sharing and unwarranted redundancy and duplication. It can also result in a more critical win-lose environment or the bringing to market of products not fully realized. Despite some hiccups along the way, Samsung has used this approach with a great deal of success.

Developing Conflict-Management Skills

As leaders show a willingness to support the teaching of design thinking skills to their employees, they soon become aware of the benefit they get from its use as a team conflict management tool. This includes paying more attention to the development of communication and conflict skills that support its success.

Because design thinking is a way of leading with curiosity, it encourages embracing ambiguity, uncertainty, and confusion. In doing so, people come to understand the value of listening to one another, allowing for the creative process of building one idea upon another. It also feeds the ability of people to move from a reliance on individual creativity and contribution, to behaving more collaboratively and engaging in shared creativity.

It all leads back to the understanding that an openness to listening to one another results in improved levels of inquiry, a necessary element in effectively and resolving conflict.

The skills of listening and seeking understanding are key to empathy, the first step in the design thinking process.

Genuine inquiry and open listening are paramount for users of design thinking to be successful and, as the result of lessened levels of fear, leads to the increased levels of emotional maturity and safety that directly impact how conflict is constructively managed. The result of lesser levels of fear translates into the free expression that leads to the ability of people to engage in the idea generation that feeds the process of co-creation.

When applied to conflicts, design thinking results in greater openness and faster generation of ideas, better feedback loops, and less competition over whose idea is better.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

COMMUNITY AND BRAND INTENTION

When it comes to the art of business and business success, whether it’s the business-to-consumer or business-to-business marketplace, nothing rings truer than the importance of knowing how to win the customer. If you’re clear on your brand intention and your company or team is aligned with it, you’ll definitely increase your chances to win.

Alignment to brand intention is a characteristic and key ingredient that successful market leaders have in common; it plays a significant role in how they beat the competition.

In my book, True Alignment, I discuss the six brand intentions – community, customization, preeminence, low price, physical wellbeing, and personal actualization — and how they provide a framework for understanding and leveraging what the customer is seeking and aligning a company’s strategies to meet those expectations.

Community

One of the six brand intentions is community. Community defines the brand intention of products or services that invite and deliver membership in a group. It offers relationship, afiliation, and connection.

The customer motivation in the brand intention of community is attention.

Community offers a sense of belonging and inclusion. It satisfies the human need and desire to feel important and have self-worth. Group members are able to receive attention and give it to others.

Business success: A tale of brand loyalty and community

Suppose two young, very creative, and intelligent men get together to develop a new product. It began a few years before they met, when at 21-years old, one man began exploring how to bring an idea to fruition. Two years later, he finds someone interested in collaborating with him to create a start-up company and bring the idea to market. They share a vision for what’s possible and begin building a prototype in a 10- × 15-foot shed.

They work tirelessly and, hoping it will be the beginning of a successful launch into the marketplace, begin seeking people to use their product. Three years later, customers begin to want their product. They find someone willing to sell it for them, develop a logo, move into to a 28- × 80-foot building, and expand their operation to eight people. The two men continue to recruit talented people interested in collaborating to build the business and, over time, the company grows to over $5 billion in annual revenue. Despite many ups and downs and challenges, they find new ways to collaborate with others, solve problems, and to continue to grow.

The resilience of its brand is defined by how it overcomes great challenges, building an identity of boldness and perseverance. Its customers become some of the most loyal brand ambassadors on the planet and the driving force behind the company’s capacity to continually expand and define ways to market and reinvent itself.

The company becomes one of the first to use crowdsourcing to engage its customers to market to others. With little prompting, its customers invite others to join its worldwide following. The company’s diverse community, comprised of people in all walks of life and generations, celebrates its shared passion and loyalty for the product and its brand by gathering in groups a half million strong.

Can you correctly select the brand to which this story applies?

  1. Nike
  2. Harley-Davidson
  3. Facebook
  4. Geico
  5. Budweiser
  6. Microsoft

If you chose Harley-Davidson, you are correct. In 1903, when the company produced its first motorcycles, its inventor William S. Harley was 23 years old and his partner, Arthur Davidson was 22. Their story of business success is familiar in that the company’s founders were young, talented, and started the business in a fashion that many of today’s success stories mirror.

Much like the folklore of the Microsoft garage and the humble beginnings of so many other companies that capture our imaginations, Harley-Davidson started with practically nothing more than a great idea. Over one hundred years later, the company generates over $5 billion in revenue.

business success harley davidson

At the core of their success is exceptional brand loyalty.

The essence of the brand, what makes it so powerful is its incredibly strong brand intention of community. The company’s mission statement has community and inclusion embedded in it:

“We ride with our customers and apply the connection in every market we serve to create superior value for all our stakeholders.”

The company’s market strategies embody and continue to be aligned to its brand intention. Much as it did in its early years when it sold to members of the military, the company pursues selling to groups and communities and leveraging camaraderie and affiliation. After World War II, when motorcycle owners loosely grouped into organized clubs, Harley-Davidson captured the idea of community and built its brand around it. Over the years, despite its quality issues, the brand maintained itself by expanding this platform.

Today, the community continues to expand and the company’s sales continue to grow. The Sturgis and Daytona motorcycle rallies attract well over a half million riders each. While not directly sponsored by Harley-Davidson, their motorcycles enjoy, by far, the greatest representation at the two events. To further the community brand intention, the company hosts toy drives, conducts cell phones for soldier campaigns, and sponsors concerts and an assortment of other events. It encourages participation in the Harley Owners Group (aka HOG), markets to members of the military, offers group rides, and locally connects individuals to fellow riders. The logo the company unveiled over 100 years ago hasn’t changed much, is recognized the world over, and maintains its popularity even as a tattoo, which is a pretty good representation of the power of brand intention.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

LEADERSHIP, CULTURE AND THE BUSINESS CODE

At the heart of complexity lives simplicity.

Aligning a business, company, or team requires a clear and constant focus, continuous effort, and all the skills necessary to be a great leader today and tomorrow. Members of organizations and teams must be more engaged and committed than ever before. For this, they need as much information and development as their leaders do. Every member of every team or company has a role in ensuring that alignment exists.

The Business Code is a framework for alignment that can be applied to any organization or team, regardless of size. There are four elements to the Business Code: the customer, brand intention, culture, and leadership.

LEADERSHIP AND CULTURE

Among a leader’s many responsibilities, none is as powerful and integral to success as understanding culture. Therefore, the leader’s behavior must be in alignment with the culture’s expectations.

Without this, it is virtually impossible to create and lead an aligned organization or team. As complex as the study of leadership is, the most straightforward definition of leadership is influencing others to act. Leaders are responsible for acting in a manner that clearly conveys how the intention of the business is implemented and ultimately how the customer is treated.

To influence culture, leaders primarily do three things.

  • They role model acceptable behaviors, which define how individual and group success are achieved;
  • They reinforce what is acceptable and unacceptable behavior, and
  • They represent the reputation of the culture.

These basic aspects of aligned leadership are not to be taken lightly. The influence a leader has, formally and informally, can easily be undermined when a leader’s behavior is misaligned.

Aligning natural preferences to group strategies

Another aspect of a leader’s influence that is often overlooked is how well aligned the leader’s natural preference is to the strategies the group is undertaking. The way we behave comes from our psychological makeup and preferences. How we are wired directly impacts how we think strategically, as well as how we relate to the customer experience. This preference guides our beliefs about what, why, and how a product or service is offered and delivered to the customer.

The customer ultimately experiences the preferences of the leader. You don’t have to look hard to find examples. Just consider Henry Ford, Oprah Winfrey, Bill Gates, Indra Nooyi, Richard Branson, Steve Jobs, Warren Buffet, Steve Wynn, Walt Disney, and Mark Zuckerberg. Each demonstrates their personal preference in how they lead, as well as the market strategies and brand intentions they pursue.

STARBUCKS: AN EXAMPLE OF LEADERSHIP AND CULTURE

Consider the example of Howard Schultz, the CEO of Starbucks. Schultz believes that connecting to and caring for people is paramount to success. This not only extends to the strategies for how Starbucks engages its customers; it is also evident in the company’s human resource strategies.

Schultz was born and raised in the Bronx, New York, where his family lived in a housing project. He often refers to his father, who struggled in low-paying jobs and had little money, no health insurance, and no workers’ compensation insurance when he got hurt on the job. In Starbucks, Schultz set out to build a company in which employees would be respected and well cared for. While the company’s main goal was to serve a great cup of coffee and to connect and care for its customers, Schultz said he wanted to build a “company with a soul.”

Schultz’s values and preferences resulted in a set of practices that are uncommon in retail businesses. Employees working at least 20 hours per week receive comprehensive health coverage for themselves and their families, as do unmarried couples. Along with stock option plans, employees are given a great deal of personal responsibility and treated with the respect that Schultz thought his father deserved and hadn’t received. How employees are treated by supervisors and the benefits they receive result in high loyalty and lower turnover.

These innovations come from Schultz’s life experience and personal preferences.

They are evident in the company’s strategies, including, in the early stages of the company’s growth, never to franchise. This decision avoided any possible dilution of, or variations in, the company’s culture and assured consistency in how both customers and employees are treated. In the case of Schultz and Starbucks, the alignment of a leader to the company’s market strategy and culture is apparent. The influence of his leadership on the organization’s performance is difficult to debate, and his reputation as a leader is undeniable. In 2011, he was named Fortune Magazine’s Businessperson of the Year.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

BACON AND EGGS ANYONE?

Review the following list of twelve of the most influential businesspeople in recent history. Is there any name you’re not familiar with?

  • Bill Gates
  • Oprah Winfrey
  • John D. Rockefeller
  • Henry Ford
  • Mark Zuckerberg
  • Walt Disney
  • Coco Chanel
  • Thomas Edison
  • Warren Bu!et
  • Edward Bernays
  • Steve Jobs
  • J.P. Morgan

The odds are fairly good that Edward Bernays is the only unfamiliar name. Who is he, and why is he included? The answer tells us something about how marketing and advertising reached such a sophisticated level of influence.

The father of spin

The idea that we purchase products to fulfill our desires and that our buying decisions are based on emotions rather than logic is certainly not new. While several versions of how this evolved exist, they all involve Bernays, an Austrian-born immigrant to America, who is considered one of the most influential minds of the last century.

Bernays, who is known as “the father of public relations” and “the father of spin,” pioneered public relations. He provided the foundation for emotional selling and marketing and influenced much of the twentieth century’s economic and political thought.

In the mid-1920s, the Beech-Nut Packing Company saw its revenue from bacon sales lagging and turned to Bernays for help. Before Bernays, the assumption was that people used logic to make decisions. Bernays, however, was influenced by his uncle Sigmund Freud, who believed that people are more motivated by emotion.

Thus, Bernays understood that much of human behavior is driven by instinct and unconscious desires. As a result, he believed that appealing to the public’s emotions would result in greater sales than promoting the dependability and reliability of a product.

bacon and emotional buying

Bringing home the bacon

To sell more bacon, Bernays decided to create an emotional appeal for a heartier breakfast that included bacon. In the mid-1920s, the ideal American breakfast was toast, juice, and coffee. To change people’s thinking, he asked over 4,500 physicians whether they thought a “light” or a “hearty” breakfast was healthiest. The physicians overwhelmingly chose the hearty breakfast. Bernays’ idea of a hearty breakfast included bacon and eggs, so he used this definition when he released the findings of his study.

The news made headlines and within a short time, bacon and eggs became America’s breakfast. Beech-Nut Packing enjoyed a significant increase in bacon sales, and breakfast was redefined. Bacon and eggs, or some variation remains, by far, America’s best-selling breakfast. This includes McDonald’s McMuffin.

Bernays’ contribution remains incredibly powerful. The idea that what we buy is driven by emotion is how products or services are marketed, branded, and sold today. Automobiles sales play on motivating the buyer’s desire for freedom, luxury, pride, and appearance. Clothing and accessories are marketed to reflect sexual prowess, attractiveness, and status. Food marketers promote physical wellbeing, goodness, and, for “foodies,” feeling “in” on the latest trend.

Bernays’ ideas have been advanced, expanded on, and fine-tuned, and emotional selling is still with us. Whenever you hear “doctors recommend” or “more dentists recommend,” you have Eddie Bernays to thank.

 

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

IT’S ALL ABOUT ALIGNMENT

The key strategic imperative of any business is alignment.

Alignment has long been the greatest challenge of leadership. The importance of alignment in business, along with its effect on performance, has only increased over time. Today, to come close to competing and succeeding in the chaotic and rapidly shifting business environment, leaders must create aligned teams and organizations.

For extraordinary companies — those that consistently compete and win in the marketplace — the overriding characteristic that is invariably present and separates them from their competition is alignment. And, because it is so important, the challenge is all the more difficult.

Most leaders, teams, and companies struggle with alignment because they lack an effective and easy-to-apply framework and approach. As a result, they tackle individual aspects of business — such as vision, strategy, processes and systems, and culture — without aligning them.

The Dangers of Misalignment

Most of us are all too familiar with the consequences of misalignment. We get caught up in the conflicts and blame games that result when everyone is not working toward the same outcome. Time and energy is wasted trying to overcome misalignments, which can disrupt and destroy teamwork and eventually bring down entire companies.

The consequences of misalignment are grave. Among others, they include:

  • A lack of focus on results that support the vision and strategy of the team and organization, resulting in poor performance.
  • A lack of a shared and consistent approach to serving the customer, which damages the company’s reputation and brand and creates customer distrust.
  • A lack of the ability to leverage and fully utilize team members’ individual talents and strengths, which decreases motivation and reduces their desire to contribute.
  • A lack of clear expectations resulting in unmet performance requirements, poor accountability, distrust, and potentially divisive conflict.

Misalignment is costly.

Typically, misalignment results in a negative financial impact, which can be obvious or often hidden.

Among the hidden costs are:

  • unmet goals and objectives
  • missed opportunities
  • missed sales
  • unmet promises to the customer, and
  • a myriad other failures that result from dysfunction within a group, team, or company.

One way or another, misalignment results in a failure, or a lack, of execution, which has a negative financial impact on a business.

All too often, leaders find themselves searching for answers to these problems without realizing that misalignment is at the root of them. They instead rely on hit-and-miss approaches and fixes, as well as temporary measures that provide only short-term solutions.

Great leaders and team members actively seek out and confront misalignments.

Aligning a business, company, or team requires a clear and constant focus, continuous effort, and all the skills necessary to be a great leader today and tomorrow.

Leaders need a systemic framework for understanding, assessing, and creating alignment. They and their teams and organizations require an approach that cuts through the complexity and eliminates the noise from multiple priorities, numerous initiatives, and the confusion of choices and options; an approach that provides a clear and simple roadmap to success.

The Business Code

The Business Code, discussed in depth in my book True Alignment, is a framework for alignment that can be applied to any organization or team, regardless of its size. It shows leaders and their companies how to confront and overcome the challenges of misalignment. The code also provides the tools needed to create strategies and initiatives and take actions that result in the alignment required to compete and achieve high levels of performance.

the business code - alignment in business

The outcomes of applying this framework include:

  • Alignment that clearly defines the trusted relationship of the business to the customer, the customer’s expectation, and what the brand
    stands for.
  • Alignment of leadership that is responsible for role modeling, reinforcing, and leading an aligned culture and is committed to the reputation
    and success of the business; leaders who hold themselves and other leaders responsible for their personal alignment to the organization,
    as well as its vision, and its culture.
  • Alignment of goals and strategies across and down through organizations and teams, large and small, demonstrated by the contribution each group and team member makes to the organization’s vision and strategies.
  • Alignment of each individual to the values, beliefs, and expectations of the culture; each member knows how success is created at individual, group, and company-wide levels.
  • Alignment that results in every person being responsible and acting in alignment with the business’s intention, as conveyed through each member’s commitment to the customer.
  • Alignment that contributes to the resilience that great companies and teams demonstrate when confronted with difficult issues and challenges and keeps them from going off course or losing sight of their mission, vision, and intended outcomes.
  • Alignment that is demonstrated through every decision and action taken by every member of the organization or team, how they fit into its culture, and what the company and team have promised to deliver to the customer.

The Business Code starts simply, letting us discover the richness of how business fulfills our needs. It allows us to connect the needs of the customer to our brand’s intention as delivered through the products or services provided. Next, it connects the ways in which we lead and operate our businesses and shows how they can be aligned to become more effective and efficient.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

WHAT IS DESIGN THINKING

Design thinking is a human-centered innovation process that emphasizes observation, collaboration, fast learning, visualization, and rough prototyping. The objective is to solve not only the stated problem at hand, but the real problems behind the obvious.”
Thomas Lockwood

So what is design thinking? 

There are many definitions of design thinking, but to be honest they are all pretty much the same. That’s because design thinking itself is an open, shared, and co-developed concept. So let’s not get wrapped up in semantics. According to Wikipedia:

Design thinking refers to creative strategies designers utilize during the process of designing. It is also an approach that can be used to consider issues, with a means to help resolve these issues, more broadly than within professional design practice and has been applied in business as well as social issues. Design thinking in business uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.

In our book, Innovation By Design, Thomas Lockwood and I conducted an in-depth study of 21 of the most innovative organizations in the world. As a result of our research, we identified 10 attributes they all share and that they use to leverage design thinking to produce change, drive new ideas, and deliver meaningful solutions.

As Thomas points out in his book Design Thinking, there are several key tenets that appear to be common in design thinking, and that we found consistently present in our design thinking organizations.

Identifying the right problem and understanding the user

The first tenet is a quest to identify the right problem to solve, coupled with a deep understanding of the user. This is achieved through:

  • observation,
  • fieldwork and research,
  • an empathetic approach to discovering stated plus unarticulated user needs, and
  • open inquiry.

Rather than adding the dilemmas of missing the mark in understanding consumers’ wants and needs, taking the approach of design thinking makes understanding the problem and the desired outcome all that much more focused and faster.

“The key is to start from a seeking to understand point of view”
Thomas Lockwood

Empathy coupled with collaboration

Empathy coupled with collaboration is the second tenet of design thinking. This applies to both the users and through the forming of multidisciplinary teams. In collaboration, constraints can be removed and great ideas can emerge. This helps to move an organization past silos and toward radical collaboration, rather than incremental improvement, thereby moving faster toward the creation and delivery of the right solution, a valued solution.

innovation - what is design thinking

Accelerate learning

The third tenet is accelerating learning through hands-on experimenting, visualization, and creating quick rough prototypes, which are made as simple as possible in order to get usable feedback. Because design thinking is effective in radical problem-solving as well as incremental improvement, the more experimentation the better.

The quick and simple prototypes also help grasp a potential implementation well before resources are spent in development. Often the goal is to fail quickly and frequently so that learning can occur. Prototypes can be sketches, rough physical mock-ups, stories, role-playing, concept storyboards—anything to help make the intangible more tangible. In a world in which shorter and abbreviated written messaging, visual cues, and emotional storytelling are overtaking written forms of communication, visualization has become a primary tool in the engagement of innovative thinking.

Integrating business model innovation

Thomas Lockwood is a big advocate of integrating business model innovation during the process of design thinking, rather than adding later or using it to limit creative ideations.

It’s a delicate balance, but also one of the attributes of effective design thinking organizationsThat is, they are able to integrate thinking by combining the creative ideas with business aspects, including the three Ps (people, planet and profit), in order to learn from a more complex and diverse point of viewThis is also helpful in anticipating what new business activities and the resources that may be required in the implementation of a new product, service, or experience initiative.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

EXTRAORDINARY BRAND RECIPES

What makes a brand extraordinary? What differentiates an extraordinary brand from its competitors? Why do we respond to powerful brands as we do? What is in the secret sauce of winners? Why do we want to associate with the best? What do extraordinary brands have that the others don’t?

Again and again we ask these questions. We want to know how to replicate that high level of success and make it our own. Whatever role we have in a company or team, we all aspire to be a part of something extraordinary.

First, extraordinary companies with extraordinary brands are well aligned. Their cultures and leadership are aligned to the company’s brand intention, which delivers in alignment to what the customer is buying.

Second, the company has a unique recipe, and the main ingredient is clearly articulated, understood, and focused on. The priorities of what to focus on in creating and delivering the company’s products or services are known to everyone and all act in alignment to that set of priorities. A sense of individual and shared commitment exists among company or team members, regardless of role or function, to relentlessly pursue and deliver the main ingredient to the customer.

While this may appear complex, it doesn’t have to be. The simpler the message, the more customers are able to see and feel the difference.

Simplicity is one of the attributes of extraordinary brands.

Complexity in a product or service often makes the customer anxious. While we like to have choices, having too many choices is not a good idea.

Have you ever felt uncomfortable when someone tries to sell you something with a lot of add-ons or options? Do you ever find yourself questioning the motives of the seller? When we’re given too much to think about, being sold too much, or being sold something more complicated than we want, we tend not to trust the seller. Or we don’t trust our own ability to make the right choice.

If the provider of a product or service claims that it will fulfill all your needs, that’s a pretty high mark to reach. You are likely to respond skeptically. I am not saying it’s not possible; I am saying it is highly unlikely. Therefore, we’re less likely to trust it.

Potentially, a customer may lack confidence in a company that offers a little bit of everything or tries to sell an overly broad range of products or services. We tend to place more trust in those that work to master a particular product, service, technology, or expertise. If a company offers a little of everything, it increases the likelihood that it’s not going to be great at any of them. The one exception is a low-price provider from which the customer is not expecting a high degree of product knowledge or service competency.

Extraordinary brands: a passion for music

I once read a poem in which the author compared walking into a bookstore to walking into a bakery. The scent of books evoked the emotion associated with the familiarity and anticipation of a fine bakery. He wrote that opening a book’s cover was like breaking into a freshly baked loaf of bread and that flipping through a book and stopping at a page and reading was like taking the first bite.

This is the experience I have every time I enter Wildwood Guitars. Whenever I set foot into Wildwood, I sense its uniqueness. By today’s standards, its approximately 500 square feet is a small space from which to conduct a thriving, rapidly growing retail business. It is also part of its charm and likely contributes to the concentrated, alluring aroma of the fine woods and finishes emanating from the guitars hanging on the walls. As customers walk into the store and across the old worn Italian rugs, they are quickly and warmly greeted by the artists sitting at the four desks that have, over the years, replaced the counters and display cases that once occupied the space. Calling them sales clerks (they don’t have official titles) would be a gross understatement. Each is an accomplished player, who leaves customers marveling when demonstrating a particular guitar. They don’t sell. They help you choose the guitar that’s right for you, that best fits the music you want to create. As they will tell you with conviction, it’s not about buying just any guitar. It’s about the art and your self-actualization.

When you enter Wildwood Guitars, it doesn’t cross your mind that it is a thriving leader in its market, an important player in a worldwide industry. Yet it is one of the largest independent sellers in the world. It achieved this by becoming a powerful niche player in an industry that has moved rapidly toward consolidation and where big is the norm.

The world’s largest retailer of musical instruments is Guitar Center. Owned by Bain Capital, “Guitar Center plunged into the new millennium with the forward-moving momentum of the previous decade and a vision of vast expansion.” Compared to Wildwood Guitars, the company is a giant, easily the Wal-Mart or Best Buy of music, with over 239 locations in the United States and over $2 billion a year in revenue. The company proves that a low-price brand intention and the ability to offer a large selection of items and brands can be a sustainable and growth-oriented path to success. Throughout its history, Guitar Center has grown through a strategy of leveraging acquisitions and opening new stores.

Like all great businesses, even large volume players need to change to succeed. Any great company must innovate and evolve to be competitive long-term, and Guitar Center has proven it can adapt. It has an operational capability and efficiency enabling it to quickly distribute its merchandise to the store level, to move it from store to store, and to swiftly respond to its customers. As part of its vision, the company states, “Guitar Center has no intention of slowing down and will be around for generations to come.”

Two different approaches

The difference in Wildwood Guitar’s approach to how the customer is treated and the intention of its brand couldn’t be any more different than Guitar Center’s, whose stated main customer objective is “to provide for the musician’s every need.” As a result, it offers a broad array of products—keyboards, drums, audio equipment, DJ turntables—pretty much anything you’re looking for. Guitar Center is a low-price retailer with an extensive selection, touting discount pricing. Customer service is naturally in alignment to that intention. While the sales associates at Guitar Center receive product knowledge training, they most often help customers find a particular product from the extraordinary range of choices and fill the role of sales clerk.

The low-price brand intention influences the sales associates and their perspective on the company’s culture.

The contrast with Wildwood Guitars couldn’t be any starker. While many of the influences of big-box retailing have found their way into the marketing of retail musical instruments (including competition on price and volume), Wildwood has resisted this impulse and has successfully held its own. In fact, it has done much better than that. It has become one of the most trusted independent guitar dealers in the world by carving outa niche that has resulted in a consistent growth. Year to year over the past decade, it has experienced double-digit growth by focusing on selling guitars, a narrow selection of high-quality ampliflers, and a few select accessories. It has moved away from selling low-priced items and taken a boutique approach by offering high-quality, vintage, custom, and rare guitars.

Wildwood is currently the largest Fender Custom Shop seller in the world. Among independent dealers, it consistently ranks among the top providers of Fender, Gibson, Taylor, and several other well-known brands. Among guitar makers, it has achieved an elevated status, resulting in several lines of “custom” guitars that include the Wildwood brand in their model names. The average price of a guitar sold at Wildwood is between $3,000 and $4,000.

Steve and Marilynn Mesple founded Wildwood Guitars in 1985. Steve has had “a lifelong love affair with music and guitars.” Their approach was to “sell the greatness and goodness of guitars.” Steve’s leadership approach and its influence on his team at Wildwood are evident and is an excellent example of a leader’s influence on the customer relationship, brand, and culture.

The relationship between Wildwood Guitars and its customers centers on the trust that comes from caring. Customers from far and wide interact with the artists who make up Wildwood’s team and, by phone and email, making buying decisions based on their input and recommendations. The members of the team build relationships, carefully listening to what the customer is looking for from a particular instrument—what they play, what they want to achieve, and what they aspire to—as well as what the customer likes in a guitar, including how it looks, feels, and sounds. Without ever playing the instrument, the customer makes a decision. That level of trust is compelling and is evidence of the caring nature of the Wildwood brand. It explains why the vast majority of Wildwood’s sales are not in-store. Steve makes it very clear. “We never try to sell the customer anything that they don’t want to buy . . . period. That’s not who we are and it’s not what our customers would ever expect from us. Everyone here knows that’s not something we would ever do.”

Steve Mesple has made changes along the way. And while they didn’t always get the results he was looking for, he has worked toward always making changes consistent with what motivates his customers, the alignment to the business’s brand, and what he sees as an unwavering culture of passion. He’s carefully recruits the right people for his team and rewards them for their passion and dedication. With the advent of the Internet, he expanded his sales capabilities and reach. The store’s website now offers over 2500 videos of great guest artists playing Wildwood’s offerings. The videos are not just entertaining. They are educational, inspirational, and in service to the customer. As Steve told me, “People love to hear great guitars played by great artists. It gives them the opportunity to experience what we can offer them, which is an unparalleled inventory of amazing guitars and trust. And we do it with unbridled passion.”

To compete with the appeal of the Wildwood Guitars of the world, Guitar Center offers through its brand Musician’s Friend, a single-person sales unit called Private Reserve. Customers can call and speak directly to the person at Private Reserve and get the expert assistance of an artist in the selection and buying of a custom or high-priced guitar. In relation to its brand and the perception of its customers, Private Reserve is much like a small stand-alone brand that lives within the larger brand intention of Guitar Center. While it offers a distinct service and product, the customer may not intuitively or intellectually find it to be in alignment with their interpretation of the Guitar Center and Musician’s Friend overall brand intention.

At the core of Wildwood’s achievement and the success of Guitar Center is what lies at the heart of the success of any business. It is alignment. For any enterprise, large or small, competing in a local, regional, or global marketplace, the required ingredient is the alignment of the customer’s expectation and their experience of how it is delivered. This means that the company’s people work with one another and act toward the customer in alignment with the brand intention and the customer’s expectations.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

DESIGNING CULTURE

Transforming or designing culture requires changing individual and collective behavior.

One of the greatest values to be gained from design thinking is the impact it can have on the culture of an organization and how it contributes to greater collaboration and innovation, regardless of its size.

Designing Culture: The Example of GE

In 2016, General Electric’s (GE) revenue topped $123 billion. GE has more than 330,000 employees operating in over 180 countries. It comes as no surprise that in a commentary published in April 2017, John G. Rice, the company’s vice chairman, shared his observation that it’s natural for a business of GE’s size and scale to see silos manifest along the way. He pointed out that the sharing of ideas and collaboration necessary to be innovative, and the ability of employees or team to add new value, have always been a challenge for the company:

Without a radical shift in everyday working behavior—in employee’s relationships with the company and one another—silos will remain, and the sort of cross-industry and horizontal collaboration that companies like GE need to foster for growth is not going to happen.
John G. Rice, Vice Chairman, GE

For any organization to undergo the continuous change required to sustain and grow, and to be innovative, its leaders and employees need to understand the tension between the paradigm of consistency offered by its culture and the ambiguity necessary for change. This means that they must be able to, at a root level, both trust in the necessity of their culture to evolve, while not relying on or creating unnecessary conditions of predictability.

It also requires being responsive to what is required to attract and leverage the ever-evolving world of talent.

Attracting creative talent

One of the keys to attracting creative talent is to create a culture that thrives on continuous learning and risk-taking.

This requires creating shifts in the culture to interest the new generation in the workforce, a group that wants to engage in a set of work experiences that are radically different from those of the past—a set of experiences that call for the greater levels of participation, and more collaborative and fast-paced ways that design thinking affords. It is about a more creative and engaging way to work and innovate together.

In its effort to become more design thinking–focused, GE moved its headquarters to downtown Boston.

Of the 800 positions at its new headquarters, 600 are designers, developers, and product managers—all evidence of the shift from being engineering-driven to design-driven, from product-centric to customer-centric, and from marketing-focused to user experience–focused. It’s also a sign of the need for executives to collaborate more with designers, design thinkers, and design leaders.

In a September 2016 interview with the Aspen Institute’s Walter Isaacson, when asked about the rise of the creative class and the company’s move to Boston, GE’s CEO Jeff Immelt explained:

I have to say it’s real. I thought it was a little bit of B.S. initially, I wasn’t sure. And when I looked out the window — when I was in Connecticut, it was beautiful, awesome, great office — but when I looked out my window, I saw nothing, there was nothing going on. I could watch cars go on the highway, things like that. I’ve been [in] Boston now six weeks and you just walk out the door. You’re in the middle of an ecosystem that quite honestly, for a big company, it makes you afraid. You’re where the ideas are. You get more paranoid when you’re doing that and that’s a good thing.
Jeff Immelt, CEO, GE

And how else is GE’s new headquarters different? “The new headquarters will be leaner, faster and more open with a constant flow of industry partners, customers and innovators.” The intent, execs say, “[i]s that it will be more like walking into a start-up in an urban setting than the remote suburban headquarters of the past,” helping to transform its culture from a functionally driven one with silos, to a culture focused on collaborative design thinking and creativity.

Taken from https://www.ge.com/reports/15169-2/
Architecture mockup from the planning stages of GE’s Boston HQ

From fear to transformation

What keeps us from realizing the tension between predictability and the ambiguity of change, the kind of real change that offers the opportunity for an organization to transform itself, and shift its culture?

One of the requirements to successfully implement design thinking to produce change and spark innovation is having a framework to understand culture. What is needed is a definition of culture and a means through which to assess the various aspects of an organization’s behavioral traits and leadership influence.

What culture does more than anything else is inform and reinforce its members how to individually and collectively attain success. It’s how to behave

The definition of what success is and how it happens is as unique to the organization as it is to an individual’s role. Culture speaks to the various aspects of behavior associated with attaining success. It includes the behaviors that support achievement or get in the way of it, resulting in a set of expectations and an understanding as to what is acceptable and unacceptable behavior.

One of the more powerful aspects of design thinking is its influence on culture. All organizations and businesses, including those that are much smaller, will encounter similar problems. Yes, the bigger you get, the more complex and difficult communication and collaboration become. Yet if you look at it through the lens of what drives these potential outcomes, the path takes us back to human behavior.

Cultures don’t create people. People create cultures.

 

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com