One of the biggest challenges today’s companies face is the threat of disruption from nontraditional competitors. In fact, in IBM’s recent survey of global C-level executives, a common refrain was that executives are most fearful of the competitor they’re not even aware of yet. The question that many businesses find themselves grappling with then is – is it possible to build an organization that is capable of leading and shaping industry disruption, rather than being subject to it?
The answer is yes, although it is far from simple to accomplish.
I recently sat down with one of the world’s foremost strategic thinkers and business consultants, Josh Linkner, to discuss our vision of how a company can establish itself as growth-enabled and capable of delivering value year after year. Josh recently joined forces with the Karrikins Group to further our efforts toward helping companies become innovative and growth-enabled. He personifies creativity, entrepreneurship and disruptive innovation. He was the founder and CEO of four tech companies that sold for a combined value of more than $200 million. To say he knows a thing or two about accelerating a company’s growth would be an understatement.
Throughout the course of our lively discussion, Josh and I talked about the growth-enabled organization (GEO) model that the Karrikins Group has defined, outlining the five key dimensions shared among companies that are creating the right focus and commitment to accelerate value and be growth enabled. Although few, if any, are perfect in every dimension, all are in constant pursuit of finding ways to be better and shape their industry’s disruption, rather than being subject to it.
What we’ve discovered in our work with GEOs is that they haven’t achieved their success through sheer luck and good timing. They don’t depend entirely on inorganic growth. And, they don’t survive simply by focusing on operationalizing successful products. Instead, they focus their hard work, dedication and commitment in the right direction, at the right attributes, to convert opportunity to value.
While there is no one right way to be growth enabled – organizations of all sizes and types can be growth enabled – being a GEO does mean having clarity around and alignment to the five key dimensions: Aspiration, Culture, Leadership, Operating Model and Market Relevance. What follows is taken from our conversation.
Dimension #1: Aspiration
Peter: We define Aspiration as being a clear and memorable articulation of the value being delivered. This dimension bleeds into the other four, as GEOs drive for clarity and intention about how to align and deliver on their defined aspiration. It serves as a call to action, inspiring leaders to deliver against it and make decisions based on it.
Josh: Companies that fail tend to overestimate the risk of trying something new, and underestimate the risk of standing still. The risk of doing something in the near term is that you could screw up your near-term results, but if you stand still, in a year you can lose relevance and be forgotten.
Peter: Right – do you wait until you’ve got a burning platform, when your margins are terrible, your customers are alienated, your staff are disengaged, and your investors have lost respect? Or do you work from a burning ambition to set a compelling aspiration? Better to take small, incremental risks, so you don’t have to swing for the fences every time.
Josh: I think GEOs build in a cadence of taking small risks – consistent trials, pilots and guerilla projects. Compartmentalizing intelligent risks early in the change cycle means you can maximize the opportunity for learning, and minimize the need for instant economic return.
I think of innovation as an aspiration, and companies get exactly as much innovation as they’re willing to tolerate. When a leader tells me that they’re not getting enough innovation, then I would suggest that they have not made it a part of their aspiration. It’s likely the leader is more interested in maintaining the status quo.
Peter: Exactly. I think companies, especially successful ones, get complacent. They’re so busy protecting what was instead of imagining what can be. You see big company after big company get upended – whether by a new entry or an existing competitor – because they failed to adapt or continue to evolve as an organization. You only have to look as far as a company such as Blockbuster – there’s an example of a company that was annihilated by a competitors innovative and aspirational business model — in this case, Netflix.
Dimension #2: Operating Model
Peter: Speaking of business models, we’ve discovered in our work with clients that GEOs have to have an operating model that supports the aspiration and drives a focus on growth through value creation – but most companies do not provide the time, space and capacity inside the business to innovate and do that.
Josh: Right – people say, ‘Oh, we’re encouraging you to innovate.’ But if someone comes in with a half-baked idea, they get sent to time-out, instead of being encouraged to further incubate. Most organizations’ operating models don’t enable their employees to build a culture of innovation. It’s an intrinsic structural conflict: Innovation sounds good, so no one’s going to argue with it. But the systems they have stomp it out, rather than encourage it.
Peter: Hard incentives are a perfect example of that. Say you’re a sales guy, and you can either sell a really complicated, unproven strategy, or sell what you’ve been selling forever — on which you’re commissioned. Which one are you going to sell? That’s an example of a hard incentive being misaligned. Many organizations do not build innovation into their business model as it creates too much risk. Consequently, the organizational system itself becomes resistant to innovation.
Dimension #3: Culture
Peter: Along those same lines, culture is a biggie for GEOs – how people show up to deliver on the organization’s aspiration can mark the difference between a growth-enabled organization and one that is just limping along. But, as I mentioned before, what often happens is that there’s a misalignment of incentives that can hinder a growth-enabled culture. I’ll give you a soft incentives example from our work at Karrikins Group with a Fortune 10 company. In an effort to create a culture to stimulate growth inside the business, one of their leaders started running a regular celebration meeting, recognizing people for success in new areas. Well, by only celebrating success, he actually created an unintended consequence inside the team. They began to only engage in the projects that they knew were guaranteed to succeed. The culture bred far more incremental thinking, and a lot less breakthrough thinking. The truth is, breakthroughs often require mistakes. So, it’s all about how you recognize and symbolically support the success and failures of learning, which is an important part of a GEO culture.
Josh: Exactly. It’s a little like brushing your teeth. Don’t brush for a few days and you’re probably not going to get a cavity. But the decay builds up over time and one day, there’s the cavity. That’s what organizations do: They think they’re coasting along, either flat or even growing, because of previous momentum. But the decay is happening underneath the surface. By the time they realize, it’s too late to respond in an effective way. So it’s about building a culture that establishes a rhythm of innovating for the future, even though the rewards may be delayed.
Dimension #4: Leadership
Peter: A lot of that culture work comes down to a company’s leaders, so that’s why we believe one of the most critical characteristics of a GEO is strong leadership. Would Ford have succeeded if ole Henry had never pushed for improvements in its assembly line? He set out an aspirational goal of “building a car for the great multitude” and every decision he made and every priority he outlined was in pursuit of that goal. Rather than accepting the factory’s existing capabilities, he led his company – and the industry – toward an entirely new method of production.
Josh: That’s an excellent example. And, I would add to it that a sense of optimism and confidence in the future are essential traits of a GEO leader as well. Finding new ways to thrive in the face of the unknown – rather than being daunted or intimidated by it – is an absolutely indispensable attribute at the executive level.
Dimension #5: Market Relevance
Josh: I think the final dimension – market relevance –- staying relevant by being fresh, aware and connected to their markets – is the culmination of all the dimensions working together.
Peter: Right – do you wait until you’ve got a burning platform, when your margins are terrible, your customers are alienated, your staff are disengaged, and your investors have lost respect? Or do you work from a burning ambition? Better to take small, incremental risks, so you don’t have to swing for the fences every time.
Josh: I think GEOs build in a cadence of taking small risks – consistent trials, pilots and guerilla projects. Compartmentalizing intelligent risks early in the change cycle means you can maximize the opportunity for learning, and minimize the need for instant economic return. If you wait too long, the only metric of measurement is, ‘Am I making any money?’ But, nothing makes money at the start. Startups, where the most innovation happens, often completely change their business models from when they were originally pitched for funding.
Peter: So, Josh, if I could summarize our conversation, here’s what I’d highlight: While few GEOs are perfect in every dimension we touched on – aspiration, operating model, culture, leadership and market relevance – what we have found in working with our clients is that companies that consistently grow focus aligning these dimensions with the end-state in mind. It’s about continually pushing forward and by instilling optimism, removing friction, and being selective within each of the five dimensions. And, it’s about never getting too comfortable with where you are today. These are the critical dimensions that existing GEOs share – and that other organizations would do well to emulate.
Josh: I couldn’t have said it better myself.