This morning I find myself in the rare position of agreeing with just about everything in an article written by an academic in the Harvard Business Review blog. Vijay Govindarajan, a professor from Dartmouth wrote a piece titled “Strategy's No Good Unless You End Up Somewhere New”, the essence of which is that innovation isn’t a strategy by itself, but strategy must include an element of innovation.
What made Professor G’s piece valuable is that he is a rare academic who understands that strategy and innovation aren't “always about coming up with new products and services. We tend to think of a shiny new product offering when we picture ‘strategic innovation,’ but that’s too limited.” He cites the fact that “Toyota changed the auto industry forever with a systemic process innovation (the lean production system)”. That makes him very unique – an Ivy League academic who doesn't think there is only one way to manage a business – the way they have honed and taught it in the Ivy League and just about everywhere else for decades.
The most insightful lines in his article are near the end where he writes, “Second, the company needs to selectively forget the past as it invents the future. The CEO will have the most difficulty in forgetting, especially if the CEO was responsible for creating the status quo. The people at the bottom of the organization not only are closest to the future but they have the least vested in the firm’s history.”
He hits the nail on the head with that one – almost. It isn't the “firm’s history” the senior folks have so much invested in and the folks on the firing line have so little vested in. It’s the leaders’ personal histories. The overwhelming number one reason for the long line of rationalizations leaders give for sticking with the old approaches and rejecting lean is their personal comfort with the old methods they have demonstrated mastery of in their ascendance to the top.
The top folks are at the top because they know how to manage with the old GAAP based standard cost numbers; they know how to work the silos and win the political games inherent in silo structured organizations; and they know how to pound on direct labor and suppliers. Lean thinking requires them to walk away from all of the old methods that may well have not done much for the company but have served them very well personally in their career success - to essentially start from scratch in their way of thinking and working. And that scares them to death. They will never admit that, however, so they dig deep into their creative wells and come up with all manner of excuses and explanations for why lean doesn't apply to their company; or if it does, why it only applies to the shop floor and certainly doesn't apply to them and how they manage the business.
It takes a degree of self-confidence and courage to lead a lean transformation, as well as a willingness to put the company’s interests ahead of one’s own. I don’t want to under-estimate or under-appreciate just how difficult it is to take the personal risk a leader must make to venture into the unknown and basically start all over with their business education. Leaders are supposed to be smarter than the average bear and have lots of answers – tough to do when they are given an entirely new set of numbers, a new structure, a new way of thinking about the supply chain and flow, a new way of interacting with employees and a new way of solving problems. They might not be able to master these new ways to the degree they mastered the old ways.
There is at least a degree of truth to the old adage about old dogs learning new tricks. Old dogs can learn new tricks well enough but it is hard to unlearn the old tricks, and the older the dog the more tricks there are to unlearn. As a rapidly aging dog myself I know this to be very true, but it doesn't change the fact that leaders must keep taking personal risks and they owe it to the organization to lead the necessary changes even if it may well result in their personal failure.
The good professor was right when he said the past must be selectively forgotten. The selection of what to remember and what to forget has to be about the business and not about personal comfort levels. As tough as it is, continuous improvement is an absolute necessity and it starts at a very personal level, and it starts at the top.