Chapter 7

INFUSING FUTURE-BACK THINKING INTO YOUR ORGANIZATION

What we’ve done to encourage innovation is make it ordinary.

—Craig Wynett

Steering the ship of the navy  •  Continuity of vision  • Remove “single points of failure”  •  “Boards are the stewards of the company’s future”  •  “Strategy, innovation, and leadership can be learned”  •  Screening for future-back leaders  •  Building a learning culture  •   Finding a higher purpose

When this book was still in its very early stages, we visited Admiral James Stavridis at the Fletcher School of Law and Diplomacy at Tufts University, where he was dean, and shared some of our thinking with him. Over the course of Stavridis’s thirty-seven-year military career, he rose to commander, US Southern Command; commander, US European Command; and NATO Supreme Allied Commander Europe. He spoke frankly about his struggles to steer the ship of the US Navy in a different direction.

“The navy is an inherently hierarchical organization,” he said, “and it prides itself on the orderly execution of business in the operational sense of the word. When the military wants to improve, it tends to do repetitive training to get better. But the seductive and dangerous quality of repetitive training is that it works. So, it’s hard for the military to acknowledge the kinds of jump shifts that must occur because of new technologies and new situations.”1

When Stavridis turned his lens on himself, he was unsparing:

Where I failed was at the US Southern Command. I went down there full of hubris. I was a new, very young four-star officer. I said, “I know what’s going on here. This is Latin America. We’re not going to go to war. We’re not going to invade Venezuela or Cuba or Mexico. Our challenges are different than warfare, which is what our organization is optimized for. Our role is counter-narcotics, disaster relief and preparedness, medical diplomacy, humanitarian operations.” So, I got out a piece of paper, sketched out my new staff structure, called in my senior team, handed out copies, and said, “What do you think?” They all said, “Wow, that looks great, Admiral.” Then we did a few day-long workshops and we implemented it.

But then after three years I got reassigned to be the commander of NATO, and my successor came in. Within three months, it was right back where it was. As we always say in the military, “No good idea survives the change in command.” What we discovered is that the brilliant mind theory of innovation is a lousy way to innovate. Innovation needs that spark, but it needs buy-in and it needs time to inculcate it. You need to build the culture and make the argument and tell the stories. You need to carve out the time to do it right.

In this chapter we will look at how to do future-back thinking, and the innovative mindset that it enables, right—and how to inculcate it in the people and processes of organizations. As with so much else, it begins with vision and must be led from the top.

Continuity of Vision

A powerful vision encompasses a galvanizing aspiration to achieve a grand purpose (to change the trajectory of health for humanity, we will accelerate the development of healthcare solutions that eliminate disease) and a clear set of concrete goals that energizes and aligns employees, customers, and investors alike (a World Without Disease will be focused on innovative drugs, but also on whatever else it will take to realize the vision—be it consumer health products, medical devices, or digital therapeutics).2

Effective future-back leaders communicate the vision relentlessly, across the organization and outside it, ensuring that every employee understands it and knows how they can contribute to it themselves. They prepare employees and investors for the changes that will come and celebrate and recognize the efforts that contribute to the vision’s success. As A. G. Lafley put it to us, “I believe in sharp thinking and clear communication to move a large, complex business ahead and its organization to constructive and productive action. I cannot overemphasize the importance of CEO leadership communication regarding innovation and the specific business unit strategy choices that go with it.”3 They also continuously and carefully cultivate and shape the vision to keep it relevant, watching the initiatives that grow out of it closely to be certain they are giving them all they need to flourish.

But at the same time, Admiral Stavridis’s anecdote illustrates the challenges of what Jim Collins called “the genius with a thousand helpers” leadership model, in which a charismatic leader embodies the vision and the direction of an organization but is either unwilling or unable to teach others how to do what they do so well.4 Think of Akio Morita, who built Sony from a tiny radio repair business into a global giant by serially disrupting it but whose successors struggled for years just to keep the organization in the black, or Microsoft, which, despite experiencing incredible sales growth after Bill Gates turned it over to Steve Ballmer, missed opportunity after opportunity to dominate new technologies. How can an organization ensure that its future-back initiatives will survive the visionary leaders and teams who conceived them and set them into motion?

In August, 2019 Jack Dorsey, the leader and founder of Twitter and Square, gave a talk at Innosight’s annual CEO summit in which he emphasized the importance of vision, how a jobs-to-be-done approach can ensure that an organization retains its focus on its customers’ deepest needs, and, critically, the danger of overdependence on a single leader. “I don’t want to build a company that’s dependent upon any one person, including me,” he said. “I think if I have to make a decision there’s actually something wrong with the organizational structure, because I’m not the closest to the customer.”

And then he zeroed in on the unacceptable risk of having a “single point of failure”:

My job is threefold: Number one, making sure that we have an amazing team dynamic, that we are together building a dynamic that is healthy, that contributes to our strength, and that is challenging in a way that makes us better.

Job number two is that decisions are being made in the context of who we serve, in the context of our customers, of technological, social and cultural trends, and of our competition.

And then the third job is just raising the bar on what we thought was possible. I want to avoid creating a dependency upon me or our current leaders, because to do that is to have a single point of failure. I want to build a company like Disney, that has survived the death of its founder and continues to carry on the same mindsets, the same drive to build an ecosystem of functions and products that are not dependent on any one person being there for the rest of their lives. I want a decision-making framework, and a product-planning framework that removes single points of failure.5

Boards and CEO Succession

If you sit on a board of directors, we hope chapter 6 convinced you that the future-back framework we prescribe applies to you no less than it does to the people who occupy the C-suites you oversee. As we discussed, boards are chartered to protect and champion the future. As such, they can help in the work to institutionalize future-back thinking, ensuring that it remains an enduring organizational capability.

A.G. Lafley recognized this when he created an upstream innovation group within P&G’s board of directors that he calls the Innovation and Technology Committee. There are two ways, he told us, that the committee adds value: First, it helps the board get comfortable with a really long-term view of innovation, “the fact that some of the things we’re going to take a run at are going to take ten or fifteen or more years to develop. The foam that is the basis of P&G’s Always and Whisper feminine care products, for example, began its development process in an R&D lab in the 1990s.” As he tells it,

We didn’t have prototypes until ten years later. And we didn’t have the first test product in the market for fifteen years. Even then, we hadn’t figured out a margin that was really going to make sense. We introduced it as a new brand in Germany and it didn’t work. Then we went back and reintroduced it as an ultra-premium line in the category-leading Always brand so that we could generate more trials and have a chance at economic viability. I mention this because I think getting the board to understand that we were going to be placing some long-term bets meant that they would be more open to, “Hey, we’re not going to maximize quarterly profits or annual profits because we’re always going to be investing in innovation to create future businesses.” That turns the conversation to “how much?” which is a much better discussion to have with them than one in which the question is whether you should invest on an on-going basis in innovation/technology breakthroughs at all. While some initiatives fail and need to be discontinued, turning off the investment process itself is death for innovation and future business growth.

The other thing that was really important is that we were thinking about board composition; we actively recruited for board members who were engaged constructively in innovation and technology, who were comfortable with the long-term investment and support required and the risks associated with innovation and technology bets. When a board is actively involved in innovation strategy and investment decisions, you can bring in CEOs with significant innovation experience in different industries. The board and I began to assess our business unit CEOs not just on their business and financial results but also on their strategy, innovation, and leadership—how they personally contributed to results in the short term and how they were positioning their businesses competitively for the longer term.

The pressures for short-term thinking are there, and I think it’s really important for the board and the CEO to share a view about what’s right for the long-term health of the business. I can’t tell you how much the long-term matters. We were an unusual company—we thought about becoming 200 years old and when we get to 200, we’ll think about being 210. The Innovation and Technology Committee and the board institutionalizes this best practice.6

Intuit’s Scott Cook (one of those future-facing business leaders that Lafley recruited for his board) also had much to say about the positive synergies between CEOs and boards when we interviewed him. “The CEO needs to be thinking far, far into the future,” he said. “And the board has to be a part of that. Its makeup is crucial, the schools of experience that its members represent. It sure helps when some have a history of creating or backing new businesses. They have to have been willing to learn from failure and stay the course, despite the pressure to deliver short-term results. Most of the examples of companies that do this successfully are founder-led, and that’s no coincidence. It’s much harder with established companies.”7

It’s tragic that an institution which in principle is meant to be a solution can so often be a part of the problem. In too many cases, CEOs’ relationships with boards are incestuous. But truly strong and confident CEOs recruit collaborators rather than cronies. Collaborative board members must constantly, as Scott Cook put it,

look in the mirror and ask themselves, ‘Are we moving this company toward its demise or to its long-term success?’ CEOs should ask them those questions too, and not be afraid to shame them when necessary. Boards are the stewards of the company’s future. Your job as a board member is not to dump and run; it is to set the company up for success year after year. After all, how would you feel about your tenure as a university trustee if afterwards your school shut down? How would you feel as a church deacon if after your leadership the flock fled? You would think you betrayed your institution.8

The most direct influence a board has on a business’s innovation culture is in its choice of its next CEO. Choosing a new CEO is not just an ultra-high-level human resources decision, or, like a sports franchise’s efforts to sign the superstar players that score the most points and attract the most ticket-buyers, a way to improve an enterprise’s brand and competitiveness. The CEO the board hires must be willing to develop a vision and have the leadership abilities to implement it. If the board believes that the current CEO had the right vision, then they must be careful to pick a new one who will sustain it. If they believe that a change in direction is called for, then they should hire a CEO who is willing to refresh and revise it.

If the board chooses a new leader from outside the organization who has a burning vision of what their new organization could become, the board can help them be more realistic about their time horizons as they learn about and acclimate to their new environment. Ideally, the new CEO will be an avid learner already.

In some organizations, the heir-apparent is identified years in advance and apprenticed by the current leader and board. We’ve talked to a number of leaders who see this as the best possible approach, but Sandi Peterson, who, as mentioned earlier, sits on Microsoft’s board, strongly disagreed. “For lots of reasons,” she told us, “people who are good Number Twos don’t necessarily turn out to be great leaders.

“Boards should not let CEOs manage succession processes in the ways that they frequently do,” she continued emphatically, “because of human nature. Frequently what happens is the person who ends up being advocated by the CEO has spent an immense amount of time managing up and making the CEO very happy. That creates a certain bias. The process needs to be owned more by the board.” Echoing some of our future-back language, she added, “Boards need to spend time thinking about how the world is changing, what the business is going to look like in five years, and why that might be different than the last five years. They need to spend time thinking about their criteria for the next leader.”9

Executive Development Programs

While the optimal CEO hire may be external, most of the C-suite denizens who make up an enterprise’s leadership team rise through the ranks at one or more of their organization’s business units. It’s critical that the right people with the right skillsets are promoted. This is also true for the innovation teams that run new initiatives. Development programs and thoughtful mentorship can go a long way toward ensuring that there is a strong pipeline of up-and-coming future-back leaders.

Companies spend billions of dollars on leadership development programs (by one estimate, some $14 billion per year in the United States).10 These run the gamut from one-and-done offsite workshops to classroom courses conducted in business schools; others provide high-potential executives with customized, on-the-job training and coaching. Giant corporations like GE, IBM, and P&G maintain virtual full-time universities for current and future leaders throughout their organizations.

Johnson & Johnson’s Accelerate Enterprise Leadership (AEL) program has proven especially effective for developing the skills of leadership, innovation, and corporate entrepreneurship in a real-time, hands-on context. This eight-month program, designed for senior executive VPs nominated for global leadership roles, is unique in that it requires a significant investment of time outside of one’s job. It’s designed to foster an enterprise-wide, growth-oriented mindset while developing its participants’ outside-in perspectives through facilitated team projects, residencies in global locations, and immersions in emerging markets.

In one year, for example, AEL tasked a group of participants to develop business ideas for William Hait’s then-nascent World Without Disease initiative. To that end, they were dispatched in small teams to locations around the world, to meet with government health officials, hospital administrators, doctors, and patients. Then, after six months of coaching from executive mentors and outside experts, they presented their business plans to J&J’s executive and management committees. Some received funding, and one of the participants opted to join the initiative full-time, making disease interception the focus of the next stage of her career.

AEL is just the tip of the iceberg of J&J’s strategic human resources efforts, which provide team and individual coaching to existing executives and programs to accelerate the onboarding of newly hired or promoted ones, as well as targeted learning programs, based on case studies, for the benefit of members of the C-suite, including the CEO.

A. G. Lafley told us about a highly targeted leadership and strategy development program he ran with his highest-potential leaders and managers.

We believed that strategy, innovation, and leadership could be learned and taught by a combination of successful practitioners and conceptual pioneers. I personally believe in three-person learning—that mastery only comes with first learning, then doing/practicing, and finally teaching others. I was personally committed to teaching and coaching the concepts and practices that I expected my future leaders to learn and master. In my experience, there are fewer innovators than there are operators, just as there are fewer strategists than there are operators. Having said that, in our organization, with our business model, we needed to develop a handful (or two) of “ambidextrous” leaders who could do it ALL—strategy, innovation, and inspirational leadership—well enough to manage large global businesses and potentially to lead the company as CEO. Fortunately, a few were able to develop the capabilities and skills and get the experience the results required.11

Screening Future Leaders

Senior leaders should screen for up-and-coming talent with an aptitude for the right-hand side of the leadership framework. One way to do this is to leverage the toolkit that Jeffrey H. Dyer, Hal Gregersen, and Clayton Christensen identified as “the innovator’s DNA” in a Harvard Business Review article and follow-up book with the same title. It turns on five attributes that map to the right side of the leadership framework.12 These are associating, questioning, observing, experimenting, and networking. People who have them should be actively sought out, encouraged, and mentored, as they will likely leave to pursue their entrepreneurial interests on their own if they are not given the right opportunities.

Associating is the ability to make unexpected creative connections among seemingly unrelated things, to cross-pollinate ideas by combining and recombining them. “Creativity is just connecting things,” Steve Jobs wrote. “When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had and synthesize new things.”13

Questioning is the penchant for following the unconventional, open-ended inquiries that comprise the essence of abductive reasoning to their sometimes counterintuitive answers, such as, If we did this, what would happen? In the HBR article that introduced the idea of the innovator’s DNA, the authors cited the case of Michael Dell, who remembered asking himself why computers that were built from $600 of parts had to be priced at $3,000. The answer was, they didn’t—and his discount computer business was born.

Business innovators closely observe the behaviors of customers, suppliers, and competitors. A. G. Lafley traveled the world to see how customers in different countries and cultures cleaned their homes and did their laundry. “Often the surprises that lead to new business ideas come from watching other people work and live their lives,” Scott Cook has observed. Cook noticed that 50 percent of his customers for Quicken, the personal finance software he developed to target to individuals, were actually small businesses. The result was a new business: Quickbooks, an accounting software for small businesses, which eventually grew to twenty times the size of Quicken.14

Experimenting is using the world as a laboratory. People who see themselves as citizens of the world have a broader perspective than those who are tied to one place. They are more open to importing ideas and practices that might seem exotic at first glance, and they are more willing to export ideas that work in one place to another, adapting them as necessary. A study carried out by the authors of the innovator’s DNA article revealed that the more countries an innovator has lived in, the more likely they are to leverage that experience to deliver new products, processes, and businesses. A. G. Lafley studied history in France in college and was the director of P&G’s Asia operations before he became its global CEO. Unilever’s former CEO, Paul Polman, who put sustainability at the heart of his enterprise vision, grew up in the Netherlands, considered joining the priesthood, and then completed his graduate work in economics and finance at the University of Cincinnati in the United States.

And finally, networking is the drive to test ideas by exposing them to peers and people from other walks of life. Business innovators are sponges for unfamiliar ideas; as such they seek out conferences and other venues to exchange and combine their ideas. The innovator’s DNA article describes how Kent Bowen, the founding scientist of CPS technologies, hung a sign in every office that read: “The insights required to solve many of our most challenging problems come from outside our industry and scientific field. We must aggressively and proudly incorporate into our work findings and advances which were not invented here.”15

Traditional metrics that assess future leaders tend to focus on the results they deliver in terms of dollars. Career paths should also be planned and assessed according to up-and-comers’ entrepreneurial experiences and capacities. If younger executives avoid risky new ventures because they rightly fear that their failures may be held against them, then that is a systemic problem in your organization that must be addressed. As discussed earlier, up-and-comers must know they will be safe in the event of an unavoidable failure and have a reasonable expectation of receiving some upside in the form of salaries, bonuses, and promotions if a venture succeeds.

A Visionary Organization Learns, Adapts, and Grows

We have described the learning loop of explore, envision, and discover in the context of vision creation and strategy development and the pursuit of new business models and growth initiatives. But learning is much more than an executive tool to be trotted out only when it is needed to solve a particular problem; it is a way of being. Visionary organizations create structures that incentivize collaborative learning at every level. Ideally, they’re populated with the avidly curious yet practical people who fit the description of Carol Dweck and Satya Nadella’s “Learn-it-alls” we met in chapter 2.16

Mark studied with the late David Garvin at Harvard Business School and collaborated with him on a number of projects. “A learning organization,” Garvin wrote in his classic book Learning in Action, “is an organization skilled at creating, acquiring, retaining, and transferring knowledge; and at purposefully modifying its behavior based on new knowledge and insights.”17 The book is filled with detailed case studies based on his personal observations of the inner workings of a host of organizations and companies, from L.L. Bean to the US Army. In it, he laid out the systems and processes that maximize an organization’s ability to gather and analyze intelligence from outside and draw lessons from within via postmortems and after-action reports and the discipline of systems analysis. Garvin’s focus was not so much on the applied research carried out in R&D laboratories but on how organizations can translate knowledge of all kinds into better ways of operating. If profitability and productivity present a snapshot of a company’s health at a given moment in time, he wrote, its ability to learn reflects on its capacity to correct and improve its operations, adapt to changing conditions, develop new ideas, and prosper over the long term. In that sense, learning is just as vital to present-forward as future-back thinking.

Organizations that seek to prioritize an ethos of continual learning, fostering a business culture that not only improves its existing offerings but continually develops transformative new ones, must provide settings that are psychologically safe for exploring, envisioning, and discovery. Streamlining approval processes for test-and-learn initiatives, empowering customer-facing middle-managers to make decisions, and tying compensation to innovation as well as profitability all make a difference.

“Employees,” Garvin wrote, “must feel that the benefits of pursuing new approaches exceed the costs.”18 Successful learning organizations enforce norms that reward innovative thinking while at the same time legitimizing the making and surfacing of mistakes, so their causes can be corrected. No one should ever feel they are putting their job in jeopardy by trying to solve a problem or develop something new that might not pan out.

“One of the big things we have done at the leadership level,” Microsoft’s Satya Nadella told an interviewer, “is to focus on shared metrics. We make a distinction between what we call ‘performance metrics’ and ‘power metrics.’ Performance metrics are in-year revenue and profit and things of that nature. Power metrics are about future-year performance. They are leading indicators of future success.”19 As Gustavo Manso wrote in The Journal of Finance, “Innovation involves the exploration of new untested approaches that are likely to fail the optimal incentive scheme that motivates innovation exhibits substantial tolerance (or even reward) for early failure and reward for long-term success.”20 The key is to recognize the path, and not just the immediate results.

There is a significant body of academic work on organizational learning, among them Peter Senge’s books (most notably The Fifth Discipline: The Art & Practice of the Learning Organization21) and the research of Chris Argyris and Donald Schön, who introduced the concept of double-loop learning. While single-loop learning seeks to analyze causes and effects in the pursuit of optimization, double-loop learning goes deeper and asks reflexive questions about the why of a thing—not just, “How can we improve this process or strategy?” but “Why do we do things this way?” and even more to the point, “How am I contributing to the problem?”

Double-loop learners see beyond the orthodoxies that define the present-forward mindset. If they’re self-critical, it is in the search of a better way. “Most people define learning too narrowly as mere ‘problem-solving,’ ” Argyris writes, “so they focus on identifying and correcting errors in the external environment. Solving problems is important. But if learning is to persist, managers and employees must also look inward. They need to reflect critically on their own behavior, identify the ways they often inadvertently contribute to the organization’s problems, and then change how they act.”22 Double-loop learners don’t just get smarter, they get wiser. And they are more creative.

Carol Dweck has noted how the fear of being judged can inculcate a fixed mindset in which people believe talent is a quality they either have or don’t. If people believe they are perceived to have talent, they may avoid risk-taking, lest they put their status into jeopardy, and refuse to collaborate, lest someone else get the credit for their collaboration. If they believe they are perceived as untalented, they may either give up or give way to resentment.

A growth mindset is the belief, actively ratified by management, that it’s possible for anyone to learn, develop, and grow.

“When entire companies embrace a growth mindset,” Dweck writes, their employees “report feeling far more empowered and committed; they also receive far greater organizational support for collaboration and innovation. In contrast, people at primarily fixed-mindset companies report more of only one thing: cheating and deception among employees, presumably to gain advantage in the talent race.”23

One of our Innosight colleagues related a conversation she had about framing with Harvard Business School’s Amy Edmondson. When situations get heated, some leaders adopt a frame of “I’m right and you’re wrong,” and then attempt to convince, control, and overcome the other person, who is seen as an adversary. Efforts must be made to replace that frame with “I have a valuable point of view but I may be missing something.” In this frame, the goal is to learn and problem-solve, and the other person is seen as a resource rather than an obstacle.

Building a Learning Culture

The learning that comes from constructive debate travels from the top down and the bottom up; it emerges from the give-and-take among an organization’s senior leaders, its middle managers, and its rank-and-file. It is important to actively and intentionally create processes and structures, and most importantly a culture in which every voice is heard.

Ferdz dela Cruz, the former chief executive of Manilla Water, told us that both the incentive structures in his company and its mandatory retirement rules tend to keep his senior team focused on a time horizon just two to three years ahead. “Everybody says they care about the long-term, but in ten years, all of my direct reports will have retired,” he said. “I think it’s worth having the younger executives tell the senior executives what the future might look like. I have a reverse mentor who’s one of our younger executives. We need to involve the millennials, the thirty-five to forty-year-old executives in our discussions. We are going to experience a big kink in our demographics, so we’re trying to change the way we work, from how our office looks to the tools that we use, so that we are an environment for the next generation as well.”24

“The CEO,” Satya Nadella wrote in Hit Refresh, “is the curator of an organization’s culture. Anything is possible for a company when its culture is about listening, learning, and harnessing individual passions and talents to the company’s mission. Creating that kind of culture is my chief job as CEO. Inclusiveness,” he continued, “will help us become open to learning about our own biases and changing our behaviors so we can tap into the collective power of everyone in the company” (the double loop). Key to that transition, he added, is “individual empowerment. We sometimes underestimate what we each can do to make things happen, and overestimate what others need to do for us.”25

Andy Hill, the former CEO of Jarden Consumer Products, told us:

One of the things I tried to instill in my organization is that nobody is smarter than the next person. On a given day, you might be the smartest one in the room. But the next day? You’re going to be in a different group and you’re not going to be the smartest one. So, collaboration is important. For me, it was the thing that was probably the single most important cultural element in my organization. It helped us succeed when others couldn’t, because I wouldn’t allow a noncollaborative environment to exist. I rooted it out at every turn and when I found areas where people were not being collaborative, they didn’t last in the organization long. I could go through fifty examples of people I fired because I knew they would never develop that collaborative cultural approach to the organization, to the people, and to the development of the business and the strategy.

If you’re not aligned culturally, if you can’t define what the culture is, what kind of culture it is that you expect people to operate within, it won’t work. It can’t work. With that said, diversity is one of the most important things you can have. The example I use is my CFO. He and I ran the company together, but he was the opposite of me from a personality standpoint. He would really get into the details; he’d sit and go through a fifty-page spreadsheet with two hundred lines on each spread. Me, I’m more big-picture, more people-oriented, more focused on results, what all of that is going to look like, than the numbers on the page. We were a great complement to each other. You should have people surrounding you that are different, that think about things differently. People that have come from different backgrounds, and done different things. Diversity on just about every axis. When we decide to do something, I want everybody to go do it. But I want very diverse points of view coming in before. You need to decide how your team needs to interact with itself from a cultural standpoint, and if you’ve got someone on the team that can’t adapt to that, then they don’t belong on it.26

Demographic diversity is important too—in the company as a whole, in its senior ranks, and on the board. More and more, it is not just a social virtue but a competitive advantage, because it ensures a better understanding of customers and a greater receptiveness to new ideas. “I’m a huge proponent of diversity on the board in all of its permutations,” Sandi Petersen told us. “Geographic, business experience, gender, industry. It’s hugely valuable. Since I’ve started being on boards, it literally used to be a bunch of retired CEOs and COOs. That’s just not the case anymore, which is good. We still have a lot of work to do on ethnic diversity,” she added, “But we’re getting there.”27

Having a Sense of Purpose

Until now, we’ve mostly written about vision in the actionable sense of the word. But when the task at hand is to change or sustain an organization’s culture, the more abstract connotations of the words vision and visionary (those relating to grand purposes and reasons for being, also sometimes called a company’s mission) come into play. Having a higher purpose is not strictly necessary for a business to succeed, but as countless studies have found, it can go a long way toward motivating its employees and stakeholders, and it helps in recruiting new talent. Paul Polman recognized that when he committed Unilever to an ambitious plan to double its revenues while at the same time reducing its negative impacts on the environment, improving the nutritional quality of its packaged foods, bettering the living conditions of the farmers and other workers in the developing world who supply its resources and work in its factories, and raising employees’ pay and making its workforce more inclusive across the board.

It’s best when the people in an organization are inspired by a set of shared goals and a sustaining sense of mission. An analysis conducted by Gallup of 49,928 business units across 192 organizations in thirty-four countries and forty-nine industries found a close correlation between missions and margins. The more aligned employees are with a company’s transcendent what and why, the more they believe its stated values are reflected in their workplaces; the higher their productivity; the stronger their connections with their customers; and the longer they are likely to stay with the company.28

In 2019, Innosight sought to identify the twenty global companies that have achieved the highest-impact business transformations of the decade, choosing candidates based on the percentage of revenue they receive from new, outside-the-core growth areas; how successfully they repositioned their cores; and their overall financial growth.

The common denominator for all of them, we found, was having a newly strengthened sense of purpose. Siemens, for example, moved beyond a stated purpose of maximizing shareholder value to an explicit mission of serving society. China’s Tencent embraced a mission of “improving the quality of human life through digital innovation,” investing heavily in new growth efforts ranging from education and entertainment to autonomous vehicles, fintech, and the industrial internet. In 2019, it refined its mission even more, to a succinct “tech for social good.”29 Denmark’s Ørsted transformed itself from a struggling natural gas business to a cutting-edge wind energy company, increasing its net profits by some $3 billion per year. The takeaway, our colleagues Scott Anthony, Alasdair Trotter, and Evan Schwartz wrote in Harvard Business Review, is that “in an era of relentless change, a company survives and thrives based not on its size or performance at any given time but on its ability to reposition itself to create a new future, and to leverage a purpose-driven mission to that end.”30

Peter Senge on the Importance of a Shared Vision

“A shared vision is not an idea … it is, rather, a force in people’s hearts…. Few, if any forces in human affairs are as powerful…. While adaptive learning is possible without vision, generative learning occurs only when people are striving to accomplish something that matters deeply to them.”31

We saw how deeply people care about a shared vision while talking to a group of Innosight analysts and associates about this chapter. Mark was reminiscing about the ways that Innosight’s vision had evolved over the years, from our initial focus on technological disruption, to our drive to achieve a deeper understanding of business models and the roles of senior leaders, and finally our development of the visioning-to-strategy-to-action methods and processes we describe in this book.

“A lot of the younger people here don’t know about that,” one said. “Would you be willing to talk about it in an employee forum?” The next thing we knew, we had all opened our phones to our calendars, and the forum was scheduled. It turned out to be one of the liveliest and best attended we’d held in a long time. Despite all of Innosight’s strategic pivots and shifts, we realized, we have remained steadfast in the mission and values we set for ourselves twenty years ago. In five to ten years, we hope the people in that room will still be tracking against that core identity, even as they evolve our company to its next phase of growth.

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