Part II
The Social Leader In Action
In part 1 we discussed how the Social Age is upon us, driven by forces and defining features that stem from a world knit together by the complexities of global interdependence and cheap, massive, and distributed social communications infrastructure.
FIGURE Part 2 Social Age
This new Social Age has ushered in a shift in organizations; rather than being a traditional hierarchy, they are moving toward a flatter, community-based structure. At the same time, the leadership approach is shifting from that of a general to that of a mayor. Social Leadership is defined by five tenets that interact dynamically.
THE TENETS OF SOCIAL LEADERSHIP
In the following chapters, we’ll explore each of the five key leadership challenges of the Social Age and the corresponding Tenets of Social Leadership. We will look at the productive conversations, actions, and behaviors (CABs) that Social Leaders can engage in to address these challenges.
FIGURE Part 2 Social Leader Tenets
As in the previous section, we will use stories and anecdotes from our research and experiences to illustrate the points we are making. In addition, we have written a case study that will unfold over these five chapters to more specifically illustrate the challenges of the Social Age and the productive and nonproductive CABs the leaders use in dealing with these challenges. Allow us to introduce you to IKU Industries.
IKU INDUSTRIES
IKU Industries is a manufacturer of custom design labels for use in clothing and other soft goods. The company provides labels and printing for major clothing manufacturers and boutique designers. The labels are used primarily on individual items. Recently, IKU Industries has moved into RFID labels, which allow individual items to be identified through passive scanners.
IKU has its headquarters in New York, with commercial offices in London, Milan, and Hong Kong. There are additional sales offices and distribution centers across the United States and Europe. IKU’s main industrial design center is located in Bangalore, India, where there is also a new manufacturing facility. Fashion design is located in New York City and Milan, with R&D located in New York.
The privately held company had $1.2 billion in sales last year, with profits of $142 million and eight thousand employees. Half of IKU’s employees have been added over the last four years. Originally, IKU Industries designed labels that were contract manufactured, at first in the U.S. and over the last fifteen years in China. At that time, the bulk of IKU employees were in sales, distribution, and design.
Four years ago, IKU opened a plant in India that manufactured machines to print labels directly onto cloth. This plant designs and creates programmable cloth-printing machines that are leased to clothing manufacturers. IKU designs labels, working with the brand owners’ clothing designers, and programs its leased machines to print the custom labels.
Based on the experience it gained in cloth-printing press design, IKU moved into the development and production of RFID-embedded labels. RFID labels permit stores with RFID readers to quickly (and at a distance of up to two meters) read and identify items of clothing. This has reduced shoplifting, aided inventory control, and provided customer insights at the retail level. IKU owns the factory, located in Bangalore, that produces these labels. This facility opened a year ago, and sales of RFID-embedded labels are the fastest-growing segment of IKU’s product line. All of these RFID labels are for individual retail products.
THE CRISIS
On a November morning in London, the team assembled: Tom Lee, the VP of sales and longest-tenured person on the team, Mary Hobbs, chief creative designer, Lisa Charles, VP of purchasing, and Gene Koss, recently hired VP of industrial design. Bob Roberts, EVP of Strategy, called the meeting to address a crisis the executive believes could threaten the very existence of the company. No one thought the meeting would be fun.
Everyone had coffee and some idle conversation as they waited for Gene to arrive, customarily fifteen minutes late. Bob Roberts began the meeting. “I think everyone is familiar with the situation, but let me go over the high-level points to be sure we are all on the same page,” he said. “Over the last quarter, H&M, Walmart, and Inditex have approached all of their clothing suppliers and insisted that they incorporate smart labels into their retail-level items and their bulk packages and to link the two. All of our customers are now screaming at us about this. We think we have a year or less to deliver, or risk some serious account losses, maybe enough to threaten everything. At an emergency management committee meeting last week we decided to drive the needed changes through the company with a task force. You four are it.”
The challenges facing IKU should by now seem familiar. The company is confronting significant business disruption from new technology that is impacting customers of their customers; IKU’s leadership needs to be proactive without a clear understanding of the playing field; the transformation in front of them has the potential to change the very fabric of the company; and the need to be open and to communicate to both communities and individuals at once will become paramount.
As we look more deeply into what it means to be a Social Leader within a community-based organization we will revisit these four team members—Tom, Lisa, Gene, and Mary—and watch their story unfold. We will learn from their successes and missteps, and we’ll use their conversations, actions, and behaviors as examples of the Tenets of Social Leadership. Let’s take a look at the team’s first meeting to get a sense of what they are up against.
THE FIRST CRISIS TEAM MEETING
Bob Roberts looked around the table at the four executives he was entrusting to lead this pivotal transformation effort and saw determination reflected back. Bob stood up and said, “Whatever you need, just let me know. This project has to be your top priority. When you are ready with a strategy, let me know and we will take it to the management committee.” With that, Bob left the conference room. There was a moment of uneasy silence. Gene poured himself a cup of tea, sat down, and started texting.
“Well,” Tom said, “we’d better start reaching out to see what the real requests are. I’ll ask my people to start talking to their key accounts and try to get a handle on the actual needs and risks we’re looking at.”
Mary jumped in, “To me, the real issue is linking the tags from the retail items to shipping packages. What technical requirements will this place on our label designs? We need to know this. You can’t expect our creative work to be limited by these new technical needs.”
“Wait,” sighed Lisa, “we don’t even know what we are doing yet. How much will all this cost? What revenue can we expect? This might be really profitable and offset any loss from fashion design on retail labels. Let’s try to get a plan together, set some timelines to develop a strategy, and still leave time for implementation.”
“Look, I don’t think we need to waste time on developing a plan for a plan,” said Mary. “It’s up to the four of us; let’s set up a couple of meetings over the next few weeks, and I’ll bet we can develop a way forward.”
“Lisa’s right about one thing, for sure,” Tom laughed. “This could be really profitable. We may end up becoming primarily a logistics company, supplying smart bulk packages and getting almost completely out of our current business.”
“Don’t be ridiculous, Tom,” said Mary, without a trace of a smile. “Once Gene gets the tech specs down we can get these package labels produced and they will simply be add-ons to what we are doing. Hey Gene, do you want to contribute here?”
Gene looked up from his smartphone. “I’ve been getting some of my engineers on this already. We are not the first people to be working on this. My guys think they can have the technical specs for this done in a month. I have one person already talking to plant operations so they are ready to cost out the production end and I asked HR to hire me a few people to expand our data mining end. This new business line should really help it take off. Tom, you should start talking to your customers about that.” The room exploded. “What?!” Lisa almost could not make the words come out of her mouth. “Gene, you basically just told the entire company what we are thinking about without any plan at all.”
“People are going to be pissed off, Gene,” Tom said calmly. “Everyone is going to be wondering about what this means. There is already some tension between Bangalore and Hong Kong, and this is going to make it worse.”
“Look, I am all for taking action and getting this behind us,” chimed in Mary. “If Gene can get this done fast, have it only impact some parts of operations, let us continue with our core business, and give you more things to talk to customers about, Tom, what are we getting worked up about?”
“Mary,” responded Tom, “first, I am not sure it is even up to us to approve this and get it going. I thought we were just supposed to make recommendations. Besides, Luther King [head of operations] is going to be furious that we are doing this without him. And how are we going to bring him into this now if he sees himself excluded?”
“We are going to need to look beyond ourselves, too, I think,” continued Tom. “What does legal think? There must be privacy issues. What requirements do our customers have? We need to consider those.” “Okay, okay,” said Gene. “The task is in front of us and I am trying to get people focused on it and get it done. Isn’t that what leadership is supposed to be?”
IKU is facing a moment of discontinuity. These moments, once so rare for us, have become commonplace. They are the crucibles within which productive leadership spells the difference between extraordinary success and living a life subject to the winds of the moment. We will follow these four characters as they face this crisis, learning from their mistakes and wins.