Ideas for building a culture of originality

A must-read. You will most likely recognize the first work environment described and perhaps enjoy a few suggestions for change. – pw

 

so1980
HBR

If there’s one place on earth where originality goes to die, I’d managed to find it. I was charged with unleashing innovation and change in the ultimate bastion of bureaucracy. It was a place where people accepted defaults without question, followed rules without explanation, and clung to traditions and technologies long after they’d become obsolete: the U.S. Navy.

But in a matter of months, the navy was exploding with originality—and not because of anything I’d done. It launched a major innovation task force and helped to form a Department of Defense outpost in Silicon Valley to get up to speed on cutting-edge technology. Surprisingly, these changes didn’t come from the top of the navy’s command-and-control structure. They were initiated at the bottom, by a group of junior officers in their twenties and thirties.

When I started digging for more details, multiple insiders pointed to a young aviator named Ben Kohlmann. Officers called him a troublemaker, rabble-rouser, disrupter, heretic, and radical. And in direct violation of the military ethos, these were terms of endearment.

Kohlmann lit the match by creating the navy’s first rapid-innovation cell—a network of original thinkers who would collaborate to question long-held assumptions and generate new ideas. To start assembling the group, he searched for black sheep: people with a history of nonconformity. One recruit had been fired from a nuclear submarine for disobeying a commander’s order. Another had flat-out refused to go to basic training. Others had yelled at senior flag officers and flouted chains of command by writing public blog posts to express their iconoclastic views. “They were lone wolves,” Kohlmann says. “Most of them had a track record of insubordination.”

Kohlmann realized, however, that to fuel and sustain innovation throughout the navy, he needed more than a few lone wolves. So while working as an instructor and director of flight operations, he set about building a culture of nonconformity. He talked to senior leaders about expanding his network and got their buy-in. He recruited sailors who had never shown a desire to challenge the status quo and exposed them to new ways of thinking. They visited centers of innovation excellence outside the military, from Google to the Rocky Mountain Institute. They devoured a monthly syllabus of readings on innovation and debated ideas during regular happy hours and robust online discussions. Soon they pioneered the use of 3-D printers on ships and a robotic fish for stealth underwater missions—and other rapid-innovation cells began springing up around the military. “Culture is king,” Kohlmann says. “When people discovered their voice, they became unstoppable.”

Empowering the rank and file to innovate is where most leaders fall short. Instead, they try to recruit brash entrepreneurial types to bring fresh ideas and energy into their organizations—and then leave it at that. It’s a wrongheaded approach, because it assumes that the best innovators are rare creatures with special gifts. Research shows that entrepreneurs who succeed over the long haul are actually more risk-averse than their peers. The hotshots burn bright for a while but tend to fizzle out. So relying on a few exceptional folks who fit a romanticized creative profile is a short-term move that underestimates everyone else. Most people are in fact quite capable of novel thinking and problem solving, if only their organizations would stop pounding them into conformity.

When everyone thinks in similar ways and sticks to dominant norms, businesses are doomed to stagnate. To fight that inertia and drive innovation and change effectively, leaders need sustained original thinking in their organizations. They get it by building a culture of nonconformity, as Kohlmann did in the navy. I’ve been studying this for the better part of a decade, and it turns out to be less difficult than I expected.

For starters, leaders must give employees opportunities and incentives to generate—and keep generating—new ideas, so that people across functions and roles get better at pushing past the obvious. However, it’s also critical to have the right people vetting those ideas. That part of the process should be much less democratic and more meritocratic, because some votes are simply more meaningful than others. And finally, to continue generating and selecting smart ideas over time, organizations need to strike a balance between cultural cohesion and creative dissent.

Letting a Thousand Flowers Bloom
People often believe that to do better work, they should do fewer things. Yet the evidence flies in the face of that assumption: Being prolific actually increases originality, because sheer volume improves your chances of finding novel solutions. In recent experiments by Northwestern University psychologists Brian Lucas and Loran Nordgren, the initial ideas people generated were the most conventional. Once they had thought of those, they were free to start dreaming up more-unusual possibilities. Their first 20 ideas were significantly less original than their next 15.
Across fields, volume begets quality. This is true for all kinds of creators and thinkers—from composers and painters to scientists and inventors. Even the most eminent innovators do their most original work when they’re also cranking out scores of less brilliant ideas. Consider Thomas Edison. In a five-year period, he came up with the lightbulb, the phonograph, and the carbon transmitter used in telephones—while also filing more than 100 patents for inventions that didn’t catch the world on fire, including a talking doll that ended up scaring children (and adults).

Of course, in organizations, the challenge lies in knowing when you’ve drummed up enough possibilities. How many ideas should you generate before deciding which ones to pursue? When I pose this question to executives, most say you’re really humming with around 20 ideas. But that answer is off the mark by an order of magnitude. There’s evidence that quality often doesn’t max out until more than 200 ideas are on the table.
Stanford professor Robert Sutton notes that the Pixar movie Cars was chosen from about 500 pitches, and at Skyline, the toy design studio that generates ideas for Fisher-Price and Mattel, employees submitted 4,000 new toy concepts in one year. That set was winnowed down to 230 to be drawn or prototyped, and just 12 were finally developed. The more darts you throw, the better your odds of hitting a bull’s-eye.

Though it makes perfect sense, many managers fail to embrace this principle, fearing that time spent conjuring lots of ideas will prevent employees from being focused and efficient. The good news is that there are ways to help employees generate quantity and variety without sacrificing day-to-day productivity or causing burnout.

Think like the enemy.
Research suggests that organizations often get stuck in a rut because they’re playing defense, trying to stave off the competition. To encourage people to think differently and generate more ideas, put them on offense.

That’s what Lisa Bodell of futurethink did when Merck CEO Ken Frazier hired her to help shake up the status quo. Bodell divided Merck’s executives into groups and asked them to come up with ways to put the company out of business. Instead of being cautious and sticking close to established competencies, the executives started considering bold new directions in strategy and product development that competitors could conceivably take. Energy in the room soared as they explored the possibilities. The offensive mindset, Carnegie Mellon professor Anita Woolley observes, focuses attention on “pursuing opportunities…whereas defenders are more focused on maintaining their market share.” That mental shift allowed the Merck executives to imagine competitive threats that didn’t yet exist. The result was a fresh set of opportunities for innovation.

TEST YOURSELF
Quiz: Do You Know What It Takes to Be Original?
PSYCHOLOGY QUIZ Adam Grant

According to decades of research, you get more and better ideas if people are working alone in separate rooms than if they’re brainstorming in a group. When people generate ideas together, many of the best ones never get shared. Some members dominate the conversation, others hold back to avoid looking foolish, and the whole group tends to conform to the majority’s taste.

Evidence shows that these problems can be managed through “brainwriting.” All that’s required is asking individuals to think up ideas on their own before the group evaluates them, to get all the possibilities on the table. For instance, at the eyewear retailer Warby Parker, named the world’s most innovative company by Fast Company in 2015, employees spend a few minutes a week writing down innovation ideas for colleagues to read and comment on. The company also maintains a Google doc where employees can submit requests for new technology to be built, which yields about 400 new ideas in a typical quarter. One major innovation was a revamped retail point of sale, which grew out of an app that allowed customers to bookmark their favorite frames in the store and receive an e-mail about them later.

Since employees often withhold their most unusual suggestions in group settings, another strategy for seeking ideas is to schedule rapid one-on-one idea meetings. When Anita Krohn Traaseth became managing director of Hewlett-Packard Norway, she launched a “speed-date the boss” initiative. She invited every employee to meet with her for five minutes and answer these questions: Who are you and what do you do at HP? Where do you think we should change, and what should we keep focusing on? And what do you want to contribute beyond fulfilling your job responsibilities? She made it clear that she expected people to bring big ideas, and they didn’t want to waste their five minutes with a senior leader—it was their chance to show that they could innovate. More than 170 speed dates later, so many good ideas had been generated that other HP leaders implemented the process in Austria and Switzerland.

Bring back the suggestion box.
It’s a practice that dates back to the early 1700s, when a Japanese shogun put a box at the entrance to his castle. He rewarded good ideas—but punished criticisms with decapitation. Today suggestion boxes are often ridiculed. “I smell a creative idea being formed somewhere in the building,” the boss thinks in one Dilbert cartoon. “I must find it and crush it.” He sets up a suggestion box, and Dilbert is intrigued until a colleague warns him: “It’s a trap!!”

But the evidence points to a different conclusion: Suggestion boxes can be quite useful, precisely because they provide a large number of ideas. In one study, psychologist Michael Frese and his colleagues visited a Dutch steel company (now part of Tata Steel) that had been using a suggestion program for 70 years. The company had 11,000 employees and collected between 7,000 and 12,000 suggestions a year. A typical employee would make six or seven suggestions annually and see three or four adopted. One prolific innovator submitted 75 ideas and had 30 adopted. In many companies, those ideas would have been missed altogether. For the Dutch steelmaker, however, the suggestion box regularly led to improvements—saving more than $750,000 in one year alone.

The major benefit of suggestion boxes is that they multiply and diversify the ideas on the horizon, opening up new avenues for innovation. The biggest hurdle is that they create a larger haystack of ideas, making it more difficult to find the needle. You need a system for culling contributions—and rewarding and pursuing the best ones—so that people don’t feel their suggestions are falling on deaf ears.

Developing a Nose for Good Ideas
Generating lots of alternatives is important, but so is listening to the right opinions and solutions. How can leaders avoid pursuing bad ideas and rejecting good ones?

Lean on proven evaluators.
Although many leaders use a democratic process to select ideas, not every vote is equally valuable. Bowing to the majority’s will is not the best policy; a select minority might have a better sense of which ideas have the greatest potential. To figure out whose votes should be amplified, pay attention to employees’ track records in evaluation.
At the hedge fund Bridgewater, employees’ opinions are weighted by a believability score, which reflects the quality of their past decisions in that domain. In the U.S. intelligence community, analysts demonstrate their credibility by forecasting major political and economic events. In studies by psychologist Philip Tetlock, forecasters are rated on accuracy (did they make the right bets?) and calibration (did they get the probabilities right?). Once the best of these prognosticators are identified, their judgments can be given greater influence than those of their peers.

So, in a company, who’s likely to have the strongest track record? Not managers—it’s too easy for them to stick to existing prototypes. And not the innovators themselves. Intoxicated by their own “eureka” moments, they tend to be overconfident about their odds of success. They may try to compensate for that by researching customer preferences, but they’ll still be susceptible to confirmation bias (looking for information that supports their view and rejecting the rest). Even creative geniuses have trouble predicting with any accuracy when they’ve come up with a winner.

A Syllabus for Innovators
When aviator Ben Kohlmann set out to build a culture of nonconformity in the U.S. Navy, he found inspiration in many sources. Here’s a sampling of the items he recommends to people who want to think more creatively, along with his comments on how they’ve influenced his own development.

Research suggests that fellow innovators are the best evaluators of original ideas. They’re impartial, because they’re not judging their own ideas, and they’re more willing than managers to give radical possibilities a chance. For example, Stanford professor Justin Berg found that circus performers who evaluated videos of their peers’ new acts were about twice as accurate as managers in predicting popularity with audiences.

 

Read the rest of the post HERE

Adam Grant is a professor of management and psychology at the University of Pennsylvania’s Wharton School and the author of Originals: How Non-Conformists Move the World (Viking, 2016).

A version of this article appeared in the March 2016 issue (pp.86–94) of Harvard Business Review.

The five stages of small business growth

HBR
HBR

Categorizing the problems and growth patterns of small businesses in a systematic way that is useful to entrepreneurs seems at first glance a hopeless task. Small businesses vary widely in size and capacity for growth. They are characterized by independence of action, differing organizational structures, and varied management styles.

Yet on closer scrutiny, it becomes apparent that they experience common problems arising at similar stages in their development. These points of similarity can be organized into a framework that increases our understanding of the nature, characteristics, and problems of businesses ranging from a corner dry cleaning establishment with two or three minimum-wage employees to a $20-million-a-year computer software company experiencing a 40% annual rate of growth.

For owners and managers of small businesses, such an understanding can aid in assessing current challenges; for example, the need to upgrade an existing computer system or to hire and train second-level managers to maintain planned growth.

It can help in anticipating the key requirements at various points—e.g., the inordinate time commitment for owners during the start-up period and the need for delegation and changes in their managerial roles when companies become larger and more complex.

The framework also provides a basis for evaluating the impact of present and proposed governmental regulations and policies on one’s business. A case in point is the exclusion of dividends from double taxation, which could be of great help to a profitable, mature, and stable business like a funeral home but of no help at all to a new, rapidly growing, high-technology enterprise.

Finally, the framework aids accountants and consultants in diagnosing problems and matching solutions to smaller enterprises. The problems of a 6-month-old, 20-person business are rarely addressed by advice based on a 30-year-old, 100-person manufacturing company. For the former, cash-flow planning is paramount; for the latter, strategic planning and budgeting to achieve coordination and operating control are most important.

Developing a Small Business Framework

Various researchers over the years have developed models for examining businesses (see Exhibit 1). Each uses business size as one dimension and company maturity or the stage of growth as a second dimension. While useful in many respects, these frameworks are inappropriate for small businesses on at least three counts.

Exhibit 1 Growth Phases

First, they assume that a company must grow and pass through all stages of development or die in the attempt. Second, the models fail to capture the important early stages in a company’s origin and growth. Third, these frameworks characterize company size largely in terms of annual sales (although some mention number of employees) and ignore other factors such as value added, number of locations, complexity of product line, and rate of change in products or production technology.

To develop a framework relevant to small and growing businesses, we used a combination of experience, a search of the literature, and empirical research. (See the second insert.) The framework that evolved from this effort delineates the five stages of development shown in Exhibit 2. Each stage is characterized by an index of size, diversity, and complexity and described by five management factors: managerial style, organizational structure, extent of formal systems, major strategic goals, and the owner’s involvement in the business. We depict each stage in Exhibit 3 and describe each narratively in this article.

About the Research

We started with a concept of growth stages emanating from the work of Steinmetz and Greiner. We made two initial changes based on our experiences with small companies.

The first modification was an extension of the independent (vertical) variable of size as it is used in the other stage models—see Exhibit I to include a composite of value-added (sales less outside purchases), geographical diversity, and complexity; the complexity variable involved the number of product lines sold, the extent to which different technologies are involved in the products and the processes that produce them, and the rate of change in these technologies.

Thus, a manufacturer with $10 million in sales, whose products are based in a fast-changing technical environment, is farther up the vertical scale (“bigger” in terms of the other models) than a liquor wholesaler with $20 million annual sales. Similarly, a company with two or three operating locations faces more complex management problems, and hence is farther up the scale than an otherwise comparable company with one operating unit.

The second change was in the stages or horizontal component of the framework. From present research we knew that, at the beginning, the entrepreneur is totally absorbed in the business’s survival and if the business survives it tends to evolve toward a decentralized line and staff organization characterized as a “big business” and the subject of most studies.* The result was a four-stage model: (1) Survival, (2) Break-out, (3) Take-off, (4) Big company.

To test the model, we obtained 83 responses to a questionnaire distributed to 110 owners and managers of successful small companies in the $1 million to $35 million sales range. These respondents participated in a small company management program and had read Greiner’s article. They were asked to identify as best they could the phases or stages their companies had passed through, to characterize the major changes that took place In each stage, and to describe the events that led up to or caused these changes.

A preliminary analysis of the questionnaire data revealed three deficiencies in our initial model:

First, the grow-or-fail hypothesis implicit in the model, and those of others, was invalid. Some of the enterprises had passed through the survival period and then plateaued—remaining essentially the same size. with some marginally profitable and others very profitable, over a period of between 5 and 80 years.

Second, there existed an early stage in the survival period in which the entrepreneur worked hard just to exist- to obtain enough customers to become a true business or to move the product from a pilot stage into quantity production at an adequate level of quality.

Finally, several responses dealt with companies that were not started from scratch but purchased while in a steady-state survival or success stage (and were either being mismanaged or managed for profit and not for growth), and then moved into a growth mode.

Revision

We used the results of this research to revise our preliminary framework. The resulting framework is shown in Exhibit II. We then applied this revised framework to the questionnaire responses and obtained results which encouraged us to work with the revised model:

* John A. Welsh and Jerry F. White, “Recognizing and Dealing With the Entrepreneur,” Advanced Management Journal, Summer 1978.

 READ MORE

Exhibit 2 Growth Stages

Exhibit 3 Characteristics of Small Business at Each Stage of Development

Stage I: Existence

In this stage the main problems of the business are obtaining customers and delivering the product or service contracted for. Among the key questions are the following:

Can we get enough customers, deliver our products, and provide services well enough to become a viable business?

Can we expand from that one key customer or pilot production process to a much broader sales base?

Do we have enough money to cover the considerable cash demands of this start-up phase?

The organization is a simple one—the owner does everything and directly supervises subordinates, who should be of at least average competence. Systems and formal planning are minimal to nonexistent. The company’s strategy is simply to remain alive. The owner is the business, performs all the important tasks, and is the major supplier of energy, direction, and, with relatives and friends, capital.

Companies in the Existence Stage range from newly started restaurants and retail stores to high-technology manufacturers that have yet to stabilize either production or product quality. Many such companies never gain sufficient customer acceptance or product capability to become viable. In these cases, the owners close the business when the start-up capital runs out and, if they’re lucky, sell the business for its asset value. (See endpoint 1 on Exhibit 4). In some cases, the owners cannot accept the demands the business places on their time, finances, and energy, and they quit. Those companies that remain in business become Stage II enterprises.

Exhibit 4 Evolution of Small Companies

Stage II: Survival

In reaching this stage, the business has demonstrated that it is a workable business entity. It has enough customers and satisfies them sufficiently with its products or services to keep them. The key problem thus shifts from mere existence to the relationship between revenues and expenses. The main issues are as follows:

  • In the short run, can we generate enough cash to break even and to cover the repair or replacement of our capital assets as they wear out?
  • Can we, at a minimum, generate enough cash flow to stay in business and to finance growth to a size that is sufficiently large, given our industry and market niche, to earn an economic return on our assets and labor?

The organization is still simple. The company may have a limited number of employees supervised by a sales manager or a general foreman. Neither of them makes major decisions independently, but instead carries out the rather well-defined orders of the owner.

Systems development is minimal. Formal planning is, at best, cash forecasting. The major goal is still survival, and the owner is still synonymous with the business.

In the Survival Stage, the enterprise may grow in size and profitability and move on to Stage III. Or it may, as many companies do, remain at the Survival Stage for some time, earning marginal returns on invested time and capital (endpoint 2 on Exhibit 4), and eventually go out of business when the owner gives up or retires. The “mom and pop” stores are in this category, as are manufacturing businesses that cannot get their product or process sold as planned. Some of these marginal businesses have developed enough economic viability to ultimately be sold, usually at a slight loss. Or they may fail completely and drop from sight.

Stage III: Success

The decision facing owners at this stage is whether to exploit the company’s accomplishments and expand or keep the company stable and profitable, providing a base for alternative owner activities. Thus, a key issue is whether to use the company as a platform for growth—a substage III-G company—or as a means of support for the owners as they completely or partially disengage from the company—making it a substage III-D company. (See Exhibit 3.) Behind the disengagement might be a wish to start up new enterprises, run for political office, or simply to pursue hobbies and other outside interests while maintaining the business more or less in the status quo.

Substage III-D.

In the Success-Disengagement substage, the company has attained true economic health, has sufficient size and product-market penetration to ensure economic success, and earns average or above-average profits. The company can stay at this stage indefinitely, provided environmental change does not destroy its market niche or ineffective management reduce its competitive abilities.

Organizationally, the company has grown large enough to, in many cases, require functional managers to take over certain duties performed by the owner. The managers should be competent but need not be of the highest caliber, since their upward potential is limited by the corporate goals. Cash is plentiful and the main concern is to avoid a cash drain in prosperous periods to the detriment of the company’s ability to withstand the inevitable rough times.

In addition, the first professional staff members come on board, usually a controller in the office and perhaps a production scheduler in the plant. Basic financial, marketing, and production systems are in place. Planning in the form of operational budgets supports functional delegation. The owner and, to a lesser extent, the company’s managers, should be monitoring a strategy to, essentially, maintain the status quo.

As the business matures, it and the owner increasingly move apart, to some extent because of the owner’s activities elsewhere and to some extent because of the presence of other managers. Many companies continue for long periods in the Success-Disengagement substage. The product-market niche of some does not permit growth; this is the case for many service businesses in small or medium-sized, slowly growing communities and for franchise holders with limited territories.

Other owners actually choose this route; if the company can continue to adapt to environmental changes, it can continue as is, be sold or merged at a profit, or subsequently be stimulated into growth (endpoint 3 on Exhibit 4). For franchise holders, this last option would necessitate the purchase of other franchises.

If the company cannot adapt to changing circumstances, as was the case with many automobile dealers in the late 1970s and early 1980s, it will either fold or drop back to a marginally surviving company (endpoint 4 on Exhibit 4).

Substage III-G.

In the Success-Growth substage, the owner consolidates the company and marshals resources for growth. The owner takes the cash and the established borrowing power of the company and risks it all in financing growth.

Looking Back on Business Development Models

Business researchers have developed a number of models over the last 20 years that seek to delineate stages of corporate growth.

Joseph W. McGuire, building on the work of W.W. Rostow in economics,* formulated a model that saw companies moving through five stages of economic development:†

1. Traditional small company.

2. Planning for growth.

3. Take-off or departure from existing conditions.

4. Drive to professional management.

5. Mass production marked by a “diffusion of objectives and an interest in the welfare of society.”

Lawrence L. Steinmetz theorized that to survive, small businesses must move through four stages of growth. Steinmetz envisioned each stage ending with a critical phase that must be dealt with before the company could enter the next stage.§ His stages and phases are as follows:

1. Direct supervision. The simplest stage, at the end of which the owner must become a manager by learning to delegate to others.

2. Supervised supervision. To move on, the manager must devote attention to growth and expansion, manage increased overhead and complex finances, and learn to become an administrator.

3. Indirect control. To grow and survive, the company must learn to delegate tasks to key managers and to deal with diminishing absolute rate of return and overstaffing at the middle levels.

4. Divisional organization. At this stage the company has “arrived” and has the resources and organizational structure that will enable it to remain viable.

C. Roland Christensen and Bruce R. Scott focused on development of organizational complexity in a business as it evolves in its product-market relationships. They formulated three stages that a company moves through as it grows in overall size, number of products, and market coverage:‡

1. One-unit management with no specialized organizational parts.

2. One-unit management with functional parts such as marketing and finance.

3. Multiple operating units, such as divisions, that act in their own behalf in the marketplace.

Finally, Larry E. Greiner proposed a model of corporate evolution in which business organizations move through five phases of growth as they make the transition from small to large (in sales and employees) and from young to mature.|| Each phase is distinguished by an evolution from the prior phase and then by a revolution or crisis, which precipitates a jump into the next phase. Each evolutionary phase is characterized by a particular managerial style and each revolutionary period by a dominant management problem faced by the company. These phases and crises are shown in Exhibit 1.

*W.W. Rostow, The Stages of Economic Growth(Cambridge, England: Cambridge University Press, 1960).

†Joseph W. McGuire, Factors Affecting the Growth of Manufacturing Firms (Seattle: Bureau of Business Research, University of Washington, 1963).

§Lawrence L. Steinmetz, “Critical Stages of Small Business Growth: When They Occur and How to Survive Them,” Business Horizons, February 1969, p. 29.

‡C. Roland Christensen and Bruce R. Scott, Review of Course Activities (Lausanne: IMEDE, 1964).

||Larry E. Greiner, “Evolution and Revolution as Organizations Growth,” HBR July–August 1972, p. 37.

 READ MORE

Among the important tasks are to make sure the basic business stays profitable so that it will not outrun its source of cash and to develop managers to meet the needs of the growing business. This second task requires hiring managers with an eye to the company’s future rather than its current condition.

Systems should also be installed with attention to forthcoming needs. Operational planning is, as in substage III-D, in the form of budgets, but strategic planning is extensive and deeply involves the owner. The owner is thus far more active in all phases of the company’s affairs than in the disengagement aspect of this phase.

If it is successful, the III-G company proceeds into Stage IV. Indeed, III-G is often the first attempt at growing before commitment to a growth strategy. If the III-G company is unsuccessful, the causes may be detected in time for the company to shift to III-D. If not, retrenchment to the Survival Stage may be possible prior to bankruptcy or a distress sale.

Stage IV: Take-off

In this stage the key problems are how to grow rapidly and how to finance that growth. The most important questions, then, are in the following areas:

Delegation.

Can the owner delegate responsibility to others to improve the managerial effectiveness of a fast growing and increasingly complex enterprise? Further, will the action be true delegation with controls on performance and a willingness to see mistakes made, or will it be abdication, as is so often the case?

Cash.

Will there be enough to satisfy the great demands growth brings (often requiring a willingness on the owner’s part to tolerate a high debt-equity ratio) and a cash flow that is not eroded by inadequate expense controls or ill-advised investments brought about by owner impatience?

The organization is decentralized and, at least in part, divisionalized—usually in either sales or production. The key managers must be very competent to handle a growing and complex business environment. The systems, strained by growth, are becoming more refined and extensive. Both operational and strategicplanning are being done and involve specific managers. The owner and the business have become reasonably separate, yet the company is still dominated by both the owner’s presence and stock control.

This is a pivotal period in a company’s life. If the owner rises to the challenges of a growing company, both financially and managerially, it can become a big business. If not, it can usually be sold—at a profit—provided the owner recognizes his or her limitations soon enough. Too often, those who bring the business to the Success Stage are unsuccessful in Stage IV, either because they try to grow too fast and run out of cash (the owner falls victim to the omnipotence syndrome), or are unable to delegate effectively enough to make the company work (the omniscience syndrome).

It is, of course, possible for the company to traverse this high-growth stage without the original management. Often the entrepreneur who founded the company and brought it to the Success Stage is replaced either voluntarily or involuntarily by the company’s investors or creditors.

If the company fails to make the big time, it may be able to retrench and continue as a successful and substantial company at a state of equilibrium (endpoint 7 on Exhibit 4). Or it may drop back to Stage III (endpoint 6) or, if the problems are too extensive, it may drop all the way back to the Survival Stage (endpoint 5) or even fail. (High interest rates and uneven economic conditions have made the latter two possibilities all too real in the early 1980s.)

Stage V: Resource Maturity

The greatest concerns of a company entering this stage are, first, to consolidate and control the financial gains brought on by rapid growth and, second, to retain the advantages of small size, including flexibility of response and the entrepreneurial spirit. The corporation must expand the management force fast enough to eliminate the inefficiencies that growth can produce and professionalize the company by use of such tools as budgets, strategic planning, management by objectives, and standard cost systems—and do this without stifling its entrepreneurial qualities.

A company in Stage V has the staff and financial resources to engage in detailed operational and strategic planning. The management is decentralized, adequately staffed, and experienced. And systems are extensive and well developed. The owner and the business are quite separate, both financially and operationally.

The company has now arrived. It has the advantages of size, financial resources, and managerial talent. If it can preserve its entrepreneurial spirit, it will be a formidable force in the market. If not, it may enter a sixth stage of sorts: ossification.

Ossification is characterized by a lack of innovative decision making and the avoidance of risks. It seems most common in large corporations whose sizable market share, buying power, and financial resources keep them viable until there is a major change in the environment. Unfortunately for these businesses, it is usually their rapidly growing competitors that notice the environmental change first.

Key Management Factors

Several factors, which change in importance as the business grows and develops, are prominent in determining ultimate success or failure.

We identified eight such factors in our research, of which four relate to the enterprise and four to the owner. The four that relate to the company are as follows:

1. Financial resources, including cash and borrowing power.

2. Personnel resources, relating to numbers, depth, and quality of people, particularly at the management and staff levels.

3. Systems resources, in terms of the degree of sophistication of both information and planning and control systems.

4. Business resources, including customer relations, market share, supplier relations, manufacturing and distribution processes, technology and reputation, all of which give the company a position in its industry and market.

The four factors that relate to the owner are as follows:

1. Owner’s goals for himself or herself and for the business.

2. Owner’s operational abilities in doing important jobs such as marketing, inventing, producing, and managing distribution.

3. Owner’s managerial ability and willingness to delegate responsibility and to manage the activities of others.

4. Owner’s strategic abilities for looking beyond the present and matching the strengths and weaknesses of the company with his or her goals.

As a business moves from one stage to another, the importance of the factors changes. We might view the factors as alternating among three levels of importance: first, key variables that are absolutely essential for success and must receive high priority; second, factors that are clearly necessary for the enterprise’s success and must receive some attention; and third, factors of little immediate concern to top management. If we categorize each of the eight factors listed previously, based on its importance at each stage of the company’s development, we get a clear picture of changing management demands. (See Exhibit 5.)

Exhibit 5 Management Factors and the Stages

Varying Demands

The changing nature of managerial challenges becomes apparent when one examines Exhibit 5. In the early stages, the owner’s ability to do the job gives life to the business. Small businesses are built on the owner’s talents: the ability to sell, produce, invent, or whatever. This factor is thus of the highest importance. The owner’s ability to delegate, however, is on the bottom of the scale, since there are few if any employees to delegate to.

As the company grows, other people enter sales, production, or engineering and they first support, and then even supplant, the owner’s skills—thus reducing the importance of this factor. At the same time, the owner must spend less time doing and more time managing. He or she must increase the amount of work done through other people, which means delegating. The inability of many founders to let go of doing and to begin managing and delegating explains the demise of many businesses in substage III-G and Stage IV.

The owner contemplating a growth strategy must understand the change in personal activities such a decision entails and examine the managerial needs depicted in Exhibit 5. Similarly, an entrepreneur contemplating starting a business should recognize the need to do all the selling, manufacturing, or engineering from the beginning, along with managing cash and planning the business’s course—requirements that take much energy and commitment.

The importance of cash changes as the business changes. It is an extremely important resource at the start, becomes easily manageable at the Success Stage, and is a main concern again if the organization begins to grow. As growth slows at the end of Stage IV or in Stage V, cash becomes a manageable factor again. The companies in Stage III need to recognize the financial needs and risk entailed in a move to Stage IV.

The issues of people, planning, and systems gradually increase in importance as the company progresses from slow initial growth (substage III-G) to rapid growth (Stage IV). These resources must be acquired somewhat in advance of the growth stage so that they are in place when needed. Matching business and personal goals is crucial in the Existence Stage because the owner must recognize and be reconciled to the heavy financial and time-energy demands of the new business. Some find these demands more than they can handle. In the Survival Stage, however, the owner has achieved the necessary reconciliation and survival is paramount; matching of goals is thus irrelevant in Stage II.

A second serious period for goal matching occurs in the Success Stage. Does the owner wish to commit his or her time and risk the accumulated equity of the business in order to grow or instead prefer to savor some of the benefits of success? All too often the owner wants both, but to expand the business rapidly while planning a new house on Maui for long vacations involves considerable risk. To make a realistic decision on which direction to take, the owner needs to consider the personal and business demands of different strategies and to evaluate his or her managerial ability to meet these challenges.

Finally, business resources are the stuff of which success is made; they involve building market share, customer relations, solid vendor sources, and a technological base, and are very important in the early stages. In later stages the loss of a major customer, supplier, or technical source is more easily compensated for. Thus, the relative importance of this factor is shown to be declining.

The changing role of the factors clearly illustrates the need for owner flexibility. An overwhelming preoccupation with cash is quite important at some stages and less important at others. Delaying tax payments at almost all costs is paramount in Stages I and II but may seriously distort accounting data and use up management time during periods of success and growth. “Doing” versus “delegating” also requires a flexible management. Holding onto old strategies and old ways ill serves a company that is entering the growth stages and can even be fatal.

Avoiding Future Problems

Even a casual look at Exhibit 5 reveals the demands the Take-off Stage makes on the enterprise. Nearly every factor except the owner’s “ability to do” is crucial. This is the stage of action and potentially large rewards. Looking at this exhibit, owners who want such growth must ask themselves:

Do I have the quality and diversity of people needed to manage a growing company?

Do I have now, or will I have shortly, the systems in place to handle the needs of a larger, more diversified company?

Do I have the inclination and ability to delegate decision making to my managers?

Do I have enough cash and borrowing power along with the inclination to risk everything to pursue rapid growth?

Similarly, the potential entrepreneur can see that starting a business requires an ability to do something very well (or a good marketable idea), high energy, and a favorable cash flow forecast (or a large sum of cash on hand). These are less important in Stage V, when well-developed people-management skills, good information systems, and budget controls take priority. Perhaps this is why some experienced people from large companies fail to make good as entrepreneurs or managers in small companies. They are used to delegating and are not good enough at doing.

Applying the Model

This scheme can be used to evaluate all sorts of small business situations, even those that at first glance appear to be exceptions. Take the case of franchises. These enterprises begin the Existence Stage with a number of differences from most start-up situations. They often have the following advantages:

A marketing plan developed from extensive research.

Sophisticated information and control systems in place.

Operating procedures that are standardized and very well developed.

Promotion and other start-up support such as brand identification.

They also require relatively high start-up capital.

If the franchisor has done sound market analysis and has a solid, differentiated product, the new venture can move rapidly through the Existence and Survival Stages—where many new ventures founder—and into the early stages of Success. The costs to the franchisee for these beginning advantages are usually as follows:

Limited growth due to territory restrictions.

Heavy dependence on the franchisor for continued economic health.

Potential for later failure as the entity enters Stage III without the maturing experiences of Stages I and II.

One way to grow with franchising is to acquire multiple units or territories. Managing several of these, of course, takes a different set of skills than managing one and it is here that the lack of survival experience can become damaging.

Another seeming exception is high-technology start-ups. These are highly visible companies—such as computer software businesses, genetic-engineering enterprises, or laser-development companies—that attract much interest from the investment community. Entrepreneurs and investors who start them often intend that they grow quite rapidly and then go public or be sold to other corporations. This strategy requires them to acquire a permanent source of outside capital almost from the beginning. The providers of this cash, usually venture capitalists, may bring planning and operating systems of a Stage III or a Stage IV company to the organization along with an outside board of directors to oversee the investment.

The resources provided enable this entity to jump through Stage I, last out Stage II until the product comes to market, and attain Stage III. At this point, the planned strategy for growth is often beyond the managerial capabilities of the founding owner and the outside capital interests may dictate a management change. In such cases, the company moves rapidly into Stage IV and, depending on the competence of the development, marketing, and production people, the company becomes a big success or an expensive failure. The problems that beset both franchises and high-technology companies stem from a mismatch of the founders’ problem-solving skills and the demands that “forced evolution” brings to the company.

Besides the extreme examples of franchises and high-technology companies, we found that while a number of other companies appeared to be at a given stage of development, they were, on closer examination, actually at one stage with regard to a particular factor and at another stage with regard to the others. For example, one company had an abundance of cash from a period of controlled growth (substage III-G) and was ready to accelerate its expansion, while at the same time the owner was trying to supervise everybody (Stages I or II). In another, the owner was planning to run for mayor of a city (substage III-D) but was impatient with the company’s slow growth (substage III-G).

Although rarely is a factor more than one stage ahead of or behind the company as a whole, an imbalance of factors can create serious problems for the entrepreneur. Indeed, one of the major challenges in a small company is the fact that both the problems faced and the skills necessary to deal with them change as the company grows. Thus, owners must anticipate and manage the factors as they become important to the company.

A company’s development stage determines the managerial factors that must be dealt with. Its plans help determine which factors will eventually have to be faced. Knowing its development stage and future plans enables managers, consultants, and investors to make more informed choices and to prepare themselves and their companies for later challenges. While each enterprise is unique in many ways, all face similar problems and all are subject to great changes. That may well be why being an owner is so much fun and such a challenge.

A version of this article appeared in the May 1983 issue of Harvard Business Review.

Neil C. Churchill is a visiting professor at the Anderson School at UCLA and a professor emeritus of entrepreneurship at INSEAD in Fontainebleau, France.


Virginia L. Lewis is a senior research associate of the Caruth Institute at SMU.

Original POST

How to get work done (when you don’t feel like it)

Holidays are over and it’s back-to-work time. Not feeling inspired in the dreary month of January? No worries – I especially appreciated artist Chuck Close’s observation that “Inspiration is for amateurs.  The rest of us just show up and get to work.”

HBR
HBR

There’s that project you’ve left on the backburner – the one with the deadline that’s growing uncomfortably near.  And there’s the client whose phone call you really should return – the one that does nothing but complain and eat up your valuable time.  Wait, weren’t you going to try to go to the gym more often this year?

Can you imagine how much less guilt, stress, and frustration you would feel if you could somehow just make yourself do the things you don’t want to do when you are actually supposed to do them?  Not to mention how much happier and more effective you would be?

The good news (and its very good news) is that you can get better about not putting things off, if you use the right strategy.  Figuring out which strategy to use depends on why you are procrastinating in the first place:

Reason #1   You are putting something off because you are afraid you will screw it up.

Solution:  Adopt a “prevention focus.”

There are two ways to look at any task.  You can do something because you see it as a way to end up better off than you are now – as an achievement or accomplishment.  As in, if I complete this project successfully I will impress my boss, or if I work out regularly I will look amazing. Psychologists call this a promotion focus – and research shows that when you have one, you are motivated by the thought of making gains, and work best when you feel eager and optimistic.  Sounds good, doesn’t it?  Well, if you are afraid you will screw up on the task in question, this is not the focus for you.  Anxiety and doubt undermine promotion motivation, leaving you less likely to take any action at all.

What you need is a way of looking at what you need to do that isn’t undermined by doubt – ideally, one that thrives on it.  When you have a prevention focus, instead of thinking about how you can end up better off, you see the task as a way to hang on to what you’ve already got – to avoid loss.   For the prevention-focused, successfully completing a project is a way to keep your boss from being angry or thinking less of you.  Working out regularly is a way to not “let yourself go.”  Decades of research, which I describe in my book Focus, shows that prevention motivation is actually enhanced by anxiety about what might go wrong.  When you are focused on avoiding loss, it becomes clear that the only way to get out of danger is to take immediate action.  The more worried you are, the faster you are out of the gate.

I know this doesn’t sound like a barrel of laughs, particularly if you are usually more the promotion-minded type, but there is probably no better way to get over your anxiety about screwing up than to give some serious thought to all the dire consequences of doing nothing at all.    Go on, scare the pants off yourself.  It feels awful, but it works.

Reason #2     You are putting something off because you don’t “feel” like doing it.

Solution: Make like Spock and ignore your feelings.  They’re getting in your way.

In his excellent book The Antidote: Happiness for People Who Can’t Stand Positive Thinking, Oliver Burkeman points out that much of the time, when we say things like “I just can’t get out of bed early in the morning, ” or “I just can’t get myself to exercise,” what we really mean is that we can’t get ourselves to feel like doing these things.  After all, no one is tying you to your bed every morning.  Intimidating bouncers aren’t blocking the entrance to your gym.  Physically, nothing is stopping you – you just don’t feel like it.  But as Burkeman asks,  “Who says you need to wait until you ‘feel like’ doing something in order to start doing it?”

Think about that for a minute, because it’s really important.  Somewhere along the way, we’ve all bought into the idea – without consciously realizing it – that to be motivated and effective we need to feel like we want to take action.  We need to be eager to do so.  I really don’t know why we believe this, because it is 100% nonsense. Yes, on some level you need to be committed to what you are doing – you need to want to see the project finished, or get healthier, or get an earlier start to your day.  But you don’t need to feel like doing it.

In fact, as Burkeman points out, many of the most prolific artists, writers, and innovators have become so in part because of their reliance on work routines that forced them to put in a certain number of hours a day, no matter how uninspired (or, in many instances, hungover) they might have felt.  Burkeman reminds us of renowned artist Chuck Close’s observation that “Inspiration is for amateurs.  The rest of us just show up and get to work.”

So if you are sitting there, putting something off because you don’t feel like it, remember that you don’t actually need to feel like it.  There is nothing stopping you.

Reason #3   You are putting something off because it’s hard, boring, or otherwise unpleasant.

Solution:  Use if-then planning.

Too often, we try to solve this particular problem with sheer will:  Next time, I will make myself start working on this sooner.  Of course, if we actually had the willpower to do that, we would never put it off in the first place.   Studies show that people routinely overestimate their capacity for self-control, and rely on it too often to keep them out of hot water.

Do yourself a favor, and embrace the fact that your willpower is limited, and that it may not always be up to the challenge of getting you to do things you find difficult, tedious, or otherwise awful.  Instead, use if-then planning to get the job done.

Making an if-then plan is more than just deciding what specific steps you need to take to complete a project – it’s also deciding where and when you will take them.

If it is 2pm, then I will stop what I’m doing and start work on the report Bob asked for.

If my boss doesn’t mention my request for a raise at our meeting, then I will bring it up again before the meeting ends.

By deciding in advance exactly what you’re going to do, and when and where you’re going to do it, there’s no deliberating when the time comes.   No do I really have to do this now?, or can this wait till later? or maybe I should do something else instead.   It’s when we deliberate that willpower becomes necessary to make the tough choice.  But if-then plans dramatically reduce the demands placed on your willpower, by ensuring that you’ve made the right decision way ahead of the critical moment. In fact,  if-then planning has been shown in over 200 studies to increase rates of goal attainment and productivity by 200%-300% on average.

I realize that the three strategies I’m offering you – thinking about the consequences of failure, ignoring your feelings, and engaging in detailed planning – don’t sound as fun as advice like “Follow your passion!” or “Stay positive!”  But they have the decided advantage of actually being effective – which, as it happens, is exactly what you’ll be if you use them.


Heidi Grant Halvorson, Ph.D. is associate director for the Motivation Science Center at the Columbia University Business School and author of the bestselling Nine Things Successful People Do DifferentlyHer latest book is No One Understands You and What to Do About It,which has been featured in national and international media. Dr. Halvorson is available for speaking and training. She’s on Twitter@hghalvorson.

Original POST

How the Navy SEALs train for leadership excellence

Continuing the Navy SEAL theme…

Although producing excellence, incentivizing excellence, incorporating new ideas from the ground and leading by example is a matter of life and death with SEALs, organizations who wish to remain competitive can adopt the same strategies. Originally posted on HBR.

MAY15_28_98185616

Almost every world-class, high-performance organization takes training and education seriously. But Navy SEALs go uncomfortably beyond. They’re obsessive and obsessed. They are arguably the best in the world at what they do. Their dedication to relentless training and intensive preparation, however, is utterly alien to the overwhelming majority of businesses and professional enterprises worldwide. That’s important, not because I think MBAs should be more like SEALS—I don’t—but because real-world excellence requires more than commitment to educational achievement.

As an educator, I fear world-class business schools and high-performance businesses overinvest in “education” and dramatically underinvest in “training.” Human capital champions in higher education and industry typically prize knowledge over skills. Crassly put, leaders and managers get knowledge and education while training and skills go to those who do the work. That business bias is both dangerous and counterproductive. The SEALS can’t afford it. “Under pressure,” according to SEAL lore, “you don’t rise to the occasion, you sink to the level of your training. That’s why we train so hard.” When I see just how difficult and challenging it is for so many smart and talented organizations to innovate and adapt under pressure, I see people who are overeducated and undertrained. That scares me.

So I reached out to Brandon Webb, an innovative SEAL trainer/educator, and CEO of Force12 Media for real-world perspective on what industry could learn from a special operations sensibility. Webb, who served in the Navy from 1993 to 2006 and radically redesigned the SEAL training course curriculum, graciously shared his insight about what works – and what fails – when effecting a training transformation.

A member of Seal Team 3, Webb became the Naval Special Warfare Command Sniper Course Manager in 2003. This was a precarious time. The SEALs leadership recognized that technical excellence—better shooting and better shots—didn’t go nearly far enough in addressing the complex environments and demands that would be made upon sniper teams in wartime deployments in multiple theaters. The wartime challenge demanded better collaboration, greater situational awareness and more strategic application of cutting edge technology for the war-fighter. The post-9/11 environment demanded it. In response, some of the radical changes that Webb designed are the following: He broke the class into pairs, assigning mentors to boost support and accountability; he created classes that explore and explain technologies giving participants greater insight into the physics and underlying mechanics of their equipment; and he adopted the “mental management” techniques of Olympic world-champion marksmen, which we were at first reluctantly but then enthusiastically embraced. The results impressed the war-fighting community. SEALs like Marcus Luttrell (Lone Survivor) and Chris Kyle (American Sniper) observed how that course transformed their field capabilities and effectiveness.

“Our instructors were teaching better, and our students were learning better,” Webb noted in The Red Circle, his 2012 SEAL memoir. “The course standards got harder, if anything—but something fascinating happened: Instead of flunking higher numbers of students, we started graduating more. Before we redid the course, SEAL sniper school had an average attrition rate of about 30 percent. By the time we had gone through the bulk of our overhaul, it had plummeted to less than 5 percent.” And as he told me in a recent email exchange, he accomplished this by drawing from many diverse areas outside the military: “We took best practices from teaching, professional sports, and Olympic champions, and we made our course one of the best in the world in a very short period of time…” Webb noted. “We re-wrote the entire curriculum and saw our graduation rate go from 70% to 98% instantly, and hold there…”

Webb explicitly emphasized four transformational training themes. They’re neither obvious nor cliché. Unfortunately, I rarely see them in Fortune 1000 training programs/executive education or elite MBA programs.

1. Produce Excellence, Not “Above Average”

The first describes where Webb simply would not professionally go. “Being very good wasn’t good enough,” Webb declared. “Training programs shouldn’t be designed to deliver competence; they must be dedicated to producing excellence. Serious organizations don’t aspire to be comfortably above average.” “I honestly don’t even want to focus on good or competent,” Webb wrote, “it’s not in my nature and I don’t want to be part of any team or organization that is willing to set this standard. ‘Aim high, miss high,’ and you can quote me on that.”

In other words, training divorced from excellence is mere compliance. It is more “box ticking” than human capital investment. Is “above average” training really worth the time, energy and expense? A kaizen—continuous improvement—ethos is one thing. But customer service and leadership training that only enhances rather than transforms capabilities and skills doesn’t buy very much.

Webb’s hardcore perspective poses an existential challenge to most organizations’ views of human resources. Do they really want training to empower and bring out the best in their people? Or does everyone train with the tacit expectation that excellence matters less than being a bit better? Webb wonders whether most companies are serious about what training can and should mean.

2. Incentivize Excellence Not Competence

This links directly to his second theme around “getting the incentives right.” Even if the training itself is world-class, organizations need recognition and rewards systems that explicitly acknowledge and promote excellence. And, says Webb, also need the courage and integrity to reposition and replace those who can’t—or won’t—step up.

“For training to work it has to be effective and incentives have to be in place (financial, personal growth, promotion, etc.) for training to be effective in the work place and in order to get employee ‘buy in,’” Webb notes. “I’m a big fan of economist Milton Freidman… it’s as simple as creating alignment through incentives and that’s what we did by creating an instructor/student mentor program. The instructors had accountability (they would be evaluated on their student’s performance) which created the right incentive for them to pass. This made a huge difference. Plus we switched to a positive style of teaching and we saw our graduation rate rocket up.”

Should training overwhelmingly focus on skills enhancement? Or must it be managed to build better bonds and relationships throughout the enterprise? Webb unambiguously champions both. The training transformation made the SEALs culture more open to innovation and exchange. Incentives aligning and facilitating accountability improved the entire organization, not just the trainees.

3. Incorporate New Ideas from the Ground

This amplifies Webb’s third theme: successful training must be dynamic, open and innovative. Ongoing transformation—not just incremental improvement—is as important for trainers as trainees. “It’s every teacher’s job to be rigorous about constantly being open to new ideas and innovation,” Webb asserts. “It’s a huge edge, sometime life-saving, to adopt a good idea early and put it into practice…As an instructor I learned that you are never done learning, and your students can be a wealth of information, especially when guys like Chris Kyle would come back from Iraq and make recommendations on how to better train students to the urban sniper environment. We incorporated this type of mission brief back and actively sought out this knowledge from the SEAL sniper’s who were returning from places like Iraq, Afghanistan, Africa and other not so friendly places. Then we would take this knowledge and incorporate it into our yearly curriculum review; if important enough, we’d make the change within weeks. That’s how fast we could adapt our course curriculum and get approvals.”

4. Lead by Example

Getting better at getting better is a vital organizing principle for learning organizations. Arguably Webb’s most passionate training theme is the one that reflects his battlefield experiences, not just his training triumphs. The most important training behavior a leader can demonstrate, he asserts, is leading by example.

“Leading by example means never asking your team to do something you aren’t willing to do yourself,” Webb writes. “This can’t be faked, do it right and your team will respect you and follow you. Don’t do this, especially in a SEAL team, and you are doomed as a leader. I’ve seen it happen, and careers ended when it did. Lead by example and watch your team elevate you with their own accomplishments.”

If your organization cares about innovation or transforming customer service or being data-driven, how do you lead by example? In Laszlo Bock’s otherwise superb Google-based book on performance analytics—Work Rules!—the phrase “lead by example” is nowhere to be found. That’s both a pity and opportunity missed because, as Webb stresses, leading by example is what truly empowers small teams and teamwork.

“I’ve seen small teams accomplish incredible things in training (my times at the sniper school) and combat (Afghanistan and Iraq),” Webb recalls. “In Special Operations environments and top business environments, you have the privilege of working with people who just get the job done at all costs. They are self-motivators. Even if they don’t have the know-how, they will figure it out and just make it happen. It’s amazing to have a whole team that thinks this way, and to see what they can accomplish.”

There are no panaceas. The level of motivation, dedication and self-sacrifice the SEALs demand from themselves and each other goes far, far beyond what most businesses and business schools should ever ask, let alone expect, from their people. But that said, for leaders and managers who truly care about their people and their customers, the SEALs training template deserves to be taken seriously. No one rightly doubts the vital role education plays in creating and sustaining economic competitiveness worldwide. But it’s long past time that CEOs, boards, business schools and universities revisit what world-class training should mean, as well.

By: Michael Schrage

Original POST on HBR

The Necessity of Failure

“There are very few black-and-white truths in management or in business, but one that I have found is that people either hire people who are smarter than them or people hire people they can control. I see it over and over again. I’ve always hired people who are smarter than me. I rowed crew in college, and I’m always thinking in those terms — will they make the team better?” ~ Nancy Dubuc
Originally posted on NYTimes

Nancy Dubuc | The Necessity of Failure

Nancy Dubuc, chief executive of A&E Networks, has made her mark on cable television by taking big risks. But for every success, Ms. Dubuc says, she has learned from important failures.

This interview with Nancy Dubuc, the chief executive of A&E Networks, was conducted and condensed by Adam Bryant.

Q. Tell me about when you were younger. What were some early lessons for you?

A. I grew up in Bristol, R.I. I had grandparents and great-grandparents nearby, and because I was the only grandchild until I was 12, I was the center of a lot of adult attention.

I’ve only come to realize this within the last couple of years, but because I was part of so many different households, I was able to be a slightly different child in each one of them. That openness to change was ingrained in me at a very young age. I think it helps me to this day, because I can walk into a meeting, size it up and pivot. That’s not something you can teach.

Were you in leadership roles in high school?

My interests were more extracurricular, more external and more social than they were academic. My birthday is also in December, so I was one of the older kids. That meant I learned social leadership early on. I was always just much better in a team and work environment than I was in a classroom environment.

How have your parents influenced your leadership style?

The directness of my mother is clearly in my voice. Her opinion is always a very strong opinion at the dining room table. I think she empowered me to have the same drive.

My stepfather and I had long drives to school together, and I was never allowed to listen to my radio stations. It was either NPR or we would talk. One of the things that he used to say to me often, and I’ve taken this with me, is “Don’t worry about it, because it’s not going to turn out that way anyway.”

I don’t think you understand that when you’re 16 or 17 years old, but now as I look back on it, so much of what we worry about is the outcome, and outcomes rarely turn out the way you think they are going to. It doesn’t mean you shouldn’t have patience and discipline and drive during the process, but only thinking about the outcome is in some ways very singular, because the outcome might be something different, and it might be better.

When did you first start managing people?

I worked at an outside production company for five years. People didn’t report directly to me, but I handled a lot of logistics, like schedules and budgets. Then, over time, some of the field producers started asking my opinion about their work — “Could you look at this and tell me what you think?” I aspired to be these people someday, and they cared what I thought about their work. That’s when my creative confidence grew.

And what was your first formal management role?

I was put in charge of development for A&E. I suddenly had eight people reporting to me, and I had to let some of them go.

Because?

I have an innate passion and competitive streak to win and to create, and I want our team to be better than everybody else. Some people thrive in that environment, and some people don’t.

There are very few black-and-white truths in management or in business, but one that I have found is that people either hire people who are smarter than them or people hire people they can control. I see it over and over again. I’ve always hired people who are smarter than me. I rowed crew in college, and I’m always thinking in those terms — will they make the team better?

Another pattern I’ve seen is that managers will sometimes complain that one of their employees is difficult to manage. But those difficult people also tend to be the best performers. Sometimes managers don’t realize that they actually have to manage people. You have to figure out what motivates them. Great managers recognize that there is no one way to manage. You may have to be 10 different managers to get the best out of your team.

How has your leadership style evolved?

I lead with some core principles. I need to trust who works for me, and they need to trust me. Trust is just paramount. And the more people say, “Trust me, I’m here for you,” the less I trust them. It really needs to be trust by action. If people do, act and deliver, I will forever give those people more leeway.

I value people who have something constructive to say and can make things better. Anyone can have an opinion about what’s wrong with something. I can’t stand the pile-on effect when something didn’t work. But then somebody might say, “Well, what if we did this?” It may be wacky and it may not be the right thing to do there, but at least they’re trying to solve the problem.

How do you hire?

A lot of it is intuition. I also think about the skills I have and the skills I need. I’m a big believer in the idea that people tend to fall into one of three camps — you’re either a thinker, a doer or a feeler.

So I’ll be thinking about the mix of those three groups on my teams. If you have all thinkers, nothing will get done. If you have all doers, that can be really chaotic because you’re not necessarily thinking about the consequences. And feelers are important because they create energy — but if you have too many of them, they will just dramatize the moment.

When you put the different kinds of people together in the right way, that can be very powerful. You never want that out of balance.

And which camp are you in?

I’m more of a doer. And when I have time, I think.