For the week of November 18, the Dow Jones Industrial Average topped 16,000 for the first time ever, giving weight to the view that the Great Recession (2008-2013) has finally passed. Confidence in capital markets remains surprisingly strong, despite the fact that the unemployment rate remains above seven percent. It is tempting to assume that corporate leadership and corporate innovation have returned to some pre-recession version of normal. This is not the case.
The Great Recession triggered a reset of basic assumptions about how we manage people and innovation in a post-recession strategic environment. The dislocation of millions of Baby Boomers (b. 1946-1962), combined with the ascent of the first wave of the 70+ million Millennials (or Gen Y, b. 1981-2000), sent a powerful signal to the economy: The fundamental social contract surrounding work has been unalterably changed. Millennials, in stark contrast to their baby boomer parents, do not see the corporate world or corporate employment as a secure, reliable, stable path for their future. Instead, they are learning how to rely on each other through social networks, start-up communities, and freelancer cooperatives such as coworking spaces.
What Millennials really want are results. They are not interested in doing things in established ways simply because “this is the way they’ve always been done.” Wired and tooled-up like no previous generation before them, Gen Y wants to solve problems efficiently and quickly, and then move on to the next one. At heart they are pragmatists.
How does this pragmatism lead to increased levels of productivity and innovation? We know, from decades of research and data, that organic innovation and growth occur more consistently in firms where employees have high levels of discretion, independence, and autonomy. Take W.L. Gore, for example. Consistently ranked as one of the most innovative companies in the world, Gore employees don’t have titles or official positions, and the company has little if any hierarchy. New hires are challenged to find an area of the business and a team within that area where they feel they can make an impact, and they join that team and are held accountable to the commitments they make to the team. Employees are driven to work on things that matter to them, and in this they bring more energy and passion to the company. 3M has managed its people and innovation pipeline like this for years, as have Google and LinkedIn more recently. The results speak for themselves.
The common feature in these approaches to managing innovation is a leadership style grounded in design thinking and evidence-based management. Rather than framing individual roles, tasks, workstations, and titles as fixed and unchanging, adaptive leaders see their organizations as unfinished prototypes. Designers work through an iterative process, where they start with end users, build prototypes, allow users to interact with prototypes, then they refine and reiterate. They allow the users to help define the product. In the organizational setting, this means listening to and following the lead of users, i.e. the rising generation of Millennials. Design-oriented leaders understand how to ask the questions: How might we do things differently? What sorts of approaches have we not tried yet? What do users really want? How can we differentiate what we do in such a fundamental way that our competitors cannot easily copy us?
Such a leadership approach, embodied in the leadership of A.G. (Alan George) Lafley of Proctor & Gamble, Scott Cook of Intuit, and increasingly Jeffrey Immelt of General Electric, really starts with company strategy. Is innovation actually a commitment we make or is it just a bunch of words we say? At Proctor & Gamble, for example, up to 40 percent of new products (i.e. innovation) are generated by outside designers, scientists, and engineers through the company’s Connect & Develop innovation platform. These outsiders are not P&G employees and do not receive costly company benefits, yet they contribute significantly to the company’s innovation efforts. This is less control, more design, and more innovation.
Roger Martin, co-founder of Monitor Group and former Dean of the Rotman School of Management at the University of Toronto, suggests that tomorrow’s top firms will increasingly organize around projects, the way design firms do, and not around fixed roles, titles, and tasks. Part of the transition will be structural, centering on issues of organizational design and communication, but part will also center on a new kind of leader. Tim Brown, CEO of IDEO, refers to this leadership style as the T-Shaped leader. T-Shaped leaders are those who possess a hard and tangible skill, such as engineering, accounting, industrial design, software development, graphic design (the vertical part of the T), but who also possess a deep, empathetic understanding of consumer culture, markets, employees, and people in general (the horizontal part of the T). The importance of T-shaped people cannot be overstated.
As General Electric’s Jeffrey Immelt has discussed extensively over the past decade, the era of the business generalist is over. In what is often referred to the Immelt revolution at GE, the company places increasing significance on hiring and developing domain experts – chemists, biologists, engineers, doctors, designers – who are then trained in the specific markets where that expertise drives business. Domain expertise is critical in leading Millennials. Millennials have very little respect for managers who do not understand the increasingly technical aspects of (virtually every) business. They respect and will work harder for people who are better at the technology than they are. This sets quite a hard bar, in that Gen Y is the most wired and technologically savvy generation in history. There is, indeed, a sense of urgency here.
The fulcrum of influence in a Gen Y dominated economy will be collaborative influence, not individual influence based on personality, charisma, rank, or any other menu item from yesterday’s leadership theories. As IBM’s Ginni Rometty recently suggested: “Individual success and advancement in the future won’t be based on what you know, it will be based on what you share.” This demands humility, adaptability, authentic engagement with growing external networks, and an enthusiasm for taking our organizations to places they’ve never been before.
Andrew (Drew) Jones, Ph.D., is a consultant, writer, and educator. He has published three books, the most recent of which – The Fifth Age of Work: How Companies Can Become More Innovative in a Cloud Economy – was published in November 2013 by NightOwls Press. He teaches in the McCoy College of Business Administration at Texas State University, in San Marcos, and has recently joined Entera + Partners in their culture change practice. He is also a partner with Conjunctured Coworking and is based in Austin. firstname.lastname@example.org