Implementing the New Social Contract: Adult-to-Adult

The previous blog entry (Sea Change Calls For a New Social Contract) introduced the notion of a fundamentally new social contract as a primary basis for unlocking and channeling a limitless reservoir of workforce creativity, passion, commitment and engagement – the very fountainhead of self-renewing, continuously innovative companies and organizations. This entry will open up an ongoing discussion about how that idea might be implemented, and how it would work on a practical basis.

Before jumping in to that discussion, first I’d like to call attention to a recurring and very interesting phenomenon that arises with our work at the Center. Bottom line, our focus at the Center for Corporate Renewal is just that: helping business leaders build companies capable of ongoing, systemic innovation, renewal and growth. In other words, we help business leaders build their businesses on a foundation of creativity and innovation, instead of production and execution, which were the primary focuses for most of the 20th century.

This brings up an interesting dilemma we run into quite often: clients ask us to provide them with a well-structured, linear, detailed, and somewhat routinized process for achieving those goals. This includes requests for very specific, routinized methods for implementing the new adult-to-adult social contract. In short, “Please provide us with an approach to building an entirely new foundational capability for continuous innovation and self-renewal using traditional (i.e. scientific / mechanistic / predictable / controllable) methods.” There’s quite a paradox here: we want to create the capability for continuous creativity (a right-brain capability) using only engineering-based (i.e. left-brain) methods. We want to create 21st century organizations using 20th century paradigms and approaches.

To a degree, those requests are both understandable and even necessary to strive toward in a business setting. Running a business successfully requires some degree of certainty, gained through well-defined structures, processes and systems – i.e. operations. But that’s not all there is to it. What I also hear behind those requests / demands are inner needs that cannot be expressed verbally in most currently-existing corporate cultures without it being a career-limiting move: “Don’t make me step out of my comfort zone; allow me to stay in familiar territory, where I have mastery and where I feel comfortable, safe, and secure.” “My career success has been founded on using analytical, linear, scientific, structured, well-defined (i.e. left-brain) capabilities and processes; I do not want to stray from that and risk failure.” Such requests would reveal personal vulnerabilities that most corporate cultures currently interpret as “weakness.” In most currently-existing corporate cultures, the success formula is to be continuously powerful, masterful, competent, and in control.

The fundamental problem, which is ultimately impossible to evade, is that creativity and its ‘grown-up’ form – innovation – are defined by leaving familiar shores behind. Cultivating creativity means letting go of familiar “props” and left-brain mastery, and heading into deeper, uncharted waters: those of the “creative self.”

This brings us full circle to the core of this blog entry’s discussion of “how” to implement the new social contract. While discussing forms of implementation of the new social contract, it is important to bear in mind that “one-size-does-NOT-fit-all.” It is possible to discuss a variety of manifestations of the new social contract, but it is not possible to fully exhaust the array of particular forms and practices associated with its founding principle: an adult-to-adult social foundation for organizations and companies.
In broad terms, the core of the new social contract is building adult-to-adult relationships based on shared purpose and mutual partnering. What does that mean? Well, it means a bunch of things:

Consider the notion of adult-to-adult relationships; i.e. non-parent-child relationships. Hierarchical, parent-child relationships are founded on power differentials: the person in the “top” position has power over the person in the “bottom” position. And, that power differential is rigid: it never changes. It is role-based. In adult-to-adult relationships, the “power” element in the relationship is more fluid and subject to conditions and ongoing discussion/ negotiation. Power is contextual rather than positional. Its “power with” rather than “power over.”

So, one of the most powerful ways to create non-hierarchical relationships is, to the greatest practical extent possible, to eliminate or significantly reduce hierarchy! In other words, flatten the organization to the greatest practical extent, and flatten the differential in power between the most senior executives and the most “front-line” of workers.

In bald terms, senior executives too often get too caught up in micro-managing and keeping their fingers in day-to-day, operational/ technical minutiae; inadvertently they may find that they are neglecting the primary core of their real job: to keep their eyes on the market, the customer base, products, services, resources, etc. – and aid the organization in interpreting changes in information relative to those phenomena, and making critical strategic decisions relative to them. The most critical, strategic core of their task is strategic interpretation and strategic decision-making.

There is another term for describing the notion of flattening power differentials: it’s called “empowerment.” Senior executives often find this notion threatening. This stems from a basic misinterpretation of the meaning of empowerment, or of flattened power differentials, and it stems from a fundamental misinterpretation of the role boundary between manager and worker. A central role of management is to serve as a conduit for information and accountability. The manager or leader is responsible for understanding and sharing the overall strategy and goals of the organization, and then for holding themselves and their people accountable for executing their role relative to the strategy and goals.

The notion of empowerment cannot be fully understood apart from its counterpart: accountability. Empowerment and accountability cannot be separated; they are two sides of a single coin. The issue isn’t one of the manager being “out-of-control.” It has nothing to do with “what” must be accomplished; it has everything to do with “how” it is accomplished.

The next blog entry will focus on some other facets of implementation of the new social contract.

Sea Change Calls For a New Social Contract

The previous blog entry, Sea Change Demands New Paradigms and Tools, briefly described the rationale for a new way of building, leading and managing organizations. This one will discuss a change that is at right at the foundation of a newly-emerging viewpoint on what is required to build high-performing, innovative, self-renewing enterprises.

Here’s a provocative statement: Here at the Center, we believe that most companies already have most of the resources they need to build innovative, entrepreneurial, self-renewing enterprises, right under their nose! However, in the large majority of companies, those resources are totally unavailable for use; in fact, they are kept under heavy lock and key!

What resources? The deep desire within most human beings to create, to make a real difference, to make a real contribution, to realize their full potential, and to engage in something that’s meaningful and larger than themselves. That profound desire, that unrealized potential is vast, largely untapped, and inexhaustible – IF the conditions are right. And, they are not. I would estimate that 80% - 90% of available internal vitality, energy, passion and creativity are completely untapped. They are under heavy lock and key.

The Old Social Contract:

What’s that heavy lock and key? The fundamental social contract that we’re currently laboring – slogging – under. First let’s look backward a little bit.

In the heyday of the “great bureaucracies” (my father’s generation), the basic social contract was this: if you (employees) behave like good corporate citizens, then we (the company) will take care of you for life. Not bad, you have to admit. But, being taken care of for life came at a price. Being a good corporate citizen meant: work hard, keep your nose clean, and most importantly, don’t make waves. “Not making waves” meant: don’t speak up, don’t speak out, don’t stand out, and don’t rock the boat. Let’s look a little deeper.

First, a good employee was compliant: good employees behaved exactly as the company expected them to behave. Second, a good employee conformed – he or she was expected to become “one of us”, and to suppress aspects of his or her personal, unique, individual identity that differed from the corporate culture. The system was this: nails that stick up get pounded down. Those that persist in sticking up get thrown out.

Third, a good employee was powerless. The price of remaining a member of the system was this: individual, adult, intrinsic power was traded for positional/social power. If you were a good employee, you might get rewarded with an organizational role where you could tell others what to do (positional power). However, you were still not allowed to act independently, or to take any action individually that might affect the system, or “rock the boat.” The system retained total control. Exercises of individual power threatened that system, and were dealt with quickly.

It was a Parent-Child, “Cog in the Machine” system. The Company was the benevolent caretaking (but also disciplining and controlling) Parent and employees were good, well-behaved (compliant, conforming, powerless) children. The belief system was that senior leaders were supposed to know everything, retain all the power, make all the decisions (and get most of the goodies). The rest of the workforce was there to execute – to follow directives from senior management. In other words, serve as childlike, unquestioning cogs in the machine.

This model works quite well when repetitive execution is the primary strategy for market dominance over long periods of time, because it’s the basic design DNA for “organization-as-production-line.” This model assumes basic stability – that tomorrow will be pretty much like today, that change will be slow, and more importantly, that leadership will initiate it. However, when innovation is the primary strategy for market dominance, it’s a crippling – even mortal – liability.

Today’s Social Contract:

This social contract – the basic fabric that held our society together – began to be ripped apart during the 1980’s when wave after wave of downsizings, rightsizings, and mergers and acquisitions started to became the norm. Since then, the basic social contract has devolved into this: You (the employee) must work harder than ever (50-60-70-80 hours/week), and still don’t make waves, but… we (the company) can’t take care of you anymore. Good luck – you’re on your own. Generally, employees are still required to give up their intrinsic, adult power, and to suppress their own independent voice and identity. The contract is still based largely on the parent-child model, but… it’s time to speak plainly: the parents have become near slave-drivers who have little or no commitment or loyalty to their children.

The old social contract worked because it was reciprocal. Employees, while they did have to give up their individual, adult-level power and identity, were in fact taken care of by the system. Today’s social contract really isn’t a contract at all, because it isn’t reciprocal: it’s almost all one-way. The company demands nearly everything and gives you a salary in return. It’s way out of balance.

Should it really be surprising that a recent poll reported that 74% of American workers are disengaged clock-watchers who want to change companies within the year? A staggering three-quarters of American employees couldn’t care less about their company, and want to get the heck out as quickly as possible!

Is this a solid foundation for sustainable innovation, corporate entrepreneurship, or corporate renewal? At the Center, we don’t think so. We think there is a better way. Does that mean going back to the old contract? Absolutely NOT.

The Path Forward: A New Social Contract

The hard truth that we, as business leaders, must address in a direct and honest way, is that if we want to build innovative, self-renewing, entrepreneurial companies, AND we still want to retain total power and control, it’ll be just like the farmer in the old joke said: “you can’t get there from here.” If we want to unlock those untapped resources and build enterprises that are filled with entrepreneurial vitality, energy, passion, creativity, engagement, commitment and contribution – we must create a fundamentally new social contract. There’s simply no way around it.

It’s clear that companies can’t “take care” of their employees for life anymore. That’s all gone. But, if we want innovative, self-renewing, entrepreneurial companies,, we (leaders and managers) must also let go of the parental, dominating, command-and-control model of leadership and management.

The bottom line is that if we want employees to be deeply engaged, highly committed, highly creative, and making a powerful contribution, we must treat them as independent, unique, individual adults. We must allow them to have adult-level power, and we must allow them to “be themselves”.

The new social contract must be based on adult-to-adult, mutual partnering. Let’s be clear: in this new contract, the enterprise still has power, but that power cannot be absolute; it must have limits. In the new social contract, each and every member of the enterprise is treated like a responsible, mature, independent adult, who has power and some degree of real “say” in the direction and operation of the enterprise, and in their role in it. We must let go of the illusion of power and control that comes with the parental role in the parent-child contract.

There are two sides to this. On one hand, this implies that each and every person is responsible, and accountable for their behavior. They are responsible – and accountable – to their boss, their employees, and their peers. The other side of that coin is that each and every member is allowed to be – and express themselves –as a unique, independent adult. Everyone is allowed to speak their mind freely, without fear of reprisal or marginalization. Everyone is allowed to “chart their own course” (within reason, of course), meaning that each person can pursue his or her own career path and goals, as long as they are in basic alignment with the overall shared purpose and goals of the enterprise. Further, everyone participates - in a very real and substantial way, in the ongoing "workings" of the enterprise; i.e. everyone has a stake in the outcome, and everyone has a degree of real power (within the boundaries of the shared purpose and overall goals of the organization).


A Community of Individuals:

The enterprise must be working toward something paradoxical and qualitatively new: maximum social variety coupled with maximum social integration. We need to build social systems that encourage and support maximum diversity and maximum individuality simultaneously with maximum community and a sense of belonging. The vision here is what we call “Individuals-in-Community,” or possibly “Diversity Deluxe.”

Here’s why: The “three C’s” – compliance, conformity and control – are tools for gaining internal alignment with collective purpose and task, but at a monstrous cost: suppression of internal variety and differences. That’s a huge problem, because internal differences are the very fountainhead of enterprise-level creativity, learning, and growth. Where the 3 C’s hold sway, innovation and entrepreneurship will wither like a tender shoot of grass in Death Valley at high noon in August.

What we’re seeking is a high degree of internal coherence and alignment that is not based on the external, social pressures of control, conformity and compliance. What we’re seeking is authentic, individual-level commitment to the shared purpose. This requires that the enterprise build a unique, individual relationship with each employee. In other words, we have to throw out the old “one-size-fits-all” approach to management, and begin to treat each member of the organization as a separate, unique adult, and as a precious resource for contribution and creativity.

My belief, and experience, is that when a real sense of community exists, but a community where the individual is genuinely valued and treated as such, the entrepreneurial flame is ignited – together with a powerful upsurge of vitality, energy, passion, creativity, drive, initiative. Everything you need.

The next blog entry will begin a discussion of what is required to implement this new social contract.

Sea Change Demands New Paradigms and Tools

The previous blog entry, Creative Renewal and Legacy Management Tools, briefly discussed the legacy leadership and management concepts and practices that dominated during the 20th century and that had a very big hand in why America dominated the world economy for much of it. The previous entry also briefly discussed why those same tools have become a major impediment in the 21st century.

There is a document available on Schering-Ploughs web site, which is a transcription of a conversation that S-P’s new CEO Fred Hassan had with a writer/reporter. In that document, at one point Mr. Hassan says that “CEOs who understand the human factor, who see the big picture of building sustainable value, do better in the long term than those who just try to appease the Street every quarter.” Indeed. But why?

New principles and practices are needed to meet the challenges of a complete sea-change in the fundamental rules of business in the 21st century. During most of the 20th century, the primary drivers of business success were execution and production. Not to say that innovation wasn’t important; it was important. But if you set up a scale and put “execution and production” on one end of the scale, and “creativity and innovation” on the other end, the scale would tip heavily toward execution and production.

In the 21st century, the balance has changed. Priorities have reversed. The heavier side of the scale has become creativity and innovation. Again, not to say that superior execution and production aren’t important; they are still critical. But execution and production no longer provide competitive advantage; in a hyper-competitive, dynamic global economy, they have been reduced in status to “table-stakes.” You have to have them to play the game; but they are simply not good enough to win the game.

In the new millennium, winning the game requires that creativity and innovation are THE core capability. Creativity and innovation have become the core strategic drivers, the primary differentiators, the foundations of sustainable organic growth. And sustainable creativity and innovation requires fundamentally new practices that tap into, unleash and align blocked and pent-up workforce capabilities, energy, passion and commitment.

The old tools focused on holding all of that down in the quest for continuity, predictability, conformity and control. The old tools are all about compliance to a (relatively) fixed strategy and to a (relatively) fixed corporate ideology, values and behavioral norms. The old tools focused on preserving the institution. In the 21st century, businesses that run themselves under the old 20th century institutional model will go the way of the dinosaurs.

Wholly new leadership and management principles and practices will be required to ensure that a business survives and grows. And those new principles and practices will be focused on ensuring that a business never becomes an institution, i.e. ensuring that it remains alive, vital, creative, innovative and self-renewing.

We’ll discuss these new leadership and management principles and practices over the next several blog entries: They include:

o The New Social Contract
o Leverage Diversity: Maximize Differentiation AND Integration
o All Hands on Deck: The Commitment-Driven Enterprise
o Partnering
o Building Commitment
o Inside-Out Alignment:
o Intrinsic Motivation
o Shared Purpose
o Three-Way Alignment
o Freedom + Accountability
o Dynamic Alignment = Dynamic Company
o Tapping the Current
o Open the Channel with New Communication Practices
o Keep Current to Keep the Current Flowing
o Tap the Underground River (Access the Right Brain)
o The Post-Institutional Enterprise

We'll address these topics in some depth over the next several weeks.

Dean Robb, Ph.D.

Creative Renewal and Legacy Management Tools

The last two blog entries focused on two key drivers in unlocking and channeling untapped workforce energy and passion into creation of new forms of value. The April 14 entry, More on Vision Statements, Alignment and Strategy talked about how a compelling vision is a primary tool in unlocking blocked workforce energy and passion. The April 25 entry, Innovation and Value Creation at Schering Plough discussed some of the key structural/technical changes introduced into Schering-Plough (SP), as part of their massive effort to channel that passion and energy into continuous creation of new, innovative forms of value – i.e. on Creative Renewal.

This week’s blog entry will focus more deeply on some of the human factors that are foundational to building organizational capability for sustainable Creative Renewal.

Creating sustainable capability for innovation and renewal is a “brave new world” for corporate America. The foundations, or “premises.” upon which most large companies have been built, stem from ways of thinking and operating that are well over 100 years old. They are rooted in the work of management and organizational theorists and practitioners whose work and thinking were embedded in, shaped by, and constrained by, the “zeitgeist” or “worldview” of the time (just before and after the turn of the century (19th to 20th)).

In a nutshell, the emphasis at that time was on creating organizations that could maintain continuity – i.e. the status quo – for long periods of time. The primary models were bureaucratic and institutional. The scientific thinking of the time, which drove these organizational models, was that the world is basically a gigantic machine, and that if we figure out the rules of that machine, we could make it do whatever we wanted it to do via the application of scientific thinking, engineering-based tools, and control-based leadership and management practices.

In that bureaucratic/institutional mindset, a parallel concept was that companies (organizations) were basically large, complex production lines. Within that worldview, a primary task of leaders and managers was to figure out how to design and operate the production lines – i.e. to keep their hands firmly on the important buttons and levers that controlled that machine. Furthermore, everybody else’s job was, in essence, a cog in that machine.

The underlying, but somewhat unstated, belief was that the world was stable – it didn’t change much, and if it did, it happened quite slowly, could be planned down to every last detail in advance (by leaders and managers), and implemented like a large engineering project. The mantra: a place for everything, and everything in its place.

Four primary leadership and management tools – hierarchical power structures, command-and-control, compliance and conformity – flow directly from these 100 year-old foundations. Their overarching goal was, and remains, predictability and stable production outputs. And to this day, those tools are smack dab at the core of how most companies operate.

The enormous problem facing business leaders today is that, while those fundamental leadership and management concepts and tools are superb if your business is based primarily or solely on continuous unchanging execution of a fixed strategy in an essentially unchanging environment, they are diametrically opposed to the goals of continuous, sustainable innovation and renewal!

If your primary business goal is to tap into collective energy, passion and creativity and channel it toward the task of continuous creation of new forms of added value, these old tools are actually counterproductive to the task! That’s a hard pill to swallow. It’s huge and it tastes quite bitter. But there it is. We need to face up to it and deal with it – directly and honestly.

(If you want to learn more about the whys and wherefores of all of this in substantially greater detail, read my article The End of "Scientific Management": Replace the Traditional 3Cs With Corporate Creativity). The nutshell version is that these old tools are based on the paradigm that the knowledge and skill needed to run a business exists solely in senior leadership and management, and everybody else’s job is to do what they’re told. It’s a military model. Another underlying assumption is that deviation and difference are the enemy of smooth, standardized, predictable and controllable production, and so they should be stamped out. This belief is captured neatly in an old Asian proverb: “the nail that sticks up will be pounded down.”

So: where do we go from here? What are the premises and practices upon which we can build organizations capable of continuous innovation, reinvention and creative renewal? We’re all in a learning mode here in this emerging brave new world, but at the Center for Corporate Renewal we believe we’ve unearthed at least a few of the key foundations. In the blog, I’d like to talk about them, and attempt to link them into the elements of the transformation happening at Schering-Plough. I will probably go beyond what Schering-Plough is doing at this point, but to the extent possible, I’ll try to link these key practices with the Schering-Plough story, as they conceive it.

More soon.

Dean Robb, Ph.D.

Innovation and Value Creation at Schering Plough

The last blog entry, More on Vision Statements, Alignment and Strategy looked at how Schering-Plough’s (SP) new “compelling vision” was a primary tool in helping senior leadership unlock and channel vast stores of passion, energy, commitment and drive to succeed in their workforce.

This week’s blog entry will focus on how SP channels unlocked workforce energy into innovation. Unblocking employee passion, energy and commitment – opening up the floodgates – is only the beginning. It’s critical to channel that energy productively. What I mean by “channel” is 1) to keep unlocked workforce energy continuously open and flowing, 2) align it with company mission, vision, values and goals, and 3) create the means or mechanisms through which that energy can be continuously converted into new forms of added value – for customers, employees and stockholders.

There are both structural/technical, as well as human, factors involved in the process of continuously channeling workforce energy into new forms of added value. We’ll start with the structural/technical side of SP’s innovation initiative, and then, in later blog entries, we’ll talk about the human side of their innovation plans.

In SP’s case, prior to the advent of Mr. Hassan as CEO, SP was in serious trouble on the innovation front. In an earlier blog entry we discussed how SP had fallen seriously behind their competition in their ability to create new products (see Corporate Renewal as Turnaround Strategy: Schering-Plough).

Mr. Hassan’s first priority was simplification of their new product development process, and a re-orientation of its central focus. What do I mean by “re-orientation of its focus”? Prior to Mr. Hassan’s tenure, the previous new product development process was driven by R&D – creating new molecules that could possibly be converted into medications to be sold to their customer base. The new process started with the customer – with doctors and patients. The old process was to 1) survey customers using standard survey tools and methods, 2) develop a new product, and finally, 3) test market it. (And hope like hell you got it right). The new way is to spend time with customers, get to know them as people, observe and work with them in their natural environment, and through a deepening collaborative relationship, find out first-hand what their real problems and concerns are.

It’s a different mindset and a different approach. It’s customer-centered rather than technology- or product-centered. A few years ago, this was known as “customer intimacy,” but the previous focus was somewhat more aimed at how customers were treated (i.e. customer service). This new approach takes customer intimacy several steps further, and invites your customers (both current and prospective), as well as other stakeholders/gatekeepers, smack-dab into the core of your business!

A parallel priority was to simplify and integrate the incredibly complex process of moving “molecules to market.” This took substantial process redesign. Previously, the process was highly “silo-ized” – meaning that the process was purely linear, where each key function needed to get new products into customers medicine cabinets (R&D, marketing, finance, operations, sales, etc.) worked separately, and when one function was “done” working on their piece of the puzzle, the completed work product was “thrown over the wall” to the next functional silo so they could “do their thing.” And on top of that, each silo was very steep (many layers of management), so that decision-making within each silo was slow and difficult.

As we’ve all learned, this is one helluva lousy way to operate in a highly dynamic, complex, ultra-competitive and fast-changing business environment. The old way is incredibly slow, mistake-ridden, blame-ridden, and accountability-free (who has overall accountability when the process is so fragmented and silo-ized?).

The new value-creation process (NPD) is radically simplified – via reengineering – to eliminate redundancy, workarounds, unnecessary complexity, and to improve speed and flexibility. The process is managed cross-functionally and collaboratively – meaning that ALL required players are involved every step of the way, and are all involved in decision-making. Although at different phases of the process, different functional players have differing degrees of “say” in decision-making, depending on what’s most important at that point.

The team managing the value creation process might be understood in a way similar to the compound eye of some insects – say, like the dragonfly. Each team member serves as a different “facet” of that compound eye, and the collective intelligence of the team is drawn upon to synthesize all the different facets of understanding and points-of-view, and to make intelligent decisions based on that synthesized (or integrated) understanding.

In parallel with process simplification, and cross-functional management, the company de-layered their management structure, to simplify and speed up decision-making. Presently, there are only 5 layers of management from shop floor to CEO at Schering Plough.

More about all of this next time.

Dean Robb, Ph.D.

More on Vision Statements, Alignment and Strategy

The last post discussed how Mr. Hassan, CEO of Schering-Plough, developed a powerful, compelling vision as a key foundation for his business turnaround, and how this vision served both to create the strong workforce alignment required for Disciplined Execution, and also for Creative Renewal. This post can be viewed in the blog entry entitled Creative Renewal: Schering-Plough's Turnaround.

As a reminder, or in case you haven’t read previous blog entries, to our way of thinking here at the Center for Corporate Renewal, we think that sustainable growth depends critically on three core competencies. A self-renewing company must be able to…

Think with STRATEGIC FOCUS: Make sense of a changing environment and gain focus on the next right strategic move
Act with DISCIPLINED EXECUTION: Align and mobilize the entire organization behind this new strategic focus
Lead with CREATIVE RENEWAL: Renew the entrepreneurial spirit, while enabling your organization to continually cycle through stronger and stronger strategy-to-execution phases

A strong, compelling vision can also serve as a key driver for Strategic Focus. In an earlier blog entry we discussed how, prior to Mr. Hassan’s ascendancy to CEO, the company had to a significant extent lost it’s way due to an entire laundry list of serious problems, most of which were of S-P’s own making. And while under the tremendous pressure of trying to put out all those fires, the company addressed them with a fire-fighter’s perspective: they just bounced around from crisis to crisis, from a tactical/ operational perspective: without any kind of coherent, over-arching, forward-looking framework in which to understand and “locate” their current woes, and also see beyond them to a genuinely new future.. As a result, the company became somewhat lost.

Anyway, when Mr. Hassan and his team wrestled with the future direction of the company, out of a great deal of friction and heat emerged a powerful, compelling vision for the future. And now to the point: this compelling vision provided a “guiding light” to help the company navigate successfully through the dark fog of tremendous uncertainty, strong competitive thrusts, and constant marketplace flux. That is, the company’s compelling vision helped the senior team to think with Strategic Focus, make sense out of a myriad of complex, constantly changing environmental signals, and to discern the appropriate course of action in alignment with the company’s long-term vision for the future.

A genuinely compelling and powerful vision has a kind of beauty about it. A vision that’s the real deal connotes something deeper, higher, and more meaningful than the usual vision statement. How? The run-of-the mill vision statement generally speaks to some form of “winning” (getting to the top of the heap) and to tremendous financial success. (By the way, both of those are great things.)

The problem is that such visions define the desired end-state solely in financial, operational, measurable terms. Such visions are strangely empty: they lack the emotional and spiritual resonance of visions that paint a vivid picture of the kind of company it intends to become! That is, they don’t paint a vivid picture of the “guts” of the company: its deep purpose, values, and the unique, authentic contribution it intends to make to its customers, and to the larger world.

Financially driven vision statements are generally written by senior management, and for senior and upper-middle management, financial goals are indeed the primary driving force of their lives. The problem, however, is that for the rank-and file employee, purely financial/ operational visions don’t generate sustainable motivation, passion and commitment. A ton of scholarly research bears this out. And the great body of employees are the folks who actually enact the vision – who make it happen.

If you want to capture and release the vast stores of passion, energy, commitment and drive to succeed in your entire workforce, you need a passionate, energetic, meaningful, contribution-oriented vision of the future. If it’s genuine, if it’s the real deal, people can genuinely rally around it and get behind it. If you have that kind of authentic vision, you won’t have to work so hard at trying to “enlist” them or get “buy-in”, both of which are generally thinly veiled sales efforts or compliance and control efforts.

Wow, I went on longer than I expected. I’ll move to a new subject next time.

Dean Robb, Ph.D.

Creative Renewal: Schering-Plough's Turnaround

Last week, we discussed how Mr. Fred Hassan (CEO – Schering-Plough (S-P)), during his initial moves at a business turnaround, also set the stage for a new organizational capability for “Disciplined Execution” – the ability to align and mobilize the entire organization behind the company’s new strategic focus. This post can be viewed in our blog entry “Disciplined Execution: Schering-Plough's Turnaround.”

This week, we’ll discuss the initial moves Mr. Hassan made in the area of “Creative Renewal” – the ability to renew the entrepreneurial spirit, while enabling the organization to continually cycle through stronger and stronger strategy-to-execution phases.

Both of the last two blog entries mentioned the critical importance of a “compelling vision” to both Disciplined Execution and Creative Renewal. I’d like to spend a few moments amplifying that idea a bit.

As mentioned in last week’s entry, a compelling vision provides a key foundation for Disciplined Execution. Previous to Mr. Hassan’s tenure at S-P, the company was in the doldrums. In some sense, the company had lost its way. It was reacting to the marketplace with a series of short-term, tactical maneuvers; however, there did not seem to be any overall “rhyme or reason” – i.e. an overarching, proactive, forward-looking, coherent framework of purpose or direction. It seems that the company was behaving something like a pinball in a pinball machine – ricocheting about from problem to problem, incident to incident. And, because of this lack of rooting in something larger – some kind of powerful vision that would provide people with a sense that the company had a larger, more long-term vision or game plan, each of those little reactive “ricochets” seemed rather meaningless. And, because there was no larger vision, the company just seemed to become more and more fragmented, reactive, and purposeless. It isn’t easy to see why employees became detached and demoralized – and thus, unmotivated to give their all.

A clear, compelling – and genuinely shared – vision can overcome this problem. Short-term problems don’t overwhelm, because they are set into a larger, longer-term, purposive and proactive context. It’s like the company knows where it’s going, and WHY it’s going there. I’m not a religious guy, but this idea isn’t new. I think that in the Old Testament, the prophet Isaiah (I think) said something along these lines: “Without vision, the people perish.”

A clear, compelling vision also provides a critical foundation for Creative Renewal. In fact, an exceptionally powerful vision is at the core of the entrepreneurial spirit. After a company has been successful, and has grown into a more mature phase of development, all-too-often the primary “spirit” driving the company becomes nothing less, and nothing more, than the “next quarter’s financials.”

In the start-up phase, however, this drive for financial success is inextricably linked to a profound vision – of how this new company will make a difference; of what kind of value creation and contribution the new company will make. This burning vision is the stimulus for innovation and adaptation, as well as a kind of burning, or urgent, commitment. It is a large part of why so many people love to “throw in their lot” with a new company, even given the risks involved. A new, entrepreneurial company is just plain exciting and fun. There is unbounded opportunity for contribution, innovation, performance and reward, together with an atmosphere of pride, vision, togetherness (“we’re all in this together”), excitement and – yes – fun.

That burning energy doesn’t have to die as a company grows older (chronologically). It can remain young (spiritually) if it can retain – and continually renew – that initial coupling of powerful vision with the drive for financial success.

We’ll continue this discussion next week.

Dean Robb, Ph.D.