In this episode, Colin and Mickey discuss the dangers and limitations that come with striving for “continuous improvement” in an age that demands companies change and innovate to survive. Leaders today face the challenge of staying responsible for both the stability of their companies and the capacity for their teams to take risks and invent. Connected leaders must appreciate what is gained from failures and the diversity required to confront challenges so they are better prepared to make the changes the circumstances require.
1:17 Mickey: Colin, the last time we were together on LBB you made a very brief comment that we didn’t stay with and I want to go back to. You said something about the age of continuous improvement is over or that continuous improvement is no longer sufficient…Mr. Pidd, what are you talking about when you say “the age of continuous improvement is behind us, passé, insufficient?
2:30 Colin: I think we’ve had many good years, keeping from the 60s and 70s, where it was enough and rigorous, focused, continuous improvement was sufficient. Now I think any business that’s only continuously improving is in decay, it just doesn’t work out. And so for me it’s a provocative statement, a challenging statement.
2:56 Colin: We know that Samsung started as purveyors of cooked rice, they sold cooked rice to restaurants, and one day somebody said to them, rather than selling us the rice, can you sell us these huge cooking vats that you’ve invented? Now, to move from cooking rice to rice cookers is not an act of continuous improvement. It’s actually an act of disruption, it’s an act of massive invention, and if somebody only had a continuous improvement mindset, Samsung may well be out of business or still be selling rice.
Colin: So it’s not a new notion, but I think what’s occurring now is the speed of change, speed of disruption, is so fast that if you’re not actually thinking about what are we gonna stop doing, if you like, “unlearn” from our previous podcast we talked about, and are you looking for the step-jump, that’s the age that we’re in. It’s the alertness to new possibilities, as opposed to polishing possibilities. Polishing reality.
4:04 Mickey: It’s an interesting statement to say that it’s not that the idea of making things better in a continual way is completely passé, it’s just that it’s not enough anymore, and that if that’s all that you focus on it ultimately leads to decay because you don’t actually have this massive invention of new possibility, disruptive new futures.
4:30 Colin: I live in this notion, and I think you do, too, where a leader is taking me somewhere I haven’t been before and a manager more likely helps me do what I’m currently doing better. So managing a system is all about the continuous improvement and if you lead through continuous improvement you’re also creating a culture that is less likely to be inventive and innovative.
4:53 Mickey: You know I think it really fits with our triumvirate of leaders, bosses, and bastards because in some of the conversations we’ve had up to now, we think of leaders as people who are really connecting with others and with circumstances in a way that reveals new opportunity and new possibilities. Bosses tend to be getting more efficient with what they already know and bastards are selfish so they’re not actually operating out of being connected and if they’re inventing something new it’s quite private and only for them.
5:53 Colin: Continuous improvement tends to mean that we look inside or just on the periphery of our own business. And culturally that’s safe because I can see what I can do, I can always see the next step. And if you like, it’s a place without wonder. This kind of step change, disruptive shift, requires me and our culture to be really looking beyond ourselves. To be really prepared to be curious and to discover things we don’t even know we didn’t know. Now that, to create an organization where that is the safe thing to do is a huge culture shift. It’s actually a shift of identity. I’m going to have to be somebody that’s a little unsafe.
6:50 Colin: Continuous improvement, and I’m generalizing, is a safe way to improve. It’s step by step. We learn stuff, we get evidence. And that’s all good, I’m really for that. Let’s just take an example. We know that companies like Coca-Cola and Pepsi-Cola, we know the sales of their sweet black drink is on the way out. Continuous improvement is not going to help that situation. They’ve got to reinvent themselves.
7:46 Mickey: So in terms of culture change then, the cultures that actually go through some radical reinvention, the attention has to be from the world back to the culture, not from the present culture out to the world.
9:10 Mickey: There are other organizations that, the way they’ve operated up to now must be reinvented because of their ability to make money keeps declining, and banks are one of those, for instance. That means that that world has to be reinvented and everybody just trying to get more efficient than somebody else that’s doing things just like they’re doing it is probably not going to be the people leading the reinvention of the financial industry.
9:43 Mickey: So, what do you see? What would you say to a senior executive who has to be responsible for the current paying off the bills, but also needs to be responsible for inventing a future that’s not so badly constrained by the past like banking is today?
9:58 Colin: I think there are two things you would pay attention to. Let’s first say what this is not about. It’s not about betting the house on everything. I mean, that’s madness, that’s crazy. Go to a casino, put all your company assets on something and hope it comes up black or red. That’s not what we’re saying here.
10:41 Colin: We’ve often talked about, what’s the bits of our system, our business that’s stable, that’s predictable, that we know what’s going on. And what’s the economic return from that? So, what is it in a bank? What is it in the Cola industry? What is it in consulting that we know is just true and we know is actually going to create economic value for our customers, our clients, and ourselves?
11:05 Colin: But what’s the dynamic part of our system? Because the way you improve the stable end is, I think, continuous improvement. We continue to polish and do those kinds of things. And what’s our capacity to be nimble and agile and dynamic, that also has the capacity to create economic value for our clients and for ourselves? And I think the job of a leader is to have that in balance. The leader or senior person in a company that’s really just playing it on the stable end of that spectrum, that’s death. Equally, if you’re only playing in the dynamic end, well, you’re gambling. And I’m not prepared to invest in you either. So, it’s just a question of balance.
12:07 Mickey: I think leaders of improvement, one of the things they’ve got to do is manage the stable resources sufficient for people to have the opportunity to experiment, to learn, and to reveal. And that agility, to be able to at the same time take care of the foundational, reliable, “these are ways we pay our bills”, and making sure that people treat just as urgently the need to keep experimenting, learning, and revealing new possibilities so that you’re not just playing out the past until it expires and everybody else around you reinvents.
13:11 Colin: I think you describe a beautiful dance if you like. Leaders have to dance between things, and I mean that in a really respectful and professional way.
13:37 Colin: So a leader that’s who is addicted to continuous improvement as their only source of joy, of their place of appreciation, will actually start to create a culture where people only pay attention to small increments, that have this high-fiving of, “we’ve just increased something by whatever”. That is a self-referencing way of being a leader.
14:46 Colin: As leaders we’ve got to also have people getting excited about risk, failing fast, and this notion of stepping into the void of possibility and wonder and be prepared to do that.
15:38 Colin: What are the things in the stable part of our system that maybe we need to think about stopping doing? I know it’s not the historical version of this phrase, but this notion of creative destruction, the 21st century’s version of that is sometimes you have to actually kill a product, kill a service, whilst it’s still doing okay. That’s where you’ve got to start thinking about, what can we take out of our current stable space that allows us invest in possibility and the rapid disrupt of the world we’re living in at the moment? That takes courage. That’s leadership in my view.
16:22 Mickey: I want to go back to what you said about appreciation because I think, it’s a really interesting question: what do you find yourself appreciating? And if you’re saying that the job of a leader is to balance the incremental improvement of the stable environment and the step-change invention of new futures that actually secure tomorrow for the company, it would be interesting to notice-how much of your time is spent appreciating the unprecedented? How much of your time is spent appreciating people who get a great ROI out of a big mistake? The economics of failure is actually learning.
The rate at which we learn something that makes the failure worth while, that’s an economic advantage. And so in this world you’re talking about where people have got to be willing to fail fast and learn quickly, we better be really good at appreciating the times where people learn something that made a big mistake actually worth it.
17:34 Colin: Absolutely. And recognize inside of that that as human beings we have different appetites for that. I mean it’s another great argument for diversity. It’s that we’re gonna have people who actually do enjoy being in the big, risky space and there’s those who don’t quite so much enjoy that. And they’re both valid positions.
18:17 Colin: As leaders, we’ve got to help knit those people together, to appreciate each other’s difference, and both being prepared to actually not always follow the particular dynamic or the stable dream. That comes back to this notion of identity: who do I become in the face of these challenges?
18:34 Mickey: A leader’s job is to orchestrate the contributions of many. Well those contributions can live very different places on that spectrum from very stable to dynamic and unprecedented. I think that for a system to actually remain viable while continually inventing the future, you better have room for orchestrating the contributions of people all the way along that comfort zone where the people who are happy at different places are likely to be the people who are actually effective at different places on the stable to dynamic spectrum.
19:23 Colin: The challenge for leaders is to ensure that we know where we are on that spectrum at any particular time, on purpose. Is it time to be more towards the stable end? More towards the dynamic end? Should we be more balanced? I’d keep that in mind, as long as it’s conscious.
19:49 Colin: I actually change what I said at the end of the last time we talked together. It’s not that we’re at the end of continuous improvement. But I think we’re at the end of the age where business liability, real sense of community, can exist if we only focus on continuous improvement.
20:15 Mickey: The rate at which information is exchanged today is so incredibly fast that the rate at which people learn, evolve and invent new possibilities is incredibly fast. Those of us who are protecting the past successes of our enterprise are investing in being further and further behind. I just like what you’ve brought up today which is, it’s both. It’s being responsible for the foundation of our contribution and responsible for the contribution we’ve never fully appreciated, much less realized. And that it takes courage to do both and it takes appreciating a broad spectrum of people and giving them all chances to contribute.
21:11 Mickey: We have to orchestrate the contributions of people who are really at home with things being stable and gradual improvement, and the contributions of people who love being on that wild, wonderous, unprecedented end of things. A leader has got to be at home with all those different expressions. I think a boss tends to have a limited view of how many of those expressions are currently viable, and a bastard just wants people that serve his or her own selfish needs, as we said earlier.
22:18 Colin: I’ll finish with another provocation: I want to challenge this notion of “best practice”. I think it’s dangerous and I think that if you think about it, if we’re really going to jump into the void and really be inventive, then we’ve got to be courageous enough to go, you know what? We can invent for ourselves.