Articles

CEOs need to scan for the faint — but vital — signals that will help give their companies an edge.

Despite the general understanding that leaders learn from experience, only a few organizations, such as Toyota, Boeing and General Electric, have truly taken it to heart by putting programs into place specifically to take advantage of experiential learning. Most companies stay within a narrow comfort zone. They certainly encourage aspiring and emerging leaders to "get experience," to take on "stretch" assignments and to take risks. But they provide precious little guidance on how to learn from experience -- how to mine it for insight about leading and adapting to change over the course of one's life. Organizations generally don't look outside their industry, or business itself, for new approaches. Instead, a banking model of learning predominates -- a semi-industrial process in which cost per unit is the key performance measure and knowledge is something deposited in aspiring leaders' heads for later use. That is unfortunate, because organizations are missing the opportunity to develop leaders by integrating their life and work experiences, especially those experiences the authors call "crucibles." Crucible experiences can be thought of as a kind of superconcentrated form of leadership development. Surprisingly, the best examples of organizations that deliberately employ such alchemy do not come from the business world. The authors draw on lessons from The Church of Jesus Christ of Latter-day Saints, better known as the Mormons, and the Hells Angels Motorcycle Club to develop four lessons for helping to develop managers. First, both the Mormons and the Hells Angels demonstrate how it is possible to craft or convert core activities to serve as practice fields for leaders. Second, they engage in elaborate preparation before sending would-be leaders out into the field. Third, they provide a supporting infrastructure while members are in the midst of a crucible. Finally, they recognize the need for renewal in individuals and the organization.

Eager to grow through innovation, companies are looking to customers to guide them toward unmet needs. But these entities often end up with vague, unusable -- or even misleading -- customer input. Why? The authors studied 10,000 customer need statements from many industries and discovered that companies have not even established a definition of what a customer need is or how user input should be standardized in terms of structure and format. Too often, companies ask customers to react to potential solutions, rather than zeroing in on their expertise: the "job" they need to accomplish with the product or service, and at which steps that experience could use improvement. By deconstructing the job, companies can identify opportunities that are universal and long-standing. In addition, the authors say, companies can collect data that fits their innovation strategy. What the authors propose is a disciplined process for gathering customer requirements that will then be addressed by innovative ideas. They outline the six characteristics that a useful customer statement must possess, including measuring value strictly from a user's perspective -- and not from the factors the company believes should form the basis for the customer's evaluation. The most helpful statements also prompt a clear course of action, specifying what dimensions of the "job" need improvement, such as its sluggish pace or inconsistent quality. The authors set forth six rules for eliciting feedback that will yield the right raw data to craft customer statements that resonate across company functions, so that departments can unite around a single growth strategy. Finally, they define the two broad categories of customer requirements -- job statements and desired-outcome statements -- and link which type works best for different innovation strategies. For CEOs, the authors' message is forthright: Successful innovation is about process, not just the result of brainstorming good ideas.

Thanks to a variety of online social applications -- including blogs, social networking sites like MySpace, user-generated content sites like YouTube and countless communities across the Web -- people are increasingly connecting with and drawing power from one other. In fact, customers are now beginning to define their own perspective on companies and brands, a view that's often at odds with the image a business wants to project. But organizations need not be on the defensive. Indeed, some savvy executives have already been turning this groundswell of customer power to their advantage. To investigate how, the authors interviewed managers and employees at more than 100 companies that were rolling out social applications. From this research, they developed a strategic framework that businesses can use to implement social applications in a number of departments, including research and development, marketing, sales, customer support and operations. The potential benefits are numerous: Social applications can generate research insights, extend the reach of marketing, energize sales efforts, cut support costs and stoke the innovation process. (And for companies that tap into employee groundswells, the result can be increased opportunities for collaboration across departments and geographical locations, as well as greater productivity and decreased inefficiencies.) But the greatest benefit might be cultural, because social applications help weave two-way customer communications into the fabric of an organization. But anything that changes culture tends to face resistance, and this is especially true of social applications, because they require managers to embrace an unknown communications channel, one that responds poorly to attempts to control it. Based on an analysis of companies that succeeded or failed in deploying social applications, the authors have derived a number of key managerial recommendations for any organization attempting to harness the power of the groundswell.

Innovation is the mandate of the day, and it has companies increasingly looking outside of their own organizations for new ways to grow. At the same time, shrinking federal research budgets are forcing universities to find alternate sources of funding for their research efforts. Consequently, just as companies are searching for new capabilities, sources of knowledge and means of growth, universities are feeling the urge to come down from the ivory tower to do business with corporations in order to keep their labs open. The convergence of these circumstances results in an unprecedented opportunity for successful partnerships between universities and corporations, and universities are making this easier every day. Recent years have seen a steep increase in the number of university-sponsored industrial or corporate liaison programs aimed at increasing university funding from private sources. But, given their differing needs, universities and corporations approach collaboration from different perspectives. How can managers reconcile the various needs of the two types of institutions? Drawing upon 20 years of experience as a corporate liaison officer, the author examines how best to manage relationships between companies and universities. He suggests that one point of common ground in corporate and academic partnerships is mutual respect for the use of the scientific method to solve problems. In such a context, academics feel more comfortable entering into dialogue with corporations without fear of "selling out," and corporate interests shed their aversion to so-called "pure" research. This allows both parties to follow the author's advice of shifting from a transactional approach to a relational approach. He examines three case studies and identifies three key factors in their success: The relationships moved beyond short-term vendor relationships to become lasting partnerships that built new capabilities for the companies; senior management was highly involved; and the companies involved the university in their strategy, not merely in technical tasks or isolated business problems.

Many companies have established technology-based platforms or virtual customer environments to partner with their customers in innovation and value creation. In pursuing such initiatives, most companies seem to focus primarily on customers' innovative contributions, paying limited attention to customers' interaction experiences in the VCE. But the VCE experience has broader and more profound implications -- particularly for customer relationship management. In this article, the authors offer a framework to help companies understand and evaluate customers' VCE experience profile. The authors describe five customer roles in innovation and value cocreation: product conceptualizer, product designer, product tester, product support specialist and product marketer. Each role has something to offer. However, depending on the customer innovation role, the nature of the customer interactions and the technologies used in the VCE will vary. The VCE customer experience is made up of four components: the pragmatic experience (its ability to provide information), the sociability experience (how it promotes group discussion), the usability experience (defined by the quality of the human-computer interactions) and the hedonic experience (relating to mental stimulation and entertainment). Drawing on examples from companies including Microsoft, SAP, Samsung, BMW, Volvo and Ducati, the authors suggest strategies and practices to enhance customer experiences in VCEs and ensure favorable outcomes in terms of both innovation management and customer relationship management. Designing and implementing the right system can help companies improve innovation and customer relationship management. Therefore, managers should view their VCE initiatives as an integral part of their overall innovation and customer strategies. What's more, the costs of implementation can vary widely. Therefore, companies need to be careful about selecting and implementing a portfolio of strategies and practices that meets the needs of the types of customers they want to engage in value cocreation.

Asia, Latin America and Eastern Europe are delivering strong revenue and profit growth.

It has become accepted wisdom in the corporate world that at one time or another every business will be forced to make radical changes. In fact, there is a blossoming industry of consultants and advisors who are equipped to help companies execute and survive these inevitable upheavals. But the authors propose that there is a better way to ensure that your company doesn't get ripped apart by radical change: Make sure it never needs it. What CEOs don't realize, say the authors, is that they could prevent their businesses from confronting the risks of wholesale change if they knew enough to identify and make smaller changes before too much friction builds up inside the company. Leaders and their management teams must be alert to -- and willing to confront -- early signs that the company's internal culture is not consistent with how it used to be, or how the leadership thinks of it. Making preemptive moves is never easy, because the signs are subtle and do not show up in traditional financial metrics. Shoring up a company's sagging identity is almost never a financial priority on par with, say, buying a new piece of equipment. The authors explain which indicators CEOs should monitor and take seriously (turnover rates, for example, or changes in the profile of new hires) so that they can make rational decisions as they are warranted, rather than waiting until panic sets in and countless changes are unavoidable. Such incremental shifting poses its own challenges: It's hard to convince others to join the movement when the culture in question looks healthy, but doing so will spare the company from the tough task in the future of having to reinvent itself. Given the choice, wouldn't most leaders prefer a low-level struggle with change rather than a fierce smackdown?