Management and leadership expert William Zyzo describes the four forces spurring multinationals to pursue creativity and innovation as a strategic imperative and provides advice on how global firms can overcome related challenges to retain their competitive advantage.
Multinationals are currently buffeted by four forces of creative destruction (See Figure 1). Of these, the first and foremost is relentless competition that occupies so much of management’s time that little is left for anything else. Multinationals face not only the traditional competition from each other, but also from an ever-growing number of new regional and local players.
How has it become so easy for new market entrants to join in the competition? One answer is the greatly expanded access to knowledge afforded by the internet. Before the advent of the internet, acquiring expert knowledge required spending years in universities in the U.S., Europe, or Japan. Now, you don’t have to travel overseas to get a degree from Harvard, MIT, Cambridge, or Oxford; all you need is a Wi-Fi connection and a smartphone or laptop to take classes at these universities through platforms like Coursera.org or Edx.org. There is no need to take the SATs or fill out admissions forms. In fact, if you don’t require a certificate of course completion, you don’t even need to pay. It’s an all-you-can-eat buffet of knowledge, for free. This commoditization of knowledge is one of the main drivers of the competition most incumbents face today.
The second reason behind the recent push for creativity and innovation is the digitalization of well-defined, routine tasks. Netscape founder Marc Andreessen expressed this idea memorably in this quote: “Software is eating the world.” Armed with expert knowledge, new entrants are using software to breach entry barriers that protected incumbents in the past. Think of the impact Uber’s business model has had on legacy businesses like Taiwan Taxi (台灣大車隊) – and Uber is not an outlier.
Software – and the speed and convenience it provides customers and suppliers – is challenging the deeply ingrained management practices of the Industrial Age. Those practices, though once a source of competitive advantage, are now becoming a liability. For example, digital natives – especially those who can design two-sided platforms – are undermining the knowledge traditional executives and managers use to compete, lead, and manage their people and firms.
Third, routine work that cannot yet be digitalized is being outsourced to lower-cost markets. For Taiwan, that means to countries like Malaysia and the Philippines. These locations not only have a highly educated workforce that can work for lower wages, but they also have citizens who are fluent in both Mandarin and English (a quality that many talents in Taiwan still lack).
Finally, work that cannot yet be automated or outsourced now consists of initiatives, projects, and tasks that are ill-defined, fragmented, dynamic, and unfamiliar. In Figure 2, these are the tasks that fall into Quadrants 2, 3, and 4. Much of the work in Quadrant 1 is either already digitalized or outsourced or is in the process of becoming so.
These four forces – increasing competition, digitalization, outsourcing of routine work, and increasing complexity and fragmentation of remaining work – are now becoming so pressing that multinationals in advanced economies like Taiwan cannot put them off any longer.
Sea change
Fortunately, a solution to this dilemma already exists. The theory of knowledge for managing creative and innovative endeavors can be adapted to overcome the challenges being generated by the above-mentioned four forces. However, introducing creativity and innovation into an organization calls for systemic change. Because most organizations lack experience enacting such changes, I recommend that managers and leaders first read Thinking in Systems by Donella Meadows. In addition, implementing this kind of transformation will require systematically integrating the following three elements: mindset, upskilling, and enabling resources (See Figure 3).
A good place to start is with adopting the requisite mindset. In company cultures that promote creativity and innovation, the attributes for a mindset shift typically include curiosity, empathy, and agility. However, I advise against using an off-the-shelf list of attributes from another currently successful company, such as Netflix, SpaceX, or Spotify. Instead, kickstart an open-ended discussion and debate after reading Mindset: The New Psychology of Success by Carol Dweck of Stanford University and Teaming: How Organizations Learn, Innovate, and Compete in the Knowledge Economy by Amy Edmondson of Harvard Business School.
The second and most challenging of the three-part solution will be upskilling. Every organization uses a tacit theory of knowledge that underpins how its people frame opportunities, challenges, and problems; how they lead and manage people and resources; and how they interact with each other and their customers, suppliers, and regulators. This overarching philosophy, which management scholars often identify as “company culture,” is deeply ingrained in the organization.
The prevailing theory of knowledge in most multinationals remains “command and control,” characterized by centralized decision-making. When market conditions are reasonably predictable and the work within the organization is mostly routine, “command and control” works like magic. However, when market conditions are dynamic and work is non-routine, fragmented, and complex, “command and control” is not as effective as some of the emerging new models. To get a sense of what your organization may need and how to get there, I recommend The Crux: How Leaders Become Strategists by Richard Rumelt and The Design Thinking Toolbox by Michael Lewrick, Patrick Link, and Larry Leifer.
Now, the place where lasting changes in mindset and skillset show up is in both our behavior and action. What is the difference? By behavior, I mean how we interact with others; action is the work we do that contributes directly to the business results we seek.
While actions should be self-explanatory, to instill conducive behavior I recommend role modeling, immediate coaching and feedback, and the use of enabling resources.
Behavioral role modeling is integral to organizational progress. Without respectable role models, the probability of the initiative’s success declines precipitously. It is only when most of us see in our role models the expected behavior and its resulting response from others that we are willing to try something new. While a role model can be anyone, the recommended models are members of the leadership team, as their behavior tends to be emulated most readily. A good source of inspiration on this topic is Simon Sinek’s Leaders Eat Last: Why Some Teams Pull Together and Others Don’t.
Next, as with learning any complex skill, two things are essential: sustained practice and immediate feedback. During practice sessions, you want to make sure that your people are asking for and receiving meaningful feedback. After learning a new skillset in a “safe space,” such as during a workshop, are they applying the new skillset in a real situation at work – for example, during a problem-solving meeting? Are people encouraging and supporting the transfer of the skills, language, and behavior? And are senior people deliberately pointing out which language and behavior they find helpful and why?
Finally, in addition to transferring the requisite skillsets, your people will need resources they can access when in doubt. Do you have in place, for example, a dedicated in-house coach with whom they can set up a one-on-one to clarify their concerns? Are relevant online resources easily available to them?
To confront the challenges facing most multinationals, we need to make our teams and organizations “creative and innovative.” The effort requires an integrated approach comprising a learning mindset, reskilling for collaboration, and behaviors that encourage and capitalize on the diversity of ideas, knowledge, and resources that currently lay unexploited in most organizations. However, as with any complex learning effort, this initiative also calls for vigorous debate, deliberate learning, and indefatigable persistence. Those who pull it off find that the results far exceed the toil and tears that the effort requires.
