Bruce Harreld Q&A

Last week, Bruce Harreld and the Harvard Business Review conducted a webinar on How to Drive Risk Out of Your Growth Initiatives, based on his article in the July-August issue.  Here are the key points:

1) Failing to provide the appropriate oversight
2) Not putting the best and most experienced people in charge
3) Assembling the wrong team, and “staffing up” prematurely
4) Taking the wrong approach to performance assessment
5) Not knowing how to fund and govern a start-up
6) Failing to leverage the organization’s core capabilities

Afterwards, participants were given the opportunity to ask questions. We’ve summarized a few of our favorites below.  If you have more questions, feel free to post them in the comments box, and we’ll give you our best answers.

Q1) If you’re going to take most senior people to run the new business initiative, who’s going to perform the day-to-day work?
A1)  We’re not talking about taking all senior leaders off of the core business, just one.  Don’t underestimate the magnitude and challenges of risks–you really want to dedicate significant  time, if not all of the time, shepherding and pulling the senior management team into the process.  Then, you’ve gotten the process started.  If you don’t have anyone you can pull out of the day-to-day, there will be problems. Maybe now is not the right time to start. Wait until you have more momentum in the core. Then find the one person who can lead the new business.

Q2) Are you suggesting getting started without knowing which processes are right?
A2) Yes.  You don’t know what processes you need in the beginning.  If you put the experiment through the core process, it kills creativity.  The existing process is built for the core; what do new growth initiatives need? Eventually, you’ll standardize and scale, but only when it’s been proven and you know what you’re doing.  Get some experience, step back after you’ve built a few, ask “what did we learn”, gather insight about what the process should be, then think about  how to institute a system.

Q3) Do projects at different stages need different governance?
A2) They all need senior- level care, but you’re not using the same metrics at each stage. Lay out the steps a typical start-up goes through. If you don’t have clarity of strategy, you can’t build a product. A year in, after prototyping, you can start figuring out where power points are for scalability, how to handle financials, and what types of metrics you’ll use.  Each stage will be different.  I had review cycles—3-4 hours for each new start-up a month. The topics of discussion were different depending on the stage of the new initiative.

Q4) Funding: funding fights are tough. Should there be a pool for investment, or should other lines of business come up with the money?
A4) You need a pool of money so the senior person who manages growth can invest.  The money comes from existing businesses. Be sure not to advertise how much is in that pool, though, because then, everyone will want a piece of that x amount of money.  And, the pool is much smaller than you realize.  If it’s large, you’ve prematurely scaled.  The real issue is off-cycle funding. Without CFO support, you’d have to wait till the end-of-year budget cycle to get the issue on table. Then, it would be too late to go to market. So, you need to figure out a different funding cycle for these projects.

Q5) What if Senior Management is risk-averse and people aren’t into your project? Will stealth innovation work?
No.  If innovation is lip service at your company, you might want to think about finding a better place to be.

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The Art of Leadership

Ingrid Johnson, Group Managing Director for Retail and Commercial Banking at Nedbank, and a former student of Professor Mike Tushman, offers some key lessons on leading transformation in her recent interview in African Banker:

“One of my big lessons had been in the art of leadership, as opposed to management…if you come in and say ‘I think this is the new strategic direction’–you’re never going to get outright support, because people don’t like change.”

“[Nedbank]was not quite sure of its destiny.  It had described a strategy, but not necessarily executed it.  It was amazing, going from one floor to the next and it felt like I’d joined a completely different organisation.”

“You come in with the expectation that [the existing management team of a reasonably performing business] know what they’ve got to do, and you just need to nudge them in a certain direction. And then you learn more about the scale of the challenge required to change the organization: if the existing leaders knew that and had embraced it, then perhaps they would have done it already.”

“It is in these times that courageous decisions and actions can change the sedtiny of the business…You need to honor people and … be very open in your conversations as to your expectations.  But how much time do you give people to shift?  I think that’s the challenge in a moderate-performing business.  If you’re on a burning platform and everything is wrong, it’s almost easier to affect change”.

If you’d like to gain a deeper understanding of how Johnson arrived at these lessons, read the HBS case study on Nedbank by our co-founder, Professor Michael Tushman.