General Motors' Chief Talent Officer on Scalable Innovation

General Motors' Chief Talent Officer on Scalable Innovation
Executives, consultants, and academics have long been perplexed by the difficulty of fostering innovation in large, stodgy, and sluggish firms. Yahoo!, Motorola, Blackberry, Sears, HP, Kodak, RadioShack, and the disastrous merger of Chrysler and Mercedes-Benz are among the failed projects. However, there are certain exceptions. Some tired old enterprises can be resurrected. And there are well-told examples about how and why old failed organisations have surmounted the odds and improved their cultures, methods, and products – but it is important to remember that nothing in life is permanent, so such achievements should be regarded as ephemeral and precarious.

One of my favourite such stories, which inspired the title of this piece, is Lou Gerstner's Who Says Elephants Can't Dance. Gerstner discusses how he led IBM's turnaround during a time when innovation had stalled and the company's collective energy was focused on politics, infighting, and the preservation of obsolete traditions rather than quality. In addition, IBM clients were frequently bewildered and disregarded by the company. According to Creativity INC, after Steve Jobs sold Pixar to Disney, President Ed Catmull and others from Pixar revived the enthusiasm, confidence, and storytelling at the iconic but faltering Disney Animation Studios. And one of the best is James Surowiecki's "The Billion Dollar Blade," which appeared in the New Yorker in 1998. It tells the storey of how a small group of Gillette insiders banded together to overthrow management who were driving the company into "commodity hell" and return Gillette to its roots as a product innovator.

Michael Arena's recent book, Adaptive Space, is a fresh contender for anybody interested in the nuts and bolts of supporting scaled creativity. I read an advance copy a few months ago and was blown away by the enlightening blend of theory and research (especially on social network theory and innovation), stories about GM and other organisations, and practical advice on what works. The book is intriguing and delightful to read, and it achieves this without resorting to frenetic exaggeration or hyperbole.

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Many Silicon Valley companies that were once charming brilliant little startups but have now grown into giant dumb conglomerates may benefit much from Adaptive Space (including Tesla). As Michael demonstrates, making innovation happen in a large organisation is extremely different from making it happen in a small one. Michael's book will be out tomorrow, and our Stanford ecorner FRICTION podcast with Michael, "Agile on Edges: Managing Misfits," was released yesterday. (If you prefer, you may listen to it or read the transcript.)

I can't believe I'm praising a book written by a General Motors executive. I was certain a decade ago that GM was doomed because of a dysfunctional culture (based on regular direct and indirect interactions with the company's managers and executives). In 2008, I wrote a very critical piece on the company in which I argued that the phrase "No We Can't" characterised GM's major competency — GM managers were the most proficient individuals I had ever seen at justifying why, even when they knew better ways to do things, GM shouldn't do them. They exemplified The Knowing-Doing Gap, which Jeff Pfeffer and I described in 2000. And, as you may recall, the corporation declared Chapter 11 bankruptcy in 2009 and was bailed out by the United States government.

What a difference a ten-year period can make. GM paid up the loan. Under the direction of CEO Mary Barra, GM is financially sound (some analysts make the case that the stock market undervalues GM, especially compared to Tesla). And, in my admittedly biassed opinion, the “no we can't” approach is gradually fading, with a growing number of GM people, processes, and products displaying creativity.

The beauty of Michael's book — and our conversation on the FRICTION podcast — is that he goes into the subtle complexities that drive corporate innovation. He understands how to reduce and overcome bad friction in large corporations like General Motors, as well as when friction can be advantageous, such as resistance to new ideas, conflict over how promising new ideas should be realised, and careful (and sometimes slow) development of promising ideas before they are implemented at scale. He goes on to say that, while some parts of giant businesses may and should be entrepreneurial, experimental, move rapidly, and take risks, doing so by everyone would be disastrous. Following his work on the ambidextrous organisation, he suggests that huge organisations undertake the normal, proven, and well-rehearsed stuff that produces money right now as well.

I was intrigued by Michael's description of a major firm's core as a supertanker — where routine things happen, employees have well-defined responsibilities, and changes in direction are made with care and unroll slowly — in order to find the right balance between scale and speed. Aboard the supertanker's stern, however, are many speed boats that sail rapidly, see new places, and do new things — all without interfering with life on board. Many speed boats are destroyed. Those who succeed expand in size, and when they achieve a certain degree of success, they typically join the supertanker and become part in its operations.

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Michael's suggestions for managing the connections between the supertanker and the speedboats are really useful. Drawing heavily on social network theory, Michael proposes that, while having very smart people is important for innovation, more and more research suggests that having the right mix of people and positions in the network, as well as creating the right connections between them, is the key to being a large innovative organisation — for connecting what happens in the supertanker and what happens in a large innovative organisation. For example, he regularly refers to challengers as people who "break through the current status quo" and "see an other set of options." The key idea is that constructive challengers aren't just complainers and critics; they don't simply upset and distract their coworkers, resulting in dysfunctional friction. Instead, “they help to break down the brick wall or draw other people and their ideas through the brick wall so that it may become the next big idea.” And, as Michael pointed out, they either have solutions or suggestions for how to solve the problems they are complaining about.