Why even reinventors must keep reinventing (and how)

Want your company to be around in three to five years? Then, it needs to systematize its approach to encouraging creativity and nurturing new ideas.

How many times have you heard that old adage, "If it ain't broke, don't fix it?" There's a new book out by business author Jason Jennings that suggests your company listens to that advice at its peril.

"The Reinventors (How Extraordinary Companies Pursue Radical Continuous Change)" considers more than 22,000 companies that are considered models of reinvention such as ones you've heard of like Starbucks or Smithfield Foods and ones that you might not know (but should) like massive technology distribution company Arrow Electronics.

The author (who has four other business books under his belt) relates that idea came about after he read statistics collected through a 2010 IBM Global CEO Study that found 98 percent of the survey respondents believed their current model was ultimately unsustainable within five years.

Here's another exercise that Jennings suggests: Look at the lists of the Fortune 500 in the year 2000 and 2010, and count how many companies are the same. You'll find that almost two-thirds fell off the ranking during that decade. (Only 10 percent of the companies on the original list were on by 2010, by the way.)

OK, so not every business aspires to be on the Fortune 500 list, but you get the point. If your company wants to remain relevant and successful over time, it needs to continually reinvent itself so that it stays that way. Here are some things that Jennings found during his research:

  1. If your company isn't growing between 5 percent and 10 percent each year, providing related growth opportunities and financial rewards for your best people, your best people will leave.
  2. Reinvention is intentional.
  3. Similarly, companies need a framework and structure in order to grow. (Although structure doesn't necessarily mean abiding by rigid rules.)
  4. Excuses reveal a lack of leadership.
  5. When growth stalls, it's very difficult to regain it.

The bulk of Jennings' book is actually dedicated to sharing research and ideas for how businesses (of all sizes) can keep reinventing themselves. Here are the themes that really jumped out at me as I skimmed through it last weekend:

  • Let your fiercest critics help guide the way. The example provided centers on Smithfield Foods, which hired an environmental advocate who had once sued the company to head up its sustainability strategy. Over the course of 10 years, Smithfield went from being known as a company that flouted regulations to one that is praised for its practices by humane societies, non-governmental organizations and others. (Its tagline: "Good food. Responsibly." Mind you, it took a new CEO and a new environmental leader to get there.
  • Be forever frugal. For those who believe reinvention costs a lot of money, consider a story from the early days of Southwest Airlines. You may forget that in 1975, the company was "bleeding cash profusely." The team studied its options and made the decision to sell one of its four planes. But, the company did it by rethinking how to rehandle its ground operations -- not by canceling flights. It went from cutting gate turnaround times from 25 minutes to 10 minutes, saving money and making its customers very happy in the process. So, the next time your team thinks throwing money at a problem is the way to solve it, encourage it to look at the process instead. Incidentally, if the Southwest example doesn't convince you, think about this: Did you know that Apple spends one-third the amount of money that Microsoft does on marketing and roughly one-quarter what it does on R&D?
  • Leading change means systematizing everything. Even though these two thoughts might seem at odds, scale requires systems. Jennings also argues that they make companies more nimble, but keeping creative resources focused on new ideas not on how to get things done. He believes there are two reasons for resistance: "Either they're too inflexible to learn a new way of doing things, or they're scared to death of the accountability that systemization will bring." Which is it for your team?
  • Don't become rulebound. Don't make the mistake of equating systems with rules. Avoid unnecessary procedures that get in the way of personal creativity or that are bad for morale.
  • Don't hesitate. This one has special resonance for me, because I tend to overanalyze decisions, which often means delaying them. But apparently there are many other reasons that people hesitate, including fear of the unknown, they've gotten comfortable or they are afraid of the financial risks. I really love the quote that Jennings uses here from his father. "Only a fool fails to learn from his mistakes. But if you can learn from the mistakes of others, you can be exceptional." No wonder venture capitalists like giving money to failed entrepreneurs.

Of course, there is plenty that Jennings covers in his 230-page book that I haven't included here. So, if you've got some business travel coming up or your team is in the middle of planning/dreaming for 2013 (and hopefully beyond), you might want to reinvent the discussion by checking out this book -- especially if your team or company wants to be relevant in another three to five years.

This post was originally published on Smartplanet.com


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