Incentives vs. insights: Responding to turbulence in China

founders-mentality-turbulence-in-china-220x207We just finished a Developing Market 100 session in Shanghai, where we had a full day with some of China’s leading founders. Turbulence remains a constant theme, but the source of turbulence is evolving. In our 2014 sessions, turbulence almost always meant “digital” as Chinese founders worked feverishly to move their businesses online. This year founders are defining turbulence more broadly—it includes not simply the online challenge, but also the need to respond to a fundamental softening of China’s growth outlook and the need to create a new value proposition for their employees.

What really struck me in these meetings was that founders are far less focused on “the answer” and far more intent on changing incentive structures so the new generation would be motivated to find the answer. As one founder put it: “I have built my business to thrive in today’s China. But I won’t be the one to figure out the new business model for tomorrow’s China. The answer will come from the new generation. My job is to liberate them, empower them and reward them to come up with new answers.” Continue reading

Cultural workflows: Is that your mother riding that elephant?

Founder's MentalityIn my recent blog post on surgical strikes, we talked briefly about “cultural workflows” and how they can slow a company down. During our eight weeks of workshops on how incumbent companies can maintain their Founder’s Mentality®, this topic came up often. So I wanted to devote a full post to exploring different kinds of cultural workflows and offer some quick ways to address them.

Cultural workflows are disruptive activities that arise from otherwise sound cultural attributes. While a given attribute may have started out as a pure positive, over time it encourages negative behaviors. What makes these behaviors so hard to manage is that they hide behind the values companies hold most sacred. As one workshop participant said, “It’s like the elephant in the room is being ridden by your mother—no matter how stinky the elephant, who wants to be seen as attacking your mother!” Continue reading

Surgical strikes … or the kyosaku approach to achieving kensho

DavidWe’ve been holding workshops for the last eight weeks, focused on a single question: “How do incumbents recover their sense of the Founder’s Mentality®?” One consistent theme: If you want to recover your Founder’s Mentality, act like an insurgent. Too often, when large, lumbering, complex companies try to simplify themselves, they start with large, lumbering, complex initiatives. Sadly, these initiatives result in more complexity, not less. Continue reading

Retaining the soul of a small company

Retaining the soul of a small companyI recently attended the 25th-anniversary celebration of Olam International, a founding member of the Developing Market 100 and one of the companies Chris Zook and I discussed at length in our book, Repeatability. Olam is a global agribusiness leader, selling 44 agricultural raw materials and food ingredients, including edible nuts, spices, coffee, cocoa, vegetable ingredients and rice. It is a challenger that has carved out an attractive niche for itself in a well-established industry with a number of strong competitors that have been around for more than a century. A few fun facts from Olam’s website give you a sense of how quickly the company has grown in its 25 years: Continue reading

“Fine, Mr. Feola . . .but have you agreed to all of that with the Russians?”

Nonstop international travel makes you fat and unhealthy. But it also gives you lots of hotel soaps, airline toiletries and great national stories that can serve as business parables. I am fat, with a heck of a lot of soap. And I collect these national stories. You might remember that I brought you “hammer time” from China and the role of Benga in cultural integration from Africa. Now I bring you a football story from Brazil. Continue reading

Founder’s Mentality and the paths to sustainable growth

If you’ve been a reader of this blog, you’re already familiar with the journey we’ve been on to define the Founder’s Mentality® and to examine how insurgent companies can resist the westward winds, preserving their Founder’s Mentality as they grow. In the coming months, we’ll be devoting more time to looking at how incumbents can restore their Founder’s Mentality before the southward winds drive them into a state of struggling bureaucracy.

In the course of meeting with different founders and founder-led companies, I’ve been asked several times if I had a presentation that founders and their executives could share within their companies. So I sat down last month to tape this overview, which shows how we define the Founder’s Mentality. Continue reading

Future makers vs. future takers: The innovation funnel

The innovation funnelWhy do large industry players find it so hard to lead innovation or respond to fundamental disruption in their industry? As we emphasized in our recent discussion of “future makers” vs. “future takers,” it has a lot to do with subtle changes in mindset that build up over time. We’ll continue to examine the problem here by looking at the “innovation funnel”—the process by which companies generate and screen new ideas.

But first, a reality check: Despite the conventional wisdom that company size and innovation are somehow incompatible, the truth is that many large incumbents do an extraordinary job of leading innovation in their industry for long periods of time. Sadly, though, they are ultimately judged on the final test—the moment when they fail to take the lead on industry disruption and lose precious ground to one or more insurgents. Continue reading