These events convene a select group of global CEOs from many industries for an exchange of ideas and insights on timely and relevant topics.
The center's board of advisors are the primary participants at the summits, along with additional prominent guests, Tuck faculty and students,
and the center staff.
The following articles summarizes the highlights from past CEO Leadership Summits.
Corporate Entrepreneurship: Weighing the Risks and the Rewards: Fifteen CEOs Exchange Insights at Inaugural CEO Leadership Summit (PDF)
By Chris Trimble and Julie Lang
Crisis in Trust (PDF)
By Chris Trimble
Optimistic CEOs Recharging Innovation Engines
By Chris Trimble
CEOs have put innovation back on the agenda. Through the dark times of the last three years, innovation was on hold as corporations grappled with the realities of an economic downturn, and CEOs lost sleep while the misbehavior of a handful of their peers dominated the news. But today, new possibilities for the future are once again at the forefront. Earnings are on the rise, and more capital is available for the pursuit of speculative possibilities.
To exchange insights on innovation priorities and techniques for managing innovation, ten CEOs and senior executives gathered for the third annual CEO Leadership Summit. The William F. Achtmeyer Center for Global Leadership at the Tuck School of Business at Dartmouth sponsored the event, held on March 9th, 2004, in the offices of Bristol-Myers Squibb in New York City. Attendees included Peter Dolan, CEO of Bristol-Myers Squibb; Narayana Murthy, CEO of Infosys; Dick Harrington, CEO of the Thomson Corporation; Dave Shaffer, CEO of Thomson Financial; Peter Francis, CEO of J.M. Huber; Bill Achtmeyer, managing partner of the Parthenon Group; Michael Dolan (no relation to Peter Dolan), former CEO of Young & Rubicam; Eric Bourdais de Charbonniere, Chairman of Michelin; Glenn Britt, CEO of Time-Warner Cable; and Paul Danos, Dean of the Tuck School. Professors Vijay Govindarajan and Chris Trimble, who direct the Center for Global Leadership, moderated the discussions.
Innovative endeavors come in many shapes and sizes. Some aim at improving existing business processes, others at revolutionizing them. Some deliver intriguing new products and services, still others hope to create entirely new industries based on unproven business models. The participants named a broad range of projects that were on their personal front-burners, fitting all of these categories.
Where process improvement was the goal, global operations was the focus. For example, several years ago, Mr. Narayana Murthy's technology consulting and software development business, Infosys, created a new global service delivery model. Infosys does not locate entire teams at client sites. Instead, teams consist of both on-site groups, usually in the U.S. or Europe, and off-site groups, generally in Asia. To perfect the system, Infosys is refining judgment about how to divide the work process across continents. And, they are designing workflows to take maximum advantage of the time difference between the client site and India - allowing Infosys to work around the clock and slash completion times. Mr. Bourdais of Michelin and Dean Danos of the Tuck School also look to improve the efficiency and effectiveness of their own global operations by finding the best possible location worldwide for each activity. While Mr. Bourdais moves manufacturing operations around the world, Mr. Danos looks to locate new public relations and MBA recruiting operations overseas, as well as find ideal spots for off-site research support teams.
In other cases, participants indicated less interest in improving the processes they already had than in replacing those processes with something completely different. For example, Bristol-Myers Squibb, with much of the pharmaceutical industry, has engaged in an arms race as each competitor expands the size of its sales force, seeking ever more time from doctors. Except the doctors are no longer willing to listen. Many now refuse to talk to salespeople at all. As a result, Bristol-Myers Squibb is experimenting with new systems for communicating with doctors, leveraging the Internet, and giving doctors more opportunities to establish an open dialogue on their own terms.
New product development is also generating renewed interest. For example, Michelin plans to extend their offerings beyond tires to other automotive components. But what was most remarkable about this ambitious group of executives was their interest in strategic innovation - experimentation with unproven business models. Today, opportunities for strategic innovation are plentiful. Rapid and nonlinear changes in the economic environment, driven by forces such as globalization and technological advance, threaten traditional industries as never before. At the same time, these changes open the door for revolutionary entrepreneurial approaches.
At Time Warner Cable, the options for investing in breakthrough business models are so numerous that the toughest challenge is choosing which to invest in first. Video-on-demand in homes, set-top boxes with digital recording capabilities, urban wi-fi hotspots, and even a move into residential telephone services are all possibilities for new or continued investment. Thomson Corporation, a provider of online information services to knowledge workers such as doctors, lawyers, and financiers, is seeking ways to make their products a much more integrated piece of their clients' work flows. This will force a transition from information products to applications, and require much different sales, service and product development processes. At Parthenon, a consultancy, Mr. Achtmeyer is wrestling with a new opportunity as well. In the aftermath of the dot-com crash, private equity investors are being more careful than ever, and desire outside advice on investments that they are considering. But the work process required to deliver this advice are much different from those of traditional strategy consulting. Serving the new market will require redesigning both organizational and pay structures within the firm. Finally, at J.M. Huber, Mr. Francis is examining every industrial business in his portfolio for new services offerings that his clients would value.
After the group shared some information about the innovations each is pursuing, they offered many thoughts on how best to manage innovative activity. For starters, you need the right atmosphere. Mr. Murthy described his own approach, "We believe that innovation has to be organic and must involve everyone. We also believe that creating an environment with confidence, hope, optimism and enthusiasm is the best way to get good ideas." Mr. Murthy has even employed a practice of staffing certain teams mostly with people under 30 - those likely to have the freshest ideas about the future.
Mr. Achtmeyer added that it was important to have fun. "Organizations that are too serious crush innovation. People just don't enjoy going to work." He added several additional attributes of innovative organizations that he has observed, including a natural inclination to applaud experimentation, respect for difference, and a shared discipline of listening carefully and respectfully to colleagues. But innovation also requires stress and tension. The trick is knowing how to create positive and productive tensions, not negative and divisive ones.
Innovative organizations need creative people. Mr. Michael Dolan offered a theory that all companies are born with a creative burst of energy. But that soon changes. "You go from people who have a creative intuition about something and a passionate desire to see it through to people who are more focused on process and become experts at process efficiency," Mr. Dolan explained. Mr. Britt agreed, adding, "There is a natural tendency to promote process people because they seem reliable...you drive innovation out of the organization."
So how do you keep creative people in an organization as it matures? Mr. Dolan offered his insights based on his transition from the corporate world to advertising at Young & Rubicam. "It was shocking just how different the creative people are...they were much more intuitive than analytical. That's not to say that they weren't bright. They are smart, but think in different ways." Creative people can be difficult to manage. "They can be childish. You have to create an environment where people like that are protected and supported...they need reinforcement and encouragement because what they do is so idiosyncratic," Mr. Dolan continued. Still, Mr. Britt added, you need a balance of both types - creative and analytical. "Creative people don't have good judgment about their own ideas."
If an organization is successful at unleashing innovative energies, it becomes critical to ensure that people who produce ideas get rapid, intelligent, and constructive feedback. Creative people may readily generate ten interesting ideas - they need a talented foil who can help point out which nine are completely impractical. These foils must give advice carefully, however. Mr. Murthy offered his rule of feedback - "Always give negative feedback in private and positive feedback in public."
Without such feedback, organizations disperse energies in too many directions. Besides strong feedback mechanisms, providing a theme - some common thread that ties all innovative endeavors together - can increase the organization's overall success rate. The Thomson Corporation's emphasis of augmenting their information services with applications that improve customer productivity is an example of such a theme.
Organizations sometimes set up separate business units with a mission to pursue an emerging opportunity. In fact, Center for Global Leadership research shows that creating a separate, though not isolated, unit is a critical success factor in strategic innovation. A danger with the approach, however, is that the employees in the core business begin to feel that innovation is something that only happens "over there," that is, in the new business unit. Mr. Peter Dolan recalled how the failure of an innovative unit within one of his subsidiaries reinvigorated the core. "The level of innovation that returned to a business that was supposedly slow growth has been noticeable. They are looking at several new products to introduce over the next few years, and have one of the most aggressive strategic plans within our company."
Many of the management techniques mentioned above can help reinvigorate innovation of all kinds within an organization. But after ideas have been generated and evaluated, management practices need to diverge depending on certain attributes of the innovative concept. Two of the most important are the level of risk, and the time to receive feedback on whether the idea is working or not.
Mr. Harrington pointed out that evaluating the level of risk is often the first step. If an idea can be implemented quickly and without much expense or risk to existing assets, you just go ahead and do it. In other cases, projects are costly and it may be years before it is clear whether they are succeeding. In such cases, Thomson Corporation has taken a more deliberate approach, as with their carefully researched partnership with a consortium of sixteen universities to launch Universitas 21 Global, an eMBA program in Asia, which they have funded in stages.
Levels of investment are so high and time to get feedback so lengthy in the pharmaceutical business that Mr. Dolan has looked for innovative ways to find out whether a new drug program is on track at intermediate stages. The company has developed new metrics that help evaluate projects in the early stages, and new incentives that make R&D employees aware of the entire drug development pipeline - not just their own piece of the puzzle.
Strategic innovations often have attributes of high risk and long feedback times. Further, they often stretch an organization well beyond its existing capabilities. Hiring from the outside can be the only realistic way to succeed. Recalling an endeavor to turn a supplier of commodity plywood into a branded producer of custom wood products, Mr. Francis recalled the critical role played by marketing executives from places like Nabisco and Sara Lee. But it required diligent attention from the top, as in many ways the organization naturally resisted the strange notions brought in from the outside.
Mr. Francis also described a notion he borrowed from the oil drilling industry - the difference between a good dry hole and a bad dry hole. Innovations often fail. A good dry hole is a failure that results from a calculated risk. It is one of many holes, and the laws of probability suggest that at least some will succeed. And, a good dry hole is one that you learn from. Failure is acceptable when you have the discipline to go back and review the history of an innovative endeavor, and learn as much as possible from it.
All of this makes innovation sound complex and risky. It can feel like a daunting challenge. So perhaps it is best to summarize with advice from Mr. Murthy, "Even with innovation, it is important to run your business with simple rules. You can communicate them easily. And people can understand them."