progress – Workforce

March 19, 2019June 29, 2023

Q&A With Gary Pisano: How Managerial Leadership Drives Innovation

Over his three-decade career, Gary Pisano has been a researcher and consultant to many of the world’s largest corporations in various industries from aerospace to nutrition. He is a Harry E. Figgie professor of business administration at Harvard Business School where he has been a member of the faculty since 1988. Pisano’s extensive experience has made him one of the leading experts in management, innovation and competitive strategy. In his new book, “Creative Construction: The DNA of Sustained Innovation,” Pisano examines how businesses of all sizes, not just plucky startups, can become transformative innovators. Workforce Editorial Associate Bethany Tomasian recently caught up with Pisano.

Workforce: When did you recognize the need for leadership-oriented innovation strategies?

Gary P. Pisano: I think it goes back very early in my career working with companies, consulting for them and case writing. I saw that without the right leadership to shape the innovation process, getting the strategy and building the right culture just doesn’t happen. I kept coming across situations with some organizations where you wouldn’t see progress over time. There was no one really taking the ball and running with it to provide that energy. Where there was lack of leadership, I would see there was a lack of progress.

Then there were companies where I would see a leader take ownership and you’d see results. So that crystalized for me that leadership plays a central role in driving innovation. I set out to write the book to give leaders a guide in how to do it.

Workforce: What is the relationship between necessity and competition as driving forces for innovation?

Pisano: I think competition is critical for driving innovation. It provides the motive. I don’t think we see a lot of innovation in sectors of the economy where there is little competition because of there is a lack of incentive. If you look at any of these companies such as Amazon, Apple and Google, there’s a lot of competition going on there between these very techy companies. They’re always changing and they can’t sit still. Competition plays an incredibly important role in spawning innovation and spawning a lot of a good economic outcomes. I’m speaking here as someone trained in economics, so I tend to feel in favor of competition to drive good outcomes in general. Competition does a lot more than innovation, too. It drives better prices and efficiency.

I think competition is one of the reasons companies get interested in innovating, particularly companies whose competitive space has suddenly gotten more intense. They might have had a period where they could get away with not being very innovative and then their space starts to change. That’s when they say, “OK, we need to reenergize this innovation muscle again.”

I’ve worked at a number of those companies where it has been some 20 to 30 years since they’ve been innovative and they got away with it because their markets were only moderately competitive. When the competition kicked up and prices began to erode, they saw they couldn’t generate the margins they needed to sustain themselves without innovation.

Workforce: In an era of nearly exponential technological growth, what defines innovation?

Pisano: We do think about innovation too much as being about the technology change but it’s not always technology. There is a lot of business model change that has very little to do with technology. Technology is not the magic; the magic is their business model.

Think about discount airline carriers, somebody like Ryanair and easyJet in Europe. They all use the same planes and airports as everyone else and they have to follow the same regulations as everyone else. Yet, the story there isn’t about technology; it’s about creating a completely new business model. I think we see a lot of that. There is a lot of business model innovation that doesn’t necessarily have to do with high technology.

Workforce: How can companies stay focused on small-scale innovation rather than becoming distracted by whiz-bang innovative strategies?

Pisano: I think it’s very easy to get inebriated by technology today. To some, it’s all about the technology and pushing the technological frontier. I think you have to go back to letting value become your compass and go back to what your competitive position is. This can help you figure out what you need and what is going to drive innovation. Sometimes that is going to be functionality that is created by technology but sometimes it could be a different kind of service offering, or business model.

Take men’s shaving products. Making a razor blade sharper using ever more sophisticated technology is probably not the value driver, but convenience is something different. Think about companies like Dollar Shave Club and Harry’s, which have online models that provide convenient access to the product. This goes back to the source of value and what customers would be willing to pay for. That’s the acid test of value.

Workforce: Are there examples of established companies that are leading in innovative strategies?

Pisano: I think there are many of them across all sectors of the economy in different ways. Innovation is in almost every sector. You see it in apparel with people buying clothing online. The whole retail sector is being turned on its head, so we see a lot of innovation there as well. If you are going to survive you need to innovate.

There is a lot interesting stuff in the auto industry today. People talk about the auto companies as being dinosaurs, but they are doing a lot of innovation on the technological side. They are doing a lot of advancement around alternative fuel and most of them have some major programs there. They are also experimenting with new business models such as ride sharing. Sometimes it’s the companies that we don’t think of as innovative. When people think of innovative auto companies everyone thinks of Tesla. There are some major auto companies that we haven’t normally thought of as these bastions of innovation that are doing fascinating things.

There are also profound changes going on technologically in the drug industry. These aren’t business model innovations per se, although many pharmaceutical companies are experimenting with new business models. There are scientific changes happening that these companies are actively involved with and investing in. It’s not just startups that are innovating, there are large, established companies.

Every company, I don’t care who you are, there is an opportunity to be an innovator. Some might say, “Innovation doesn’t apply to us. We can do what we have been doing, just do it a little better.” I don’t think that there are many sectors of the economy where that is true anymore. Particularly in the U.S. economy, where we are facing global competition. That’s going to be hard to compete on.

Workforce: As climate change remains an ever-encroaching threat to the environment, how can more companies gear strategies toward greener innovations?

Pisano: I think companies are looking very carefully at their incentives to do it. This is where government policy matters because policies often create the incentive for companies to innovate. Tax policies and other regulations can tilt the field, so you will see that kind of innovation. A lot of companies are waiting and watching. Auto companies certainly see themselves on the forefront of green innovation as they invest heavily in alternative fuel sources. I think that there are a lot of things that every company can do in terms of climate concern.

Think about plastic. Plastic is atrocious for the environment and it’s all over the place. Just thinking about changing materials doesn’t require massive innovation. You can see how much waste there is every day, especially in packaging. A lot of the stuff you buy online that is shipped to your house is loaded with plastic and Styrofoam. None of us want our stuff to be broken but there is an awful amount of waste just in packaging. We don’t think of packaging as this big innovation opportunity but figuring out ways to cushion items without using so much plastic would be amazing.

I think regardless of what business you’re in, you could be thinking about fitting green innovation into your business model. This can be done by just improving efficiency. Even incremental improvements in process efficiency, where you use less energy, can accumulate quite a big effect.

Again, we can see this in the auto industry where cars have become more efficient. We now have smaller cars with much cleaner and more powerful engines. That innovation was largely driven by change in fuel and clean air standards. This is an example of how government policy matters when it comes to driving the incentive for companies to pursue climate-conscious innovation.

There are tons of opportunities for innovation that help the climate. I do think companies need polices that provide those incentives. I would tell companies to have a clear strategy of how you are adding climate change as a priority into your innovation portfolio. Ask yourself how this is going to create value and think about your broader competitive advantage.

Workforce: Any final takeaways for companies that are thinking about approaching innovation?

Pisano: Take your time. There is no magic bullet for these kinds of strategies. I wish I could offer you three easy steps but if innovation were easy then it wouldn’t be a source of competitive advantage. If it were easy, then it wouldn’t be valuable.

It is hard to build an organization that is capable of innovating and doing it over and over again. If you can do that, then your organization has a fantastic competitive advantage.

July 29, 2013June 29, 2023

Is Our Goal Equality or Equity?

On Aug. 28, we will mark 50 years since the March on Washington and Dr. Martin Luther King Jr.’s historic “I Have a Dream” speech. With the recent not guilty verdict in the trial of George Zimmerman for having shot and killed unarmed African-American teen Trayvon Martin, racial tensions and familiar questions are bubbling to the surface, and many are questioning how much progress has been made in diversity and inclusiveness since 1963.

One of the ways we can move forward and change the old scripts is to focus on equity, not equality. Equality, according to Webster’s Dictionary, means “as great as,” “the same as,” or “like or alike in quantity, degree, value, etc.” King only mentioned equality twice in his “I Have a Dream” speech, and while he was likely referring to the “as great as” meaning of the word, it’s the latter definition — a sense of uniformity and sameness — and its lack of desirability that seems to be coming out in many opinions lately regarding race in the U.S.

While most people profess valuing human differences to some degree, and decry any attempt to make us all “the same,” few truly believe or comprehend the real and profound differences in people’s perspectives and lived experiences. We assume that people are like interchangeable machines, believing that the justice system metes out objective decisions equally to all, and that had Zimmerman’s and Martin’s roles or races been reversed, the outcome of the trial would have (should have) been the same. We assume that the N-word uttered by young black males to each other in friendly social settings is the exact same N-word spoken by white celebrity chef Paula Deen to her husband and employees.

However, these assumptions are naïve at best and dangerous at worst. We are not apples and apples. Even when we speak the same words and perform the same actions, they are not the same. There is a different context, history and impact in those scenarios depending on who the players are. Arguing about whether or not it should be that way is moot.

Equality is a “universalist” approach, centered within oneself, applying one set of rules to vastly diverse people and situations. It focuses on keeping my behavior consistent. It says “I treat everyone equally.” Equity, defined by Webster’s as “the quality of being fair or impartial” and “that which is just,” is centered on others, on keeping the impact of my behavior on diverse others consistent. For instance, my parents had one set of rules for all three of us kids about how old we had to be before getting our first watch, first bicycle, first bra, etc. The well-intended, theoretically “fair” uniformity (equality) of those rules turned out to be very unfair (inequitable) in their practical application given that we had different needs and maturation rates.

King didn’t mention equity in his speech, but he did mention justice eight times, and injustice three times. I suspect he’d think that fairness and justice (equity) is preferable to sameness (equality). And I suspect he’d believe that regardless of our good conscious intentions, it’s the impact of our words, actions, policies and systems, and whether or not those are equitable, that matter more. Besides, “equity” also refers to a security representing an ownership interest in an investment. And isn’t it time we all held more equity in D&I and its dream deferred of excellence and brilliance?

September 29, 2006March 8, 2019

Hurd Tells Congress HP Way Can Be Restored

It took more than seven hours before a congressional hearing on spying by Hewlett-Packard got around to a discussion about the impact of the scandal on employees.

A day that featured 10 former HP executives and security consultants exercising their constitutional right to decline to testify and the relentless grilling of former HP chairwoman Patricia Dunn concluded with a query from Rep. Michael Burgess, R-Texas, about the company’s outreach to its workers.

“We’ve made an effort to communicate with them as often as possible,” HP chief executive Mark Hurd replied to Burgess, whose district includes an HP facility. “We’ve communicated with them about our governance changes and the issues around the investigation.”

Hurd was the last witness in a hearing of a House Energy and Commerce subcommittee on September 28 that lasted from 10 a.m. until nearly 6 p.m. The panel delved into the unfolding drama surrounding HP’s efforts to ferret out boardroom press leaks about company strategy.

The investigation involved HP’s obtaining phone records and other personal information about board members, journalists and its own staff through clandestine methods, including the use of false identities, or “pretexting.”

Even as HP tries to recover, lingering concerns about corporate spying may become an issue for employers.

“Every company in America is examining itself to see if it has the same kind of problem,” says Nell Minow, editor of the Corporate Library, an independent research firm in Arlington, Virginia, that specializes in corporate governance.

Congress may also take up the issue. “This gives us a good opportunity to open the window on some of the practices going on in companies around the country,” said Rep. Diana DeGette, D-Colorado.

HP, which has built a reputation as an exemplar of ethical corporate behavior, may now find itself lumped with other rogue companies, according to Rep. Tammy Baldwin, D-Wisconsin.

Enron and WorldCom shook American’s confidence in the finance and accounting arena. “HP is shattering their expectation of telecom privacy,” Baldwin said during the hearing.

The company’s employees may have similar concerns, which could even outweigh the fretting about damage to HP’s brand. “It’s not the reputation issue; it’s the paranoia issue,” Minow says.

House members on both sides of the aisle spent the first hour and 15 minutes of the hearing castigating the company with variations on the same theme: What were you thinking?

Hurd apologized for HP’s behavior and said that he is ultimately “responsible for everything that goes on at Hewlett-Packard.”

Although he admitted to approving the content of a bogus e-mail to a journalist, which was intended to monitor her sources, Hurd said that he ignored the scope and tactics of the investigation.

In part, he blamed the demands of running a huge company. “A CEO cannot be the backstop for every process in the company,” he said. “I pick my spots when I dive for details. There’s no excuse for that.”

But at the end–perhaps because the questioners were exhausted after working over Dunn and others–Hurd was both unbloodied and unbowed.

“We are committed to our core to redefine our company in a way that not only we can be proud of, but in a way that all corporations in America can be proud of,” he said.

—Mark Schoeff Jr.