CEOs’ confidence about growth prospects is at its lowest since the 2008 financial crisis, while fear of regulation is their biggest bugbear, according to this year’s PwC CEO survey. Together, these two insights suggest a prevailing attitude of: “We would find ways to grow, if only we were allowed to.” So where to look?
The PwC research suggests CEOs believe the key to growth exists within their (“inside out” in the report’s language). Seven in ten (71%) hope to grow organically, while nearly two-thirds (62%) expect growth to come from launching a new product or service. But despite the perceived importance of such initiatives, the majority (55%) believe “we are not able to innovate effectively”. As a result, “availability of key skills” is the third biggest threat to growth (up from fifth in 2018).
There is no doubt that turning ideas into reality requires a lot of skill, talent, and experience. But there is an interesting assumption at work in that phrase “availability of key skills”. It is that the organisation doesn’t already have what it needs, and so must look outside itself.
Here’s an alternative view: businesses rarely lack sufficient talent or ideas. What they lack is an ability to organise themselves in a way to take full advantage of them.
The four horsemen of inertia
In many businesses, four innovation-killers join forces. Together, they crush talent, dampen skills, stifle ideas, cleave to the pragmatic, and ensure nothing new gets done.
Horseman 1: Politics
Badly managed politics squeeze out innovation. But no organisation should aspire to be politics-free. Every organisation is political, for the simple reason that every organisation is the composite of different people with different talents and priorities trying to get different things done.
The main question is whether those politics are healthy–a constructive clash of agendas in pursuit of a higher goal–or unhealthy–a festering torpor. The former predicts growth; the latter, paralysis.
The challenge for CEOs is to identify which of the two definitions applies.
Killer question: Are we all aligned around a common goal, even if we are occasionally conflicted about how to get there?
Horseman 2: Structure
A good structure is one where everybody in an organisation is able to do what they do best, and talent can flow where it’s needed. But too often, fundamental decisions on structure are settled very early in a business’s lifecycle. Even the largest organisations rarely challenge the basics, no matter how many times they restructure.
In truth, structure should be an ongoing discussion, with leaders playing an active role. “How do we organise ourselves to best effect, given what we know now, and where the future is going?” is an enquiry that is rarely made in the far-reaching spirit that it deserves. This hinders innovation because talent ends up working in ways that are configured to old models and paradigms.
Killer question: Does the matrix control the talent, or the talent control the matrix?
Horseman 3: Operations
The right balance of agility and rigour in idea development and decision-making supports growth. In some organisations, agility has the upper hand, and people start saying things like, “We need to move fast and break things.” Break what, exactly? Your products? Your people? Your bank balance?
In even more organisations, rigour is the enemy of growth. The fear of breaking things drives the entire way of working. For example, many management structures encourage a process where the need for “buy-in” dominates. As a result, ideas can take months or years to get to fruition. That’s if they’re not killed by groupthink, smothered by due diligence, or abandoned through failures of will.
Killer question: Can we make decisions quickly, even when those decisions need data?
Horseman 4: Culture
Culture is the ongoing negotiation between you and everyone you work with about what you do, how you do, and why it’s necessary. It is the stories you tell each other about the work you’re doing. When you accept that nothing is easier to change than a story, culture becomes an empowering concept.
Good culture has its foundations in:
- Optimism–the belief that tomorrow can be better than today. It is the implicit motivation for all good ideas.
- Purpose–the answer to the question “why bother?”. None of us are going to bother having ideas if we believe those ideas aren’t going to do any good.
- Pleasure–the feeling of having striven hard for a goal, and achieved it. Without having to try, achievement has no value. Purpose without pleasure is grind. But pleasure without purpose is transient.
- Profit–the catalyst that enables the company to do more of the work it does, in the process creating more value for more people. Always remember that no-one ever got out of bed to create shareholder value.
Bad culture misdiagnoses or ignores these attributes altogether.
Killer question: Do our people know what they’re working to build, beyond our share price?
Together, these Four Horsemen are lethal assassins of productivity inside many organisations. Indeed, in many instances, inside-out growth as proposed by the PwC report may not be a question of skills availability. Rather, it will be about overcoming organisational barriers to enable the talent that firms already have. Perhaps CEOs don’t need to feel so gloomy after all.