Having the right mindset, culture and leadership behaviours is essential to practise emergent discovery. With these three things in place, you can make it acceptable to broach the unthinkable. 

Almost by definition, breakthroughs in their embryonic stages defy existing theories, principles, and bounds of experience. As such, they should be considered leaps of faith. So to foster emergent discovery in your organisation, you need to make it acceptable to consider the seemingly impossible. 

Early in the process, leaders and team members must be willing to suspend disbelief and to reserve judgement about whether a hypothesis is true or not. Common (and very reasonable) questions such as “Why do you believe that’s true?” and “How do you know that’s the right thing to do?” tend to shut down the process of inquiry. 

Instead, ask questions like “What experiment could you run to test that hypothesis?” and “If your hypothesis is correct, what are some possible areas where we might create value?” The way leaders react to early hypotheses heavily influences whether the most creative ideas are snuffed out or have a chance to evolve into something impactful. 

Leverage your critics’ insights to make your ideas even better. Breakthrough innovations typically challenge prevailing dogma, the set of collectively held beliefs about what is possible and what is acceptable. Challenging dogma also means challenging the people (the “leading authorities”) who have built their reputations around its veracity. History tells us that people who challenge conventional wisdom are often subject to accusations of recklessness, incompetence, or worse. Leaders must make it acceptable to defy dogma. Consider the common practice of engaging external experts to vet internally generated ideas or to perform due diligence on proposed investments. 

In principle, having such external input is a good idea. But too often, these experts become defenders of conventional wisdom. A better approach is to use them to improve the new ideas by identifying a critical assumption that should be tested, for example. If we engage sceptics and can tolerate their sometimes scalding critiques, we can learn a lot about what we need to do to move our ideas forward.

Make it about ideas, not personal ownership. Emergent discovery explicitly recognises that ideas are built over time with contributions from many people. One person’s ill-formed idea last month might be the essential building block for someone else’s step forward this month. The two are equally important to the process. Pursuing emergent discovery in your organisation requires a culture where ideas are not “owned” by individuals but are considered part of the intellectual commons of the enterprise. 

Disconnecting ideas from people also means that a failed idea is not a personal failure. Accordingly, emergent discovery works better if the teams involved in an effort have shared incentives and rewards.

Leading emergent discovery

The notion that breakthrough innovation is a random, chaotic process largely dependent on the visionary powers of gifted geniuses makes many organisations hesitant to embrace it as a core element of strategy. 

That is unfortunate given the massive value that breakthroughs produce for society and the companies that create them. But there is nothing mysterious or magic about the process. Breakthrough innovation can emerge through a rigorous and disciplined process of intellectual leaps, iterative search, experimentation, and selection. 

Emergent discovery is a repeatable process that can be learned.

Mastering it, however, requires more than understanding the mechanics of the process. It requires an organisation in which the people, particularly the leaders, adopt the right mindset and behaviours. 

They must be willing to consider seemingly unreasonable ideas and suspend judgement early in the discovery process. They must embrace learning through rigorous experimentation and failure and prioritise collective contributions over the personal ownership of ideas. Ultimately, whether an organisation adopts these habits depends critically on the behaviours of its leaders. Pursuing breakthrough innovation is as much a leadership challenge as it is a technical one. 

If the Covid-19 catastrophe has taught us anything, it is that the world can change dramatically in short order. Looking ahead, all companies must build the capacity to leap beyond existing comfort zones. Now, more than ever, we need leaders who can drive breakthrough innovation. 

Adapted from “What Evolution Can Teach Us About Innovation” by NOUBAR AFEYAN, co founder and chairman of Moderna Therapeutics, founder and CEO of Flagship Pioneering and GARY P. PISANO Jr. Professor of Business Administration and senior associate dean at Harvard Business School. – Harvard Business Review 202110 

Companies must be prepared to meet their moral and business obligations when operations bump up against labour abuses or worse. That’s why it’s critical for companies to have a human rights strategy and proactively consider when and how to take the action needed to fulfill their moral obligations; meet shareholder, customer, and employee expectations; and keep other stakeholders satisfied. Authors of new research looked at business ethics and sustainability, including discussions with managers and human rights groups, and how businesses have addressed these issues in the past. They created a framework to help companies develop a business and human rights strategy that is applicable to their situations. The framework offers tools to help companies gauge their vulnerabilities, and identify approaches and tactics that will assist them in meeting their social and commercial responsibilities.

Three categories of human rights violations

In their research, the authors observed three broad areas where human rights issues ariseand that companies must consider when developing a strategy.

Abuse in the way a company’s products or services are made and delivered. 

This includes abuse by suppliers or contractors or within a company’s own operations. Managing human rights risks in the supply chain is becoming increasingly complicated as geopolitical environments change, supply chains become more complex, and human rights defenders leverage digital media to highlight abuses occurring right under our noses in areas that were previously unseen. Sometimes a job such as picking tomatoes, making clothes, or working on a construction site, may appear to be normal.

What might not be seen is the way people are being controlled through intimidation, inescapable debt, the removal of passports, or threats of deportation. A 2019 investigation in the U.K. revealed a slave ring involving more than 400 trafficked Polish workers who were being held in appalling conditions. The labourers were receiving a pittance to work on farms and in factories that supplied major supermarket and building supply chains, including Tesco, Waitrose, Sainsbury’s, Homebase, Travis Perkins, Argos, and Wickes. Unsurprisingly, the companies were unaware of the conditions their suppliers’ workers were subjected to. 

In fact, most companies today are vocal in announcing policies to weed out forced labour in their value chains. However, the prevalence of modern slavery in global supply chains has become so entrenched that sadly most multinational companies benefit from it somewhere, often very far down the chain, where they have little visibility or leverage.

Abuse in the way a company’s products or services are used. 

While companies may not knowingly create products that violate human rights, they could find themselves complicit when customers employ their products or services to do so.

Even if not legally complicit, then they are at least guilty in the court of public opinion. Caterpillar, a long-standing supplier of heavy machinery to the Israeli army, found its reputation at risk when evidence emerged of its equipment being used to demolish Palestinian houses and orchards.

Abuse by regimes where the company operates. 

It is difficult to identify a country where human rights abuses of one kind or another do not take place, whether in the form of forced labour, suppression of free speech, racial / cultural / gender discrimination or unlawful incarceration. The issue is nuanced, and countries differ in their views on what constitutes basic human rights. Companies can benefit from working closely with governments, but when a regime violates human rights, they can get embroiled in scandal. 

Three key decisions for your human rights strategy

The insights gleaned while assessing a company’s exposure to human rights issues can also be used during the development and execution of a response. To help business leaders work through this, we’ve created a decision tree that highlights the key choices that could be made and their potential consequences.

DECISION 1: Exit, Speak up or Stay silent? 

The first decision a company must make is whether to get involved. Based on the conclusions reached using the exposure matrix, business leaders must decide whether the issue requires further attention and possibly action. 

Is it serious enough to warrant divesting operations and/or possibly leaving the country? If not, what other options are available? Deciding on the best option is not always straightforward, nor is flight always the most appropriate action: pulling out of a country can not only seriously impact a business’s bottom line but also harm the communities in which it operates, such as by eliminating local jobs or ending prosocial initiatives the company has taken. 

If a business makes the choice to continue operating and to work to address systemic human rights abuses within its environment, it needs to develop a nuanced strategy and be very deliberate about how and with whom it interacts.

DECISION 2: A Collective or Individual Approach? 

If a company chooses to stay and take action, it must decide whether the issue is best addressed by the company individually or should be undertaken collectively with other organisations or stakeholders. An individual approach can be most effective when companies are influential and when time is of the essence. 

DECISION 3: Which Actions and Tactics Should Be Chosen? 

Having decided on a collective or individual approach, companies are faced with the question of whether to take direct action to stop human rights violations or whether more can be done by indirectly influencing the institutional settings in which they operate.

Adapted from an article by N. Craig Smith, Markus Scholz, Jane Williams 

Formulating and executing sound organisational strategy is difficult work. Strategy is often made by elite teams and thus can be limited by their biases about competitors, customer needs, and market forces and it can be an uphill battle convincing stakeholders across the company to channel money, time, and energy in a new and unproven direction.

Hence making strategy behind closed doors is a prescription for failure when disruptions are coming from all directions. The authors’ solution to both the strategy formulation and execution challenges is radical: open up your strategy process now!Open strategy offers leadership teams access to diverse sources of external knowledge that they wouldn’t otherwise have, while also making individual leaders aware of their

biases and helping them build the buy-in needed to speed up execution.

This approach is particularly valuable when companies face disruptive threats and contemplate transformational change. It’s much easier to master disruptions when you’re forging strategy in concert with others who view the world through a different lens than you do. Progress and innovation depend less on lone thinkers with exceptional IQs than they do on diverse groups of people working together and capitalising on their individuality, as social scientist Scott E. Page has shown.

In short, diversity of perspective matters a lot.

Involving people from  outside your company in strategy-making not only provides a wellspring of fresh ideas but also mobilises and galvanises everyone involved. All this can happen without a loss of control over the strategy-making process.

Why does a Closed Approach to Strategy-Making have its limits?

According to a 2018 Bain survey, strategic planning is the most popular tool available to managers. Yet, too often, the results of that planning are under-whelming. 

Studies find that somewhere between 50% and 90% of the strategies devised by leaders don’t work. A 2018 survey of 201 American and European executives found that 52% of their strategic initiatives over the previous three years had underperformed.

These disappointing outcomes are particularly surprising considering the resources companies pour into strategy-making. Each year, they spend more than $30 billion on consultants, tapping their knowledge of industries, competencies, and business models, and CEOs spend over 20% of their working hours, on average, focusing on strategy.

At the core of this problem is the very process by which strategy is crafted. Companies have little hope of charting a reliable path forward if they limit strategic deliberations to a small group of senior executives. They can’t get the best ideas that way, nor can they effectively connect strategy to execution. Yet, strategic planning as practised today is a tightly closed, secretive, and bounded process. Executives presume that keeping strategy to themselves keeps the company safe from employees or external contributors who would inject unschooled or unruly thinking, and from competitors who would steal their ideas. But they are wrong: The hoarding of strategy isn’t helping their companies. It’s killing them, in several distinct ways.

Isomorphous strategies

Have you ever noticed that a great deal of strategic thinking in an industry sounds the same? You’re not imagining it. It’s due to a phenomenon that organisational theorists call isomorphism.

In essence, it means that in the process of adapting to our surroundings, we behave in increasingly similar ways. The same is true for companies, particularly as benchmarking and best practices have become central elements of strategy-making. 

Unimaginative strategies

It’s tough to get ideas to cross-fertilise in corporate settings. Departments and individuals compete with one another for resources or prestige, and even when leaders mandate cooperation and silo-busting, the ideas still don’t flow freely. 

Biased strategies

One of the underlying culprits was what cognitive psychologists sometimes call the status quo trap, the tendency to favour what already exists and information that confirms that choice. Other common biases that can torpedo strategies include the sunk cost trap (the tendency to irrationally support past choices that are failing), loss aversion (the tendency to give greater weight to potential losses than potential gains) and the overconfidence trap (the tendency to believe in the accuracy of overly optimistic forecasts). 

All of these biases represent dangerous blind spots for strategists who work alone or in small groups, where the pressure to conform can lead people to ignore negative information and disparage those who bring it up.

Adapted from an article BY CHRISTIAN STADLER, JULIA HAUTZ, KURT MATZLER, AND STEPHAN FRIEDRICH VON DEN EICHEN – MIT Sloan Management Review Spring 2022

Can strategy be reframed so that companies can thrive in the face of our current and future challenges?

In 50 years of researching companies both in the U.S. and in Japan, the authors’ view of the organisation has evolved from an information processing machine to a living organism continually creating new knowledge.

Advances in neuroscience research in recent years have shed light on the biological factors driving humans’ sense of purpose. We now know that the most basic need we are compelled to meet is social connection.

Neuroscientists have also found that the human brain exhibits a predisposition to seek the common good. As human beings we share the ability to rapidly adapt to changing circumstances, and we can imagine together how we might create a better world.

Considering these findings, the question is: “How should companies use both souls and brains so that strategy becomes relevant to the world we live in?”

Here are six recommended practices that may help you infuse strategy with soul. An ancient Japanese tradition says that doing the ordinary things in life a little bit better every day elevates individuals. In the same way, doing the ordinary things a little bit better every day in our jobs such as working hard, making ethical choices, being kind, practising self-reflection and self-discipline, being humble and being thankful, elevates our work lives. 

This builds culture at the organisational level and character at the personal level. These behaviours have to be practised every day so that they become a way of life. Similarly, as we have learned over decades of studying organisations, companies can adopt six daily practices to turn this strategy into a way of life:

1. Cope with complexity.
2. Adapt to change.
3. Embrace dynamic duality.
4. Empathise with everyone.
5. Tell stories.
6. Live with nature.

This set of practices helps organisations connect to the goal of building better lives and futures for company stakeholders, members of society and employees, and helps define and pursue business goals that support the common good.

COPE WITH COMPLEXITY

The growing complexity of our world and its many interrelated systems is widely acknowledged. To solve our most pressing problems, we must tap into diverse perspectives and sources of expertise across multiple domains because no single approach or field of study will provide the answers. 

Likewise, we must bring all of our own diverse capabilities to bear: The ability to sit with a complex problem and use both analytical and intuitive thinking to address it is increasingly crucial to organisations.

ADAPT TO CHANGE

The rapid rate of change of the modern world, driven largely by accelerated technological progress, demands that leaders and organisations anticipate and adapt to new circumstances at a pace unprecedented in human history.

EMBRACE DYNAMIC DUALITY

In the West, an intellectual tradition of dualistic thinking (drawing sharp distinctions between mind and body, self and other, humanity and nature) has led business executives to neatly divide knowledge into two categories: explicit knowledge, which can easily be articulated and shared, and tacit knowledge, which is more intuitive and gained from lived experience. 

They often value the former more highly than the latter. In contrast, the intellectual tradition in Japan has stressed oneness of body and mind, of self and other, of humanity and nature. Tacit and explicit knowledge form a dynamic duality interacting with, and interchanging into, each other to create something new through life experiences.

EMPATHISE WITH EVERYONE

Human survival has always depended on our ability to organise in mutually supportive groups for food and protection, which is why social connection is our top priority. At the root of connecting with others is empathising with them. Facing today’s crises, political and business leaders should unite, using this unique quality that we humans have. 

To empathise on a deep level, we need to develop a keen understanding of others’ perspectives and cultivate compassion in our hearts.

TELL STORIES

Effective business leaders understand the power of using stories to communicate the essence of their beliefs and ideals and to help the organisation internalise strategy.

LIVE WITH NATURE

Complex natural systems such as the Earth’s climate predate humans by more than 3 billion years, and we have been living with them since our species first appeared.

The Japanese tradition of “oneness of humanity and nature”, also practised by many indigenous cultures around the world, has taken on new relevance as humankind seeks to repair the damage to our natural environment caused by industrialisation.

SURVIVING THE FUTURE

These six practices must become a way of life for companies to survive in this day and age of “unknown unknowns.” They must also become the modus operandi in the life of a strategist who seeks to meet the unprecedented challenges facing businesses and humankind. Observing leaders who consistently do these things has taught us the following lessons about strategy. First, strategy must be driven by human beings. 

Strategy is as fundamental as thinking good thoughts, doing the right thing, and practising self-reflection and self-discipline in everyday life. Those six practices represent the authors’ philosophy of doing business: work with soul. Customers, employees, suppliers, communities, and shareholders want to know whether you have a soul, if you want to build mutual trust and connection. 

Second, strategy is driven by wisdom and it is about future-making. The future is hazy and unpredictable, which is why leaders need to tell stories about where they are headed, it allows others in the organisation to follow. 

Narratives illustrate a set of beliefs about what the company stands for and what kind of legacy it wants to leave behind for future generations. These stories bind the organisation together and help strategy become a way of life for all employees.