 Hello and welcome to the leaders room. I'm Keith Sweetman of Iklif and I have with me today Charles lead beater He's the author of we think he's also an advisor an innovator and an author of other books I know you have a new one coming up coming out shortly the frugal innovator which comes out in April May 2014 fantastic the frugal innovator in innovator coming out next month. Thank you Charles and thank you for joining us As you know, we are a leadership and governance center here And so I'd love to have just a short conversation with you that talks about your work in the context of leadership So first of all, could you give us an idea? What do you mean by we think what are you talking about when you say mass innovation? Not mass production Well, I suppose what I mean is that with technology combined with new values People can be organized in ways without having an organization in a traditional way So people can now come together and achieve things through networks and Communities using technology that previously they would have needed a very large organization with a hierarchy and a bureaucracy to achieve And so this is opening up entirely new possibilities new forms of organization and those new forms of organization Respond to quite different kinds of leadership. So whereas with a large bureaucratic organization, you might have had quite instructional leadership of an authoritarian kind Depended on its position if you're trying to lead a community of people with like interest But who are to some extent independent you need a leadership, which is about influence and about inspiration and about Effectiveness not about position Because we read things like Wikipedia and it all sounds like the crowd is always going to be smarter than any individual And that's the way it's presented But one of the things I saw in your book is that this notion of we think really needs a core And I guess what you're saying is that the leader provides that core Yeah, so none of these big collaborations or these big like Wikipedia or open source software even more Which is it is the kind of classic case I suppose just get going out of thin air someone has to put in some extra effort to get it going and start the Community and often those people whether it's the first traders on eBay or it's the first contributors to Wikipedia Form both the core and set the tone and the kind of values of the organization And you see this also in big scientific collaborations as well that the human genome was mapped by people who had collaborated on previous projects and those projects they set the sort of tone and the values which then led to the way that they collaborated so there's no such thing as a kind of Organization without any kind of structure or Relationships of power but in these communities they operate in a different way from a pyramid hierarchy Now you've used the word values three or four times so far in this conversation Can you talk more about what kind of values are you talking about? What's distinctive about the values that help to create these we think kind of well I suppose that their values one is The value of purpose so they're animated by purpose to make a better thing To provide a better outcome rather than animated by position or kind of where you stand in a hierarchy They're animated by values of contribution So respecting the contribution of other people and animated by the value of sharing that actually the more we share the more we create together so Some of these were inspired by looking at large scientific collaborations and the human genome is a very good example that that was mapped by a Global team most science now is done on an interdisciplinary basis globally with global researchers collaborating to get collaborating together those collaborations depend on people Sharing knowledge and what they found with the human genome was the more you share the more you get So there's this generative dynamic that sets in the more you put out there the more you get back It is and so one of the but what I think one of the things that's happening with More collaborative and open forms of innovation which is now coming about is that if you hoard things You don't get more value Exactly so you need to keep I draw this analogy that one of the best organizations Which I think embodies this philosophy is Barcelona football club and Barcelona football club the way that Barcelona play football The ball is always in motion. It's always been passed around No one ever hoards it and that's the way you've got to think you always got to be able to pass Because it's by keeping the ball in motion that you create more value if someone keeps control of it and says No, it's my ball. I must have it then everything breaks down Corporations you can think of exemplify this particularly well Well, I think there are more and more corporations who are trying to do things like this and you certainly see an organization like Pixar, which is both very Controlled and commercial but also within Pixar has a very very sort of egalitarian flat Feel to it and sort of community feel to it and of course emerging out of the internet You see more organizations which are working more rapidly with their consumers and communities of consumers around them whether that social media or games companies the games companies are have Sort of led the way I suppose in understanding they have to engage with their communities to get those communities to contribute to the game and the The game is really a platform for communities to build stuff around Rather than being a passive audience Companies organizations industries that you think do not lend themselves to this Well, what I say to companies is when I talk about this kind of stuff Is that it might be the case that your industry is immune that if you're in chemicals or consumer goods or Even in legal services It might be that your industry is immune to these things that actually in your industry It will remain closed and so on so forth But it's a big risk to assume that it will consumer goods because that strikes me as something Well, even in consumer goods Well for several reasons, I mean what is that every purchase we make now is accompanied by information by Some aspect of social media of comparison of feedback so on and so forth So there's nothing which is completely immune to that These organizations are employing people who have now been brought up with social media So the people you're leading will now be used to communicating laterally finding information out using the web so One way or another organizations will be affected either on the labor market side because the people they're employing have this culture Or on the demand side that more of their consumers will be used to the idea of being able to compare rate Have their voice heard make a suggestion give feedback Yeah, and so no organization can now think I'm not going to have a conversation with my consumers because the consumers will start having a Well, maybe but even there as we've seen actually, you know, you can Communities can form around all sorts of things. It's but it's dangerous for now for companies to assume That they don't need to be part of this conversation and that there's going to be no conversation going on another concept you talked about is the conditions that are needed for we think to succeed the leader of the Sort of the catalyst the crystal the core of this whole thing Anything more to say about the conditions? Well, I think there's a that we've been through a period where Companies for a time thought that all you needed to do was sort of open up and launch a wiki and so on so for that Actually, these things need careful tending. So You need to pose an interesting question You need to understand what will help people contribute why they'll contribute need to make it easy for them to contribute You need to find ways to connect people together in some way to sort of govern the community as well So it's not just a question of sort of giving people technology and then they start collaborating and finding things out You've got to nurture those environments and conditions and it's like Tending to a garden or something like that. You can't plan it But if you just let it go it might just end up being chaotic bunch of weeds a bunch of weeds You mentioned in your book that leadership in many places has become and here I quote Bonus driven performance management as opposed to true leadership Yeah, and so as I think about what you say and this garden that can be created That's going to be more free-flowing with multiple sources and more self-management and openness and conversation Yeah, communication all this stuff, but you've got these people who are you know an install base of leaders quote-unquote Who may not quite get yeah what this requires or if they get it? It might actually be really hard for them. Yeah to make the shift. Yeah, they've grown up in a completely different system They've been rewarded on a different basis Identity is doing what they do. Mmm. What have you encountered in your work around that and What recommendations or what do you do to help people? Make a shift. Maybe it's not as hard as I think what it's like No, I think it's really hard because I think that I think it's really hard because those behaviors are very ingrained and In many the big organizations that I deal with both public and private It's almost like there's a civil war going on the civil war between Leaders who kind of feel they should be leading and taking responsibility and taking action and giving direction and Employees who feel they should be doing jobs which have more discretion more scope for their own advancement and things like that And I think worldwide there is now a trend amongst younger people in their 20s and 30s who? regard authority if not with skepticism then certainly as something that needs to prove itself before it's legitimate and Your title doesn't matter so much as how you behave what your values are and what you do So I think there's this tremendous tension Where where do you find companies who've found a way around that or trying to adapt it? Well one very interesting company. I think is Unilever Led by a fantastic CEO Paul Ploman Paul Ploman runs a marathon for charity every year. He's got deeply held values of his own he talks openly about those values and He's very deliberate about trying to create a culture in which people take responsibility for their work their actions And in which the company is not just a way to make money It's a way to achieve some sort of social purpose So now they're talking about each Unilever brand being Identified with a social cause in some sense and taking the lead on issues about say water usage and what have you So I think that's an example of a very old traditional company, which is trying to reshape itself but he's a very experienced very thoughtful kind of Social business leader, but I think that he's the kind of person that we're going to need more of who can recognize that To create value you have to share value and you have to show that you're creating value for society As well as for your company for example to know if he faced much in the way of resistance or if as he You know gains the power and influence to be able to create the organization that he wanted to create if he encountered much In the way of skepticism in the organization with a much in the way of turnover or I think there was turn it Eager to sign up. Yeah, no I'm waiting for this man to take over. I think all of that actually. Yeah. Yeah, so I think there were lots of people waiting I think there's a huge pent up Kind of yearning in lots of companies for a sense of purpose and dynamism and and kind of optimism about Organizations, but I think there's a lot of inertia as well if not direct resistance inertia but I think the other thing that is also true that we shouldn't underestimate is that It won't all go according to plan that actually Persuading people to operate in these new ways, you know is quite difficult So I know for a fact that Unilever is you know trying to do some really in interesting and ambitious things about Creating new products which use less water. So FMCG and consumer goods companies soaps detergents They're associated with using lots of water. Well actually trying to get people to use less water is a very very difficult thing to do It's easier to sell detergent than it is to change behavior over water So, you know what that means what does it mean to be a company that's concerned with trying to change behavior for the better? That's a big undertaking so it's not to be underestimated but the benefits in the long run of a Leadership which says our job is to set some clear rules and some clear values and some sort of Objectives but to create the conditions in which other people make the best decisions and use their best talents That that's general shift was that kind of leadership is going to become much much more common I think you said something interesting now many things interesting just now But one in particular is in the long run and of course what mitigates against a Lot of corporate social responsibility Is the short-term long-term? Yeah, so how much patience have people had I don't know if Unilever is the right example but another example Did this has this affected their corporate profits? How is this being received by the outside world by the by the outside stakeholders? Yeah, the shareholders and other stakeholders who are interested in seeing Unilever succeed quarter to quarter to quarter Yeah, so I think that's an ongoing challenge that companies need to Feel that they can deliver to financial markets and to investors and to that kind of pressure as well as to these social Objectives have they been profitable Oh, yeah, no Unilever. Yeah, no, Unilever has been profitable There are lots of arguments about other cases But for instance Pepsi is in the middle of a very big attempt to do something similar particularly around water but in the long run, I just don't think there's a way that companies are going to be able to make money whilst trashing the environment and Renaming on social commitments to communities where they work that Yeah, and getting and particularly one of the things that I hear time and time again now is From what I was with a big financial institution in London Not one I expected to say this who said we now can't Employee people from university unless we can tell them they're going to have interesting jobs in which they'll be have the Opportunity to do something socially purposeful So we just can't compete to attract talent now unless we do more than give them jobs with money So that that actually very heartwarming. Well, it's heartwarming and it's something I've heard from many companies of all sorts of different kinds, but it suggests that the generation that they are now Recruiting is expecting something different and that that in addition one of the things that these young people are saying is that they'll Prepare to work for a while for a company But actually if it's not really interesting and it's not really doing something valuable They'll use that experience as a basis for then going off and starting something themselves So with we're dealing now with a generation that looks at its careers in a very different kind of way Are there any downsides of all this openness and sharing and communication that You've seen well, I don't I am a great Believer in it So I think that the way forward is for companies to be like this and that they're more that companies Create a sense that they are bringing people together in a shared purpose and they're doing that by sharing information sharing rewards Sharing responsibility. That's the way forward the downsides are is if you do it stupidly, I suppose and you just expect people to Be able to start doing it without any support or without any guidance without any structure or any purpose any rewards So it's very important for instance to work out what what motivates people to want to share. It's not money Usually it's recognition and it's the opportunity to do something useful So you can set the wrong incentives for these things or you can create the wrong conditions Or you can do you can say one thing and do another thing So there are all sorts of different ways in which companies will will will fall foul of it or get get it wrong And companies find it. I think really difficult. They they want to believe that they're like this but actually the tendencies to You go in the other direction help them to see themselves that has to be part of the role that you play when you consult You help or how do you help a leader to see himself or herself? Someone who thinks hey, I'm very empowering. I completely help my people to Manifest their own. Yeah, right in the meantime you talk to the people. They say my boss is a control freak. Yeah Well to see themselves Yeah, I mean there I suppose there are two things that happen to be realistic in those situations I'm just thinking about a company that I was with last week Where the message from the senior management is we want a socially responsible simple helpful Organization which is out, you know prime purposes to help consumers and help the communities that we serve If you listen to the senior middle management, they say we've got lots of rules hierarchy, you know We can't do anything with disempowered so on and so forth. Well, what what's the solution to that? Well, one is the feedback to the senior management that you you you've got to be honest about what you're trying to do You've got to live up to it and realize The the constraint walk the talk, but the other is that often there's more space in organizations than people realize that That one of the problems with putting constraints around themselves So I find the big problem with command and control in organizations is not that there's someone at the top commanding and controlling But actually that people think they're being commanded and controlled and the mindset imagine all sorts of yeah They they and part because they feel partly because of fear, but also because partly it makes them feel more comfortable as well Because I don't have to step up exactly that so they say I can't do it because there are so many rules and restrictions I'm helplessness is exactly. Yeah, exactly. Yeah, and so I think there's a lot of that And so I think there are a lot of people I'm thinking of say the banks in the UK We're you know the banks have behaved in a really socially reckless way in many ways they've made profits at the expense of the economy in society in many ways and Now a new generation of leaders is trying to change that But many of the people they're trying to lead are now very skeptical About the messages that they're being told and there is a sense of learned helplessness, which is I can't do it, you know I've actually heard that Interest in financial services in business schools has actually declined right as a result Any final words Well just that I think that this agenda about kind of shared leadership is is the way that things are going to go that Leaders in all sorts of life are only going to be lead only going to be able to lead through influence in future Fundamentally through their ability to influence other people and provide them with a sense of purpose and meaning and that's true in politics And it's also true in business. I wish we had more time. I really enjoyed speaking with you Charles lead lead be tar. Thank you very much for joining This is Kate sweetman and thank you for joining us in the leaders room. It's a wrap