“youth seems to have advantages in innovation: everything is possible, knowledge is fresh, obligations are few and reputation is not at risk.”

Innovation can occur in products – we see this clearly in the field of mobile technology, for example – as well as in processes and services. Depending on the impact of innovation on environmental conditions, it can be classified as breakthrough innovation or incremental innovation.

Any environment, business, culture or otherwise will be shaped by innovation that evolves through periods of incremental change, and will be punctuated by innovative breakthroughs that either enhance or destroy the existing competence of firms and the individuals that make them up.

Incremental innovation creates changes through cumulative processes until a major advance that creates discontinuity ruptures the beginning point altogether.

Through incremental innovative improvements in products, for example, the underlying technology is both enhanced and extend, and thus reinforced as an established technical order as well as a socio-political one.

Individuals with a lot of experience are usually the best at carrying out these incremental improvements – we saw this with Steve Jobs as he turned Apple into the market-leading brand it is today.

Generally, younger people are more effective at bringing about breakthrough innovation by creating new technology that disrupts old ways of working and thinking. Major innovations can represent technical advances so significant that no increase in scale, efficiency, or design can make older technologies competitive with new technology whether product, process or service.

Again as an example we can look to Steve Job’s younger self, driving innovation at Pixar and then designing, developing and marketing the now ubiquitous Apple products.

Older, more experienced people may work alongside younger risk-takers in bringing innovation to a company. It is not for one group or the other to stake a claim on innovation – as we have seen, both types of individual are needed to bring about the different kinds of change that happen within a lifecycle of a business.

What is really needed – both in business and in government and beyond – is a culture of innovation. Often vested interests prevent innovation from fully emerging. There are many innovative patterns that are bought into by Western governments, only to be stored away and not implemented. For example, there are alternatives to oil, but due to investments in oil through vested interests many other innovative alternatives that could replace its use are not supported.

This does not have to be the case, as we can clearly see in the case of Japan, which has a culture of improvement of processes, or “change for the better”, captured in the Japanese philosophy of Kaizen. This philosophy teaches people to eliminate waste and to increase productivity, and encourages all – not just CEOs – to implement this and look out for opportunities for amelioration.

It is important to remember too that innovation can come in many forms, not just through business. Spain has a strong culture of innovation when it comes to architectural design, for example the ‘Metropol Parasol’ or ‘The World’s Largest Wooden Structure’ which opened in Seville, which can be seen as part of a long tradition encompassing the surreal modernist buildings of Gaudi and many others. These buildings could be also be compared to Dubai’s ambitious architectural projects, which double are important both in terms of business and in driving the way that people think about planning for the modern city.

Whilst the mainstream media is focussed on current issues of interest to the general public, presented with (supposed) neutrality, stakeholder run social media tends to focus on solutions to problems which are of interest to target communities, and even though subjective, are at least transparent. As highlighted by Paul Klein on his Forbes blog post, social media is inextricable linked to a rise in transparency.

Social media offers many benefits to individuals, groups, corporations and society, such as easy interaction with friends and relatives, sharing information, mobilizing resources to support members, and conducting business easily and efficiently. However, social media has raised various ethical issues, many of these centred on a violation of privacy rights, stemming from a lack of control over how one’s personal information is accessed, and further ‘manipulated’ and transmitted. Misuse of information on social media sites includes impersonation, fake identities, ambush marketing and unintended end uses (e.g. cyber-bullying). Another issue which has been raised is the possible effect on the individual of replacing “authentic” interpersonal communication with online messaging and file sharing, and spending so much time and energy preoccupied with online life, instead of real life. And social media, even when used as a source of information and/ or a space for open dialogue with stakeholders, uses infrastructure provided by third parties who may store and examine communications passed through their channels, and possibly even use this information for their own benefit, for example, through targeted marketing.

The uses and abuses of social media suggest that there are many stakeholders involved, with benefits and risks for all (e.g. higher transparency), but at the same time focus on individual or interest group rather than public good and society. By its nature, social media is used to focus on issues of interest to the individual/groups using it.  In this sense the truth that it promises is inherently subjective, – meaning that it can just as often be used for personal motives as for the “public good”.  As the mass media/press, through the current Murdoch inquiry, are being examined and hopefully, ultimately be subject to regulation to protect the interests of the ‘public good’ but without the truth being prevented from emerging, so should the social media be exposed to a similar level of scrutiny.

Companies in that sense have become very focused, and the outstanding companies in the world are the ones that have migrated beyond competency thinking, which is a cluster of skills, and far more into capability thinking, which is identifying the skills to make the difference right now and in the future. Necessary skills might include being able to handle the market, the internal culture, the political relationships in the company, the stakeholders, the reputational concerns, and the board.

There has been little attempt to cut costs on capability. There has been a lot of attempt to cut on competencies. Under the present environment where the economy is beginning to improve, for many companies there is a major question mark about whom they really need. Do you really need to go into mass hiring again? Probably only if you’re in the mass production business. Do you need to be very selective about the talent that you want to bring in and how you’ll invest in that talent? The answer is yes, but that is a part of market where mass hiring does not take place. What’s necessary is the highly selective development of very particular people with very particular skills. So yes, I can well understand the major question: Will companies continue to hire as they did before after recession? And if the companies that are really the outstanding companies of the world, if those companies are working on a capability framework, the answer will be no.

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From all research Nada and I have undertaken, what the role and spread of the responsibilities of the CEO and chairman is is one of the two most difficult questions we’ve had to answer. Unlike most of the literature, we have found that the CEO and chairman roles are what each of the role incumbents make those roles. There seem to be two critical driving factors in the thinking behind those roles: the first is the business proposition, what the business that the CEO leads is all about. Is the business about product innovation? Is the business about being customer-centric? Is the business about being disciplined on cost? Those three elements as examples are concerns for any business. The second critical factor is: which is your company’s primary principle, and which other ones are just operational skills that you have to practice?

In a business that is more at the mature end of market, and really controlling costs is the prime factor, how can a CEO effectively interact with the customer community when in fact that CEO is leading strategies and policies that will reduce costs within the organisation and possibly damage or undermine customer relations, customer service, and being customer-centric? So it’s no surprise in the cost-discipline type of business, that most are hierarchical, with the CEO and the top team tending to be smaller. They’re highly focused on making management very aware of how to deal with their costs and how to reduce their costs year by year, and trying to keep same levels of service year by year (or slightly less service year by year but not by much)–all this comes down to the skill of management. So the CEO under those circumstances is probably more aloof, and that’s not just part of his or her personality, it’s a business requirement.

If Steve Jobs and Apple really have a customer-centric focus to their business, and that is coupled with product innovation, then the example from the top becomes very important. So the CEO responding to customer concerns or complaints or praise is really a very important branding factor. Now how much of Steve Jobs’s time can be used to be customer-centric is another matter, but the fact that the individual is responding to the customer on a business proposition of customer-centricity as critical to Apple, that to me at least makes a lot of sense.

So the first concern to address is: What’s the business proposition of the company? The second is: What makes the difference? Regarding differentiation. in world that’s highly competitive, where in many ways it’s difficult to tell the difference in terms of product quality, service, support, pricing, and/or customer care amongst products and companies, that extra 1% difference creates a unique differentiating factor, and for all I know, Steve Jobs may be achieving just that.

So, under those circumstances, those organisations that do really well examine their context, examine their competencies, are very often quite honest about their weaknesses and what needs to be done to address those weaknesses, and try exceptionally hard to make that 1% difference. We’ve found that context is critical: What is it unique about you? What makes the difference about you? And how do you show that difference even just a little bit? We’ve found that making a 1% difference can have a 10% effect on performance.

So the way Steve Jobs interprets his CEO role (which is someone more informal, distinctly in charge of the business, very creative and at the same time deeply concerned with customers and interacts with customers) could be the result of two things: the business proposition of Apple, and that unique differentiator that makes Steve Jobs stand apart which other companies don’t have.

All CEOs should keep these two factors in mind: what’s the business proposition of your firm, and what is it about you that makes the unique difference that will stand out and make this brand grow? Does it matter whether it’s customer centricity? Does it matter whether it’s excellent stakeholder relationships? Does it matter whether it’s very good internal disciplines within the corporation? And the answer is yes it does, when those little bits of extra effort are linked to a clear business proposition that makes the difference.

All companies, says Andrew Kakab­adse, professor of international management development at Cranfield School of Management, have done localisation “badly at some point”. The key to making it work is “clarity of strategy”, which is formed “when a company interrogates itself about what it’s really good at”, he says.

and

Prof Kakabadse says this is a reversal of the old strategy of “think global, act local”. Now, it is “think local, then act global”. So, rather than companies customising products to a local market, the focus should be to start with the local products and then try to leverage them globally.

You can read the full article here.

So yes, the trade unions are now giving management the chance to reposition their cost structure and try to put the airline on a much sounder footing. Though I think that many have underestimated the brand damage that is occurring to BA from these strikes. I suspect that the trust in the marketplace for British Airways is low, and I also suspect that for many European, regional or international travelers, British Airways must now be on the bottom of their lists. Seat for seat, ticket for ticket, BA is expensive. You’re likely to find that the Eastern airlines (Thai, Cathay Pacific) and Gulf regional airlines (Emirates, Etihad) have a much better service, have nicer flight attendants, more up-to-date seats and beds in business class and first class, all at a much cheaper price.

So yes, Willie Walsh at BA is now being given an opportunity to restructure. Whether he can reclaim the same brand position that BA had in the mid-to-late 90s and early 2000s, I doubt. The ongoing issues with volcanic ash from Iceland don’t help matters. How have all the canceled flights affected airlines? Well, they’ve lost a lot of money in terms of passenger receipts (though presumably they would have had some savings on fuel). The volcano hasn’t led to British Airways’s union or management loosening their position. I can’t see how the union will in any way give up, because should they do so, there is no way back for them, and British Airways will cut costs. I actually think that cost cutting will be inevitable, and the union is trying to do the best it can to preserve jobs.

The shame of all this is that there isn’t a partnership arrangement between the management of British Airways and the trade union, because that’s the only way that things are going to move forward. The airlines, like many other businesses, are in a mature market. Under those circumstances, costs constantly have to be under review. The more partnership arrangements we have, the more forward-looking both management and the trade union can be. Neither the strike nor the ash cloud have done anything to improve the relationship.

Another question to ponder is why flights were grounded for so long. I think there are two answers — one is that there wasn’t the body of knowledge to understand how planes would perform and behave while flying through volcanic ash. The only case studies that existed before were when aircrafts flew over a volcano but not through dispersed ash. I suspect now that the various authorities have learned quite a bit.

However, that doesn’t explain why that learning couldn’t have taken place in less than six days. There were airlines trying to experiment with what it means to fly through volcanic ash, but European authorities wouldn’t allow passenger flights for six long days.

I’m left with an interesting question–what did we learn as a nation about people being stranded and about how people move should there be some sort of crisis when planes can’t fly? On Sky News, there was constant repetition of the prime intelligence committee of the UK, COBRA, meeting periodically during the day. I have to ask the question whether this was just safety concerns for aircraft and their passengers, or was there another concern that if there was a war in the future, we have now learned something else about how to move masses of people in one direction, how to hold masses of people in a particular location, and how to use the armed forces for social purposes. I don’t think that’s the way it started, but I do feel that there was learning about trauma conditions that have nothing to do with this ash cloud.

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An expensive taxi ride is only part of the real story. As I’ve mentioned on this blog before, for years the BBC had internal chauffeur service available to BBC staff for only a certain amount of time per day. Because the internal service wasn’t always convenient, staff used external drivers probably more than the internal service. The expense of individual trips is nothing in comparison to the intuitional cost of holding such services and not using them. So the question is, how do you change old-fashioned cultures?

There’s only one of two ways. You either have a top-down change programme initiated by the board, whereby trying to establish a new leadership style and approach, and a culture that is more conducive to the business of the organisation predominates. Or you take out costs, often through redundancies. If neither takes place, then this £639 taxi ride does capture one element of any legacy organisation — that is that they are well able to criticise everyone else, but when they get scrutinzed, they become highly defensive.

So nothing new. Is the BBC really going to change? I don’t really know. I haven’t seen any initiative to want to change internally and have a more developmental approach to change, but it may be happening. I don’t see any desire to change the structure and the infrastructure of the BBC in order to break down that culture. So I suspect that we’ll see more stories like this, and they’ll continue well into the future.

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