INNOVATIVE LEADERSHIP

A new order in today’s business leadership dynamics is aptly summed up in one word: INNOVATION. The word encompasses macro perspectives for improvising changes targeted at impactful business vibrancy.  This includes strategy reformation, process transformation, information & data revamp, restructured procedures, new creations etc – all the activities for doing old things the new way ……. and doing new things, so to speak.

A trendy two-word phrase has also inundated the business world: DISRUPTIVE INNOVATION. “Disruptive” connotes shifting away from prevailing norms of business practices for acquiring significant new market scores. The two-word phrase was coined by researcher Clayton Christensen and his cohorts in the mid-90’s.

Wikipedia defines disruptive innovation as “an innovation that creates a new market by providing a different set of values which ultimately (and unexpectedly) overtakes an existing market.” To me, the definition also relates to disruptive technology which bolsters a process to produce a new product or service that begins from the bottom of the market but could quickly pick up pace to displace established competitors.

Let us look at the common business scenes prevailing now. How many long-standing corporations have been carrying on the same modus operandi – or simply put, business as usual approaches –  and look for means to scramble for business growth? Do you not agree that many enterprises merely whip up pressure on their sales people year after year for organic incremental growth in business scores? Without salient innovations, regardless whether with the disruptive factor or not, it will be a matter of time such entities may phase out.

The promulgaters of innovation in today’s business order point at one message: Business leaderships must either *think out of the box or *create a new think box. The two perceptions may be similar but slightly different.

To think out of the box infers to creating ideas for changing the existing mode of business approaches but still falling on the same fundamentals representing the main founding principles. The current business box is the base; ideas extrapolated from the base (out of the box) serve as supplementary initiatives.

Take for example, a life insurance corporation relying on its large conventional sales agents as the bastion of business growth. While recognising the prominent contribution of this convention for now, the top leadership should extrapolate by considering new agent streams, like appointing tax consultant firms, community cooperatives, trade unions, private trusts, will writing enterprises, property developers, legal firms etc as corporate agents (not in individual/personal name). In view of wide network, these establishments can leverage on their existing contact database to promote life insurance products. Sales from corporate agents will be additional revenue to the sales scores of conventional agents who represent the main base. Probably, corporate agents may gradually gain prominence in comparison to the conventional agents

Formulating a new think box links to exploring entirely new business platforms with potentials for viable development. It does not necessarily mean abandoning the core business genre. More so, the new box may be fronted as a subsidiary to the main platform.

Here is a classic example. A pioneer budget airline of Malaysia, in facing up to competition posed by other budget carriers that entered the scene later, successfully ventured into an economy class hotel chain. At the same time, it incorporated an insurance arm. Travellers who fly by this airline to overseas destinations usually take up travel insurance and/or personal accident insurance along with their ticket purchase. Some travellers also book room accommodation with its hotel chain (in the country where it also operates) at the time of ticket purchase. The two additional idea boxes now serve as boosters to the overall business under the “wings” of this budget airline, rendering complementary revenue by offering packaged conveniences to travelers.

I have always wondered why large insurance corporations in Malaysia do not consider owning an established hospital chain, or at least hold a major equity stake in a reputable one. If this was conceptualised, I can imagine the following benefits:

# The hospitalisation claims pay-out from the insurance corporation to any policyholder who has sought treatment in its hospital would be recouped in the form of medical fees received, thus going back to overall financial coffers of the parent company, i.e. the insurance corporation. This is one way of curbing claims compensations going as outflows to external medical institutions.

# Some special privileges, like free annual medical check-up at the hospital, can be accorded to holders of its medical policies. Such perks may add attractiveness to its medical cover products, hence lending weight to capture the medical insurance market.

# Consensus by both entities under the same group to institute sound hospital treatment practices and charges would help to contain claims experience ratios (total claims pay-out amount vs. total premiums collected from medical insurance policyholders). This would sustain its medical products’ profit margins. In addition, the hospital’s reputation as an efficiently run service-orientated medical institution would be enhanced.

# Better promotion of the branding image of both entities due to effective strategic alliance.

I opine this idea is worth considering for possible exploration if properly strategised.

Now, let us look at the bookstore business. Question: Do we foresee hardcopy books facing the piercing brunt of competition coming from e-books in the current electronic or digital era? More and more reading enthusiasts are placing book orders the e-way. They can just download to their laptop after effecting purchase via credit card from home. They can also view the short synopsis of a book, like the preamble and contents outline, for free before deciding to buy on-line.

A common drawback in respect of hardcopy books housed in many conventional bookstores is, most of the items - especially the costlier ones - are tightly sealed in thick transparent plastic wraps to curb browsing by visitors. Only the cover of a book, showing the name of the author, the title and the cover design can be seen. I believe the bookstores want to protect the hardcopies from being smeared and worn off by the hands of browsers who put back to the shelf after flipping through. But would you buy a book just by viewing the cover only without having any idea what the contents are about? I would not.

It is high time for owners of conventional bookstore chains to explore innovations that could effectively protect their business competitiveness vis-à-vis the gaining popularity of e-books. Unless some value-added facilities are improvised, hardcopy book business will face more challenging times.

What about the following idea for hybrid “transformation” (combination of “out of the box” and “new box”) of a conventional bookstore?........

+ Cozy spread-out premises in a commercial zone within the perimeters of upmarket residential clusters. To target at the upper middle-class society as customers.

+ Bookstore cum library setup – for *purchase,*rental or *loan of books. Loan privilege is only applicable to patrons who pay an annual loan membership fee. No restriction to the number of loans. All items are available for purchase or rental to all patrons. Purchase is at item’s listed price but frequent purchasers are entitled for rebate. Rental fee rate is based on the listed sale price of an item.

+ Only the soft copy of a book on loan or rental can be read via any of the computer screens linked to the system containing the items available in the store. The screens are situated in the library section, equipped with desks and chairs.

+ Intended purchasers can view the synopsis and a few excerpts of a book for free before deciding whether to purchase, rent or opt for loan.

+ A stipulated period for loan or rental, which cuts off the on-line access to the loan or rent item after the last date. If a patron wishes to refer to the book again, he/she can request to resume the transaction. Rental fee will be charged again for renting the same book the second time. Within the stipulated period, patrons may log off from the screen and resume reading anytime. In other words, patrons can read a book on loan or rent in phases as long before the cut-off date.

+ Duplicating via camera shots or video is prohibited. To ensure compliance, CCTV cameras are installed in the section housing the computer screens.

+ Phone calls and other uses of mobile phones within the premises are prohibited, to bar unnecessary disturbance to the tranquil environment.

+ A patron who has read a book on rental can buy the same in hardcopy form at the price less the rental fee.

+ Book loan members have the privilege of purchasing books at concession prices, slightly cheaper than the listed price.

+ A cozy cafeteria is adjoined next to the library section, partitioned by a glass panel wall with a glass door. Food is served at the cafeteria only. Beverages ordered from the cafeteria may be served to patrons in the library. The cafeteria is responsible to upkeep the tidiness of the desks in the library where drinks have been served.

Do you think my two proposed revolutionary ideas (for a large insurance corporation and bookstore) are viable? Perhaps the optimists may be impressed with positive intrigue, while those who are less adventurous may hold reservations about shifting from the norm for fear of possible failure risks. No denying significant costs come along with significant revolutionary changes. Large capital outlay may perhaps be required. There is also no guarantee the innovative directions will not end up as flops.

Let us face reality. In the modern era, corporate leaders must wake up to recognise that innovation culture has already zoomed in to be the new business order of the day. Many disruptive innovations have already taken place. Corporations cannot expect to thrive for long without being willing to absorb some risks to thrust innovations that disrupt conventional business modes.

Look around what has happened in the competition realm ……… conventionally brewed beer vs. craft beer; conventional camera vs. handphones with built-in high solutions camera facility; conventional financial institutions vs. fintech enterprises; walk-in purchase vs. online purchase etc. We know the conventional ones are facing intense pressure to ward off the competitive onslaughts posed by their disruptive counterparts.

More and more disruptive innovations will continue to emerge into the various markets. Top corporate leaders not willing to try out brand new initiatives just to avoid possible failure risks may still face risks of their business faltering at the tail end due to disruptive competition. Look at some once upon a time big names which phased out of the market - all because they preferred to focus on organic growth than innovative growth, and because they preferred to play safe than take risks. Top leaderships must first inhere a mindset whereby some form of risk-taking is tolerated for the sake of innovations linked to new thrive potentials.

InTheBlack business magazine carried an elaborate write-up which propounded the key points shared by Professor Ram Charan, a renowned global business adviser.

# The issue facing business leaders is not how to cope with change; it is about how to anticipate changes coming down the track, understand their implications before competitors do, then harness them to enhance market position and profitability.

# Many leaders think of how to better what they have always been doing, but that is not enough in an aggressive competitive business world. They often get engrossed in looking for incremental gains, without time to explore the big picture.

# Identifying new potentials should be one of the key responsibilities of top leaders. Ideas to usher business forward should be a core skill of any top leader.

To mitigate possible unforeseen risks for contriving innovations, certain prudent proactive preliminary measures may be taken, as follows:

- Form a special task force comprising the right players in the right roles pertinent to conceiving and developing a new major project. The members are subject matter experts in their respective field. 

- Brainstorm sessions by the task force on the proposed project. Adopt an elaborate but workable brainstorm model to draw in pertinent points for deliberations.

- The task force may consider organising a focus group for soliciting feedback on the suggested innovation. Focus group participants should be meticulously identified, like top sales personnel, premier customers, experienced customer service representatives. Their inputs from different perspectives will identify the likely strengths, attractions and drawbacks relating to the idea.

- Test the water by rolling out a trial run or mock launch. During this trial, the task force should note down their observations for further deliberations. What lessons have been learnt? What aspects could be improved? What flaws could be averted? What strengths could be capitalised? 

- Re-define the processes based on the lessons learnt from the trial run. Then roll out the full launch with refined features. However, abandon the project if the final assessment indicates it is not viable - this is to cut loss.

SUM UP:

Major innovations in any corporation rest on two fundamental prerequisites applicable to its top leadership, namely (1) Willingness to accept challenges, particularly in facing up to possible failure risks.  (2) Willingness to allocate resources (time, manpower, logistics, dedicated efforts and budget) toward working on intended innovations – in other words, allocate expenditure for research & development (R&D).

Two popular idioms of “no risk, no gain” and “adapt or die” hold out as manifested truths. It is incumbent on top leaders to proactively recognise signals of changing trends if they want their business to survive in the longer run.

Nazir Razak, the group chairman of a top rung bank in Malaysia and who was holding the chair of the East Asia Business Council, pronounced at a meeting of prominent people on 13 November 2017 his key emphasis:

^ Technologies emerging around them were transforming the world – from the nature of jobs and work to the way societies function.

^ The 4^th Industrial Revolution would bring new challenges which were going to affect everything in running businesses. There would be a huge disruption to jobs.

^ Robots and artificial intelligence were already replacing workers in factories and increasingly also challenge service jobs too.

^ If the South East Asia nations could position themselves properly and quickly , the 4^th Industrial Revolution would be a powerful force for prosperity.

(Source: The Star newspaper)

I like to end this article with a few punchy quotes from three respected leaders.

·         “I have more fear in my life that we aren’t going to maximise the opportunity we have, than messing something up and the business going badly.” (Facebook founder Mark Zuckerberg, in conversation with LinkedIn co-founder Reid Hoffman)

·         “Embrace change – not comfort zone.”

·         “Risk and failure are part of success.”

·         “Learn from competitors, or perish.” (Lee Kuan Yew, the revered first prime minister of Singapore who transformed the island nation)

·         “You cannot invent and pioneer if you cannot accept failure. To invent, you need to experiment. If you know in advance that it is going to work, it is not an experiment.”

·         ‘I ask everybody to not think in two-or-three-year time frames, but to think in five-to-seven-year time frames." (Amazon founder Jeff Bezos, speaking to Michael Beckerman, the president and chief executive of the Internet Association)