Over the past year alone, the real estate industry experienced a decade-worth of technology advancement. In many organizations, there are departments that are eager to adopt these new technologies or new ways of operating. However, without an organization-wide mindset for change, the technology advancements or operational adjustments simply won’t take hold.
Robert Sutton, a professor and researcher at the Stanford University School of Engineering, studies the science of organizational change. He joined Qualia for a conversation about scaling innovation and why “scaling is about moving 1,000 people one foot forward not about moving just one person 1,000 feet forward.” He presented case studies from Netflix, Microsoft, IKEA, and other large and influential organizations to demonstrate strategies for leaders to scale innovation in their own businesses.
Scaling requires a collective mindset and a unity of effort
“Scaling isn’t about sending off fast little speed boats in different directions,” Sutton said. “It’s about unity of effort, unity of mindset, and collective action.”
One example of a company that has successfully shifted its mindset several times is Netflix. The company’s initial business model was shipping DVDs to consumers. Then, the company shifted to streaming services. Today, the business is one of the biggest production companies in the world. These massive changes required the entire organization to be unified in mindset and collective action toward making each shift successful.
Microsoft is another example of a company that worked to adjust the collective company mindset in order to scale innovation. The company, under the leadership of a new CEO, shifted from a culture of “know it alls to learn it alls” by eliminating the mindset that only the smartest people in the room would get ahead.
One diagnostic test Sutton uses to test for a collective mindset is to ask leaders of an organization “what is sacred and what is taboo?” It’s critical that the answer is clear and that people agree. At some organizations, the leadership team could not answer this question. Meanwhile, when he asked the question to executives at Amazon, they could all answer “the customer is what’s sacred, and wasting money is what’s taboo.”
To successfully scale, should you standardize everything or allow for local customization?
While a collective mindset is beneficial, sometimes too much standardization can inhibit scaling businesses from succeeding.
Sutton offered an example of IKEA versus Home Depot. Both companies were moving to start operations in China. The Home Depot maintained its standardized approach in the new location; however, IKEA decided to take a more customized approach. “IKEA realized that they were a do-it-yourself organization moving to a do-it-for-me culture, so they offered more services to help people assemble their purchases,” Sutton explained. Ultimately, IKEA was a success and The Home Depot did not succeed in the new market.
While Sutton advocated for some level of customization for growing businesses, he warned that too much customization can create problems for new businesses. “When you’re starting out, you should create a playbook and adjust it as you go along,” he said.
Often, with large decentralized organizations that are spreading technology, everyone wants their own “snowflake version” of the technology, customized to their needs. “A reasonable middle ground is to pick guardrails or a short list of non-negotiables that everyone has to follow,” Sutton said.
Lessons for successful leadership
Among leaders who successfully scale innovation within their organizations, Sutton and his co-researchers discovered three common attributes.
- Influential leaders are poets in the sense that they know how to motivate people with the right language, and are also plumbers who get in and do the dirty work.
- Skilled leaders know when to hit the gas and when to hit the brakes. “There are times when you need to slow down,” Sutton explained. “Especially when you’re in a cognitive mindfield where you don’t know what’s going on.”
- Leaders know when to stop doing what’s not working. “One of the key things that successful organizations understand is that what got them here, won’t get them there,” Sutton said. People who understand how to identify company practices that no longer make sense can help move organizations forward.
4 principles for scaling
To conclude, Sutton offered 4 principles for organizations to successfully scale innovation in their own businesses.
- Focus on creating “hot causes” with “cool solutions.” Sutton explained that rational solutions don’t always inspire people to change their ways. “The hallmark of successful scaling is connecting a hot cause for a cool solution,” he said. Instead of sharing evidence-based practices for why the team should adopt a new approach, offer up emotion-driven narratives for why the solution matters.
- Remember that emotions live in little transactions. Leaders who are able to tap into pride and anger can incite change in others. However, it’s typically better to inspire pride over anger.
- Create a “connect and cascade” process to scale. “I tend to get concerned when businesses want to spread excellence but they just want to spread a thin coat of it,” Sutton said. “For example, if everyone in the company takes a 30 minute design thinking course, don’t assume that you now have a culture of design thinking.” A better solution is to create excellence within one unit and then connect that unit with another unit to spread through a “connect and cascade” process.
- Get rid of the “bad.” Sutton explained that “bad is stronger than good” so it’s important to eliminate bad behaviors and attitudes. “Bad behavior is stronger, longer lasting, and more contagious than positive behavior,” Sutton said.
To hear more from thought leaders like Sutton, click below to subscribe to Qualia Insight.
