As usual, the TV show Mad Men is a hot-bed of intrigue again this season – and it’s especially fun to watch the workplace as a management consultant. There are a few lessons that Mad Men can teach Second Stage leaders about Talent Management.
The focus needs to be on people, not work. As Second Stage companies grow, they need to spend less time focusing on how the work gets done, and more time focusing on who is on the team and how they work together. The firm’s partners are still focused on their work, not on managing their team, and I expect that we’ll start to see the team dysfunction increase as the season goes on. (If it does, it would be natural for the firm to break apart at some point – team dynamics usually overtake good work.)
Culture needs to be managed. Sterling Cooper Draper Pryce, like every company, has a culture – the question is whether it’s consciously acknowledged and managed. And the key to culture is defining just a few principles that drive the culture. In this year’s premier, Megan calls out one of SCDP’s principles: cynicism. There’s no inherently good or bad principles – they just have to work for the company. My guess is that the other principles for SDCP would be creativity, individualism, and fun. It’s hard to have principles that don’t fit the executive team.
Manage your high potentials. Pete Campbell is a huge asset to the firm, but because there’s no one helping him manage his development and career path, he’s a problem. High potentials are great – in many ways the heart of Stage 2 companies. But they come with a cost – you need to make explicit, valuable investments in them.
I suspect SDCP could use a better strategic planning process, too, but that’s a topic for another post…
My sons love Legos. They love building the kits based on the instructions that come with them – and they love building their own creations out of a bin of parts that is the resting place of all those well-made sets.
When my son is building a triple-winged rocket, or an army base, it’s very clear that the creation process is not connected at all to the sales process. Yet, for some reason, when we are working on an innovation in our business, for some reason it’s much easier to think that the creative process is inherently connected to the commercialization process.
But it isn’t.
Being a business owner, I sometimes think as I watch my son and his Legos, “What would it take to make this little hobby a business?” My mind first goes to customers – their feedback, engagement, and money. And then it goes to logistics – managing the schedules, inventory, work flow.
You need creativity, customers, and control to commercialize innovations. The creativity part comes easily for Stage 2 companies – but if you don’t have customers and control, you’re just playing with Legos. Which, I can tell you from watching my sons, is engrossing and rewarding…but is not a sustainable business model.
I wrote several years ago about how growing companies need to manage their shifting need for innovation talent, referring to Ted Prince’s work with the Perth Leadership Institute. I’d like to highlight a few ideas about innovative people now.
First, Prince’s research indicates that relatively few people have the skills to be innovators, and someone can only learn to be more innovative if they have a high degree of “leadership agility,” as Prince calls it. So the first problem with hiring innovative people for a growing company is that there just aren’t many out there.
Second, the way innovation happens in Stage 2 means that more innovation doesn’t necessarily mean more innovators. Why? Because much of the innovation process is not about invention and creativity. There are other skills that are needed – sales and management skills being the two most prominent. Sales skills ensure that the company’s innovations are connecting with customers. Management skills ensure that the company keeps control of innovation projects. Sales and management skills enable your true innovators to do more of what they do best, so you will actually get more out of innovators even if their number stays the same.
So, for you Stage 2 leaders, the bad news is that it’ll get harder and harder to find truly innovative people for your growing business – and the good news is that you won’t need them as much as you might think.
I hear Stage 2 leaders all the time say, “Creativity and flexibility is what made us great – we cannot change that.” It’s a “pound the table” statement for most.
I agree – but my “pound the table” statement back is, “You’re right – but creativity and flexibility look different in a growing company than they do in a start-up company.”
And this is especially important – and hard for Stage 2 leaders – when it comes to innovation.
Most start-up leaders invent and innovate with customers that they know very well, and so there is a very short leap between the innovation process and customer feedback.
In Stage 2, though, companies usually have the resources to start pursuing their own ideas – not just react to what customers ask them for.
This change is far more challenging than most leaders realize.
First, Stage 2 leaders think that their experience with a few customers extrapolates to larger markets – which is true sometimes, but oftentimes isn’t. Second, Stage 2 leaders often involve customers less in the development process (they can be a pain, after all), which makes it less likely that the customer will want it, and more likely that the sales process will take longer. Third, a Second Stage company has enough moving parts that need to work together, that creativity without boundaries will cause more harm than good.
We’re not talking about too many controls here. A monthly review meeting. A customer meeting once a quarter. A paragraph of milestones and expectations that progress can be assessed with.
The Futurist magazine had an article several months ago titled, “Innovating the Future: From Ideas to Adoption” by Peter Denning. In it, Mr. Denning described “the work of innovators,” which included 8 types of activities that need to take place for innovation to happen.
The article is interesting to consider when thinking about how small business innovation happens – especially for Second Stage companies.
Remember, growth companies are often led by very inventive and creative people – which is a huge asset in the start-up phase. But in Stage 2, that needs to be supplemented with structure and discipline. Denning’s 8 innovation practices offer a good model to show what’s going on in growth-company innovation.
Second Stage companies are good at these 4 of Denning’s innovation practices:
- Sensing new possibilities
- Envisioning a compelling story about the possibilities
- Leading and mobilizing people to adopt innovations
- Embodying the innovations in their own actions
On the other hand, Second Stage companies are typically weak at the other 4 of Denning’s innovation practices:
- Gaining preliminary customer buy-in to start innovating
- Overcoming resistance to change and creating customer commitment to try the innovation
- Helping customers integrate the innovation into the environment and stick with it
- Managing all commitments to completion
What’s the difference between those 2 lists? The first one – the things Stage 2 leaders do well – leverage inventors’ strengths of vision and passion. The second one – the things Stage 2 leaders struggle with – involve dealing with the complexity of customers, teams, cultures, markets, and projects.
As I say again and again, the only way to deal with all that complexity is to create some structure, process, and systems to handle it. Not a lot…but some.
All 8 of Denning’s innovation practices are important to commercializing new ideas. So, it’s no surprise that many Second Stage companies have a lot of great developments going, but struggle with making money from them.