There Is No Secret Formula. Effective Leaders Need To Master Mode Shifting.

In 2005 W. Chan Kim and Renée Mauborgne published Blue Ocean Strategy, which found  that “blue ocean” launches, those in new categories without competition, far outperformed the shark-infested “red ocean” line extensions that are the norm in the corporate world. It was an immediate hit, selling over 3.5 million copies.

Around the same time, Bain consultants Chris Zook and James Allen’ published, Profit from the Core. They found that firms that focused on their ”core” far outperformed those who strayed. For example, they warned that Amazon was putting itself in peril for expanding its business beyond books and predicted dire results.

Clearly both theories can’t be true. The truth is that there is no secret formula. Success is highly context dependent. What works in one set of circumstances will likely lead to failure in another. That’s why we need to become adept at mode shifting from one set of principles to another. There are no silver bullets. Solutions need to fit problems, not the other way around.

Hierarchies And Networks

For decades we’ve been hearing that we need to eliminate hierarchies and break down silos. Yet there is little evidence of any success. In fact, when management guru Gary Hamel, who has been leading the call to “bust bureaucracy,” surveyed readers at Harvard Business Review he found that levels of organization had increased, not decreased. At the same time, many high-profile efforts to “flatten organizations,“ such as Holacracy, have failed miserably.

The simple truth is that, while flatter structures promote innovation and creativity, you need clear lines of authority and strictly delineated roles to execute complex processes. Everybody needs to know their job and its relationship to everyone else’s.

In The Friction Project, Stanford Professors Bob Sutton and Huggy Rao make the case that good leaders become adept at switching between the hierarchical and flat styles of leadership. For example,when Navy SEALS are on a mission they operate with a strict line of authority and nobody questions rank or orders. Yet in after-action reviews, they strip off their ranks and everybody has an equal say.

In a similar vein, Pixar’s has developed a famously collaborative feedback process to develop stories. Yet once a movie moves into production, the company is strictly hierarchical. Everyone knows exactly what their role is and they wouldn’t even think to question it. You can’t have 300 different visions for a film. You can only have one and it is the director’s.

Leaders need to lead. When executing a plan that means giving orders and having them followed. On the other hand, developing a strategy requires multiple perspectives and leaders need to listen. To be effective, you need to learn how to do both and switch between them.

Incremental, Breakthrough and Business Model Innovation

One of the best innovation stories I’ve ever heard came to me from a senior executive at a leading tech firm. Apparently, his company had won a million-dollar contract to design a sensor that could detect pollutants at very small concentrations underwater. It was an unusually complex problem, so the firm set up a team of crack chip designers and they started putting their heads together.

About 45 minutes into their first working session, the marine biologist assigned to their team walked in with a bag of clams and set them on the table. Seeing the confused looks of the chip designers, he explained that clams can detect pollutants at just a few parts per million, and when that happens, they open their shells.

As it turned out, they didn’t really need a fancy chip to detect pollutants — just a simple one that could alert the system to clams opening their shells. “They saved $999,000 and ate the clams for dinner,” the executive told me.

This is a great example of mode-shifting. For the most part, developing semiconductors is an incremental process. If you can consistently improve performance year after year, you get Moore’s Law. But when you shift the parameters of the problem, you need to open up the process to people with different perspectives and areas of expertise.

As I explained in Mapping Innovation, if the task had been simply to make a chip that was 30% more efficient, a marine biologist dropping clams on the table would have been nothing more than a distraction. At the same time, technological solutions would be of little use if the business model itself is failing. There is no one “true path” to innovate, you need to apply the right strategy to the right problem.

The Changemaker Mindset And The Manager Mindset

Most of the time, we operate with a manager mindset and that works fine. We build consensus and execute with predictable outcomes. Customers know what to expect and we work with colleagues and partners to meet those expectations every time. Quality and consistency are the coin of the realm. You need to deliver both to be successful.

Yet when it’s time to switch course, you need to discard the manager mindset and embrace a changemaker mindset. You can’t expect everyone to be on board from the beginning, so trying to build consensus is a waste of time and energy. You need to identify a coalition of those who believe in the change and build from there. Once you begin to gain traction, some will join you, while others will have to seek another path and go on another journey.

When pursuing change, nothing is predictable. You’re doing things that you haven’t done before and you need to embrace uncertainty. You will take wrong turns and face dead ends. Things will go awry and you will get frustrated. You can’t just focus on execution, but must learn to embrace exploration, learning from mistakes along the way.

Effective leaders need to master both the manager mindset and the changemaker mindset and learn to effectively switch off between the two. Just because you need to pursue change doesn’t mean you can just ignore everyday operations. On the other hand, if you try to pursue change with a manager mindset you are almost guaranteed to fail.

Becoming An Effective Leader

About a decade ago I made the trip out to see Brian Robertson, the creator of Holacracy, the leaderless management governance method. It was all the rage at the time, with high-flying firms such as Zappos and Medium adopting it enthusiastically. Brian was kind enough to spend a few hours with me, explaining the ins and outs of how it all worked.

But even then I was skeptical and I told him so. My experience running organizations taught me that the most important thing a leader does is make decisions and that often requires you to switch directions, exchanging one set of principles for another to adapt to different contexts. There are no easy guides to making these mode shifts and you can’t just take a vote. You have to take responsibility for making the decision.

For creative challenges, giving everyone a say leads to better results, but when you need to execute operations, especially complex ones, everybody needs to play their role and there can be no questioning of authority. Innovation requires you to identify what kind of problem you have before you can identify the right strategy to solve it. You can’t pursue change with the same mindset with which you pursue everyday operations.

As the philosopher Ludwig Wittgenstein pointed out, “no course of action can be determined by a rule, because any course of action can be made out to accord with the rule.” We have to have the courage to make decisions and that often means we need to exchange one mode of logic for another.

Greg Satell is Co-Founder of ChangeOS, a transformation & change advisory, an international keynote speaker, and bestselling author of Cascades: How to Create a Movement that Drives Transformational Change. His previous effort, Mapping Innovation, was selected as one of the best business books of 2017. You can learn more about Greg on his website, GregSatell.com, follow him on Twitter @DigitalTonto, his YouTube Channel and connect on LinkedIn.

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