Monday, November 11, 2013

Form and Function

By Andrew Yenchik

Determining the strategic capabilities – and the leadership to execute them – will always remain difficult to determine and essential for growth.  The McKinsey Quarterly’s insights regarding the link between a firms growth and the traits their leaders posses initiates an interesting discussion.  McKinsey’s research found that leadership quality is essential for growth, and that most companies don’t have enough of the high quality executives that they need. [1] In addition, Palladium strategists Donlon and Walmer remind us that setting strategy should come first, then defining capabilities, and then the choosing of leadership to execute the chosen strategy. [2

Therefore, form (the executive leadership and their traits) should follow function (determined strategy and capabilities).

But is this “form follows function” methodology always the case?  It sounded good as I read these articles; therefore, I explored a few strategic leadership examples from the recesses of my mind just to make sure.

Jan Carlzon at SAS
When Jan Carlzon took the helm at SAS in 1981, the airline was hemorrhaging $20M a year, had an international reputation with extreme lateness, and was the epitome of a rigid, centralized, and slothful organization.  Carlzon turned SAS into an international sensation in just a few years, focusing relentlessly on customer service, quality, and timeliness.  He turned a centralized snail into a lean problem-solving machine, giving frontline employees the power. [3] However, prior to Carlzon, SAS’s strategy and capabilities were focused on increasing technology and defending against rivals. [4] It appears that Carlzon’s ideas and personality set the strategy for SAS – which turned out well.  Did form really follow function?  Or did function follow a dynamic and intelligent form?

Steve Jobs at Apple
When Apple purchased NeXT in 1986, Steve Jobs returned to the company he co-founded.  He became CEO the next year and began to put into motion his “Think Different” strategy.  He terminated projects (Newton, OpenDoc, and Cyberdog) and people that didn’t align to his strategy. [5] Under Jobs’ leadership, Apple developed iTunes, the iPod, the iPhone, and countless other game-changing innovations.  But before Job’s return, Apple was floundering without solid direction, strategy, and capabilities.  A charismatic, brilliant, and stubborn Jobs rebuilt Apple upon his seemingly “cult of character.”  Moreover, Jobs is famous for quotes such as “A lot of times, people don't know what they want until you show it to them” and “We never hire consultants, per se. We just want to make great products.” [6] [7] Again, I ask, did Apple purchase NeXT or bring back Jobs due to execute well-designed strategies and capabilities?  Did form follow function?

To me, these two limited examples show the blurry lines between form and function, and which follows which.  In the political arena, function often follows form.  A particular candidate, armed with platforms and ideas (a strategy and capabilities, per se), is elected to office and then sets out to install those ideas and strategies.  It appears that academia and research lean towards the opinion that form should follow function, in the broad sense.  But what about these two historical examples of function following form?  Has academia and large databases running complex Hadoop queries missed the mark?

Steve Jobs and Jan Carlzon both possessed the needed competencies to lead their firms, design a lasting strategy, and engender a legacy.  McKinsey did get one thing right – that certain competencies of executives and leaders are more important to some strategies than to others. [1] I take that one step further and say that certain competencies of executives and leaders are more important than current or future strategy for a firm.  Find the right guy, and your strategy and capabilities will follow.

A final example of a firm that appears to understand the dynamic relationship behind form and function – strategy and leadership – is Vivint.  Vivint is a home automation and home security company that utilizes a door-to-door sales force.  Vivint was formerly APX Alarm, an alarm company that had began to decline due to leadership and money woes.  Alex Dunn, Governor Mitt Romney’s former Chief of Staff, was brought in as President, along with a list of other highly accomplished executives.  This team rebranded and restarted as Vivint, and huge success and growth has followed.  Blackstone Group acquired Vivint in 2012 and Forbes recognized them as one of America’s Most Promising Companies for 2013. [8] Moreover, recent hire Matt Eyring, former managing partner at Innosight and renowned innovation strategist, made headlines and also made success for recent Vivint spin-off Vivint Solar. [9] From my view, it appears Vivint has used strong leadership, possessing key competencies, to build strategy and capabilities that they can successfully execute.

So what do you think – does a successful firm set a strategy and then find key leaders, or do they find key leaders and then set a strategic course?  History seems to favor the later, while academia favors the former.  What came first, the chicken or the egg?

[1] McKinsey Quarterly, July 2011, “Do you have the right leaders for your growth strategies?”
[2] Donlon and Walmer, “Does Your Organization Have the Capabilities to Execute Its Strategy?”
[4] Richard M. Burton and Borge Obe, “Strategic Organizational Diagnosis and Design: The Dynamics of Fit”

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