Behnam Tabrizi, PhD, has been teaching how to leading organizational transformation at Stanford University’s Department of Management Science and Engineering and executive programs for more than 25 years. An expert in organizational and leadership transformation, he has helped thousands of CEOs and leaders plan, mobilize, and implement innovative transformational initiatives. He has written ten books, most recently Going on Offense: A Leader’s Playbook for Perpetual Innovation, which is on The Wall Street Journal bestseller list. His book, “The Inside-Out Effect: A Practical Guide to Transformational Leadership,” is an international bestseller. Tabrizi recently spoke to The Innovator about his new book and how companies can become perpetually innovative.
Q: How do you define perpetual innovation?
BT: From 2015 to 2022 I studied companies that are agile innovators and repeatedly came out with major advances, despite changing markets. I found eight main drivers, which are outlined in my book: existential purpose, obsession with what customers want, significant influence over employees, a startup mindset even after scaling up, the readiness to control the tempo, the ability to operate bimodally, a bias for boldness, and radical collaboration.
Q: Your book provides an insider view into the drivers of success and challenges in 26 organizations – including industry giants like Apple, Tesla, Amazon, Microsoft, and Starbucks. You argue that companies like Tesla have mastered all eight. If you are a company in a traditional, unsexy sector how do you not just learn from a company like Tesla but be like them?
BT: You don’t need to be them but think about what your company could do if you and your leadership could be 10% more like Tesla or 20% more like Apple. My first book, Rapid Transformation, talked about how transformation needs to be parallel and fast and how digital transformation is not about technology. My next book, The Inside Out Effect, is about personal and leadership transformation. This new book, Going on Offense, on perpetual innovation and steps to an innovative culture completes the trilogy of transformation and innovation essential steps.
Q: Can you talk about some of those steps?
BT: To start, there are some principles of digital transformation that are very critical. A truly digital transformation, or any type of transformation, happen when you connect the outside in – the ecosystem – with the inside out – your employees. A lot of transformation is about the need to change the way that people in the organization think. It is about adopting a digital mindset, being curious and a having a willingness to experiment. In every case where companies were able to succeed it was because they created a movement to connect the outside in, to the inside out. It was not about armies of outsider consultants coming in and saying, ‘here is what you need to do’ and then leaving. It was due to a huge engagement through the right leadership structure and right process that led to a rapid transformation. While working on their transformations, mindsets changed. Without leadership transforming employee mindsets nothing gets changed.
Q: How would you apply that approach to a new disruptive technology like AI?
BT: AI is a 10,000-pound gorilla coming at everyone. You can look at it as a threat or an opportunity. Successful companies will take the attitude that ‘this is the biggest disruption in terms of innovation and tech that is going on in our ecosystem, so I am going to bring that in.’ Then, the company will educate the senior team and think about how to go about experimentation, cleaning the company’s data and ensuring that none of the company’s sensitive, proprietary data becomes public. During an executive program at Stanford Business School, an executive from Wipro [ an Indian multinational corporation that provides information technology, consultancy and business process services] explained how his CEO did this and then spoke to the employees and explained that no one is going to lose job their job due to AI but by using it, everybody’s productivity is going to improve significantly. The company made a short video on AI for employees to ensure everyone across the globe has the same vocabulary and fundamental knowledge of AI and is encouraging people to experiment with some guardrails. This is what I mean by bringing the outside in.
Q: In your book you talk a lot about the importance of existential purpose. Can you elaborate?
BT: Existential purpose is not a slogan on the wall. It is something that a leader – and employees – live and it makes people so excited they feel it in every fiber of their bodies. Apple CEO Tim Cook once said that ‘when everybody is working in the same direction, then people find meaning in their work. Otherwise, it is just a job, and life is too short for that.’ If every organization could find that kind of alignment, I believe that so much productivity could be unleashed.
Q: What are some of the other keys to ensuring that your organization constantly innovates?
BT: Cultivating a startup mentality, which means giving employees the freedom to come up with ideas and really have agency at work so you can be sure you are addressing the right issues. Otherwise, people are worried about trying to look good rather than making a difference. Velocity is also important. Every company should look at its pipeline of innovation and make sure it is managing that differently than the way it handles its existing business.
Q: How do you get the balance right?
BT: Amazon, which has 1.5 million employees, creates sandboxes to come up with ideas and to prototype. It has been amazingly innovative, trailblazing the Cloud industry, transforming book printing and now moving into the grocery and other sectors and, at the same time, has developed the leadership and a culture to manage its existing businesses differently than its innovative business. With its existing business Amazon is obsessively focused on fulfillment. When I spoke to Amazon executives, I asked them how often they check if an employee is not hitting all the key metrics. The response was quarterly; by that they meant every 2.5 hours. That is what I call hands-on. It is necessary because today’s customers have crazy expectations – especially millennials.
Q: In your book you talk about how some companies – like Microsoft – lost their mojo but managed to regain it and how others – like Google – have lost their edge lately. What can business learn from these examples?
BT: It is important to unleash the talent you have. Satya Nadella came from Microsoft’s Cloud division. He changed the company’s North Star from ‘a PC at every desk’ to ‘empowering every person and every organization on the planet to achieve more.’ He came into his current job when Microsoft was in trouble and that new North Star has helped the company, which was behind in AI, become a leader. Surprisingly Google did not make the list of perpetually innovative companies. Google has become bureaucratic, and employees have become so frustrated they have stopped innovating. At some point Google had 70% of top talent in AI but in the past year the company has started losing the war on AI with Microsoft. With the help of reset through rapid transformation, employee transformation, and transforming to a perpetually innovative culture – the trilogy of transformation, which is covered in my three books – any organization could unleash the talent it has within.
Q: What advice do you have for business?
BT: Organizations need to rethink their models and their ideas. Just because you have free cash flow now doesn’t mean you are going to survive, especially with AI coming. My advice is read my latest book and consider the eight drivers of perpetually innovative companies. Ask yourself what areas you need to be thinking about improving and what challenges you have. Go back and look at your company’s original values and pick a few – not many. Announce them to the world, and regardless of what happens, stick to them, otherwise, you will lose credibility, especially from within your organization. Next, get comfortable with the idea that everything else is open to change and needs to be reexamined and rethought. If you stand still, you will get run over. As my new book illustrates, it is those who perpetually innovate who succeed.
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