Corporate Leadership and Start-up Entrepreneurship

Prof. Colin Coulson-Thomas
What role does corporate leadership play in the success of a start-up enterprise or new business ventures? For many people the term “corporate leadership” may conjure up images and discussions of chief executive officers (CEOs) and senior management teams, boards of directors and corporate governance arrangements. It might also suggest the existence of a corporate organisation. Yet a new enterprise may begin as an idea, that eventually finds expression in the form of a start-up venture involving one or more founding entrepreneurs, operating on their own at home with the goodwill and support of family and friends and who are looking for customers and sources of income.

At an initial stage “corporate leadership” may seem an overly grandiose description to apply to the design of a website, searching for modest premises and seeking part-time help, while keeping a close watch on cash flow. Many business ventures and the entrepreneurs who conceive them begin modestly. Some may not think of themselves as “corporate leaders” until they have passed the micro-business and SME stage. This article will examine the relationship between leadership and entrepreneurship. It will also raise questions concerning the nature of contemporary leadership and its relevance to the leadership of start-up ventures and entrepreneurial activities such as innovation.
The Nature of Leadership
There is an extensive and growing literature on the qualities one needs to be an effective leader, but isn’t effectiveness in senior, board and entrepreneurial roles more about what leaders do, how they cope with challenges and address opportunities, and the impact they have, rather than the sort of people they are? Isn’t it possible for individuals with a wide range of personal qualities and personality types to be successful leaders if they do the right things in the situation they are in?

Is the contemporary focus upon personal qualities actually dangerous in that identified attributes may or may not be relevant, appropriate or desirable, depending upon the situation, context and stage of development? When inappropriate they can alienate people, divide people and create rivalries between people. Too much emphasis is also sometimes put upon leadership potential. Without motivation it may remain latent. Potential also needs to relate to an opportunity.

Too often perhaps the focus is upon leaders rather than followers. Courses and books on how to be a good follower do not draw the crowds. Few young and ambitious people harbour dreams of becoming followers. Are potential leaders encouraged to focus on their own development rather than upon developing others? Courses and coaching often emphasise how to motivate, monitor and inspire others, rather than how to listen, help and support or engage, share and build relationships. Do entrepreneurs need to excel in both arenas? Should they also ask questions about themselves and their aspirations and motivations to determine if entrepreneurship is appropriate and right for them at their stage of life and the situation they are in (Coulson-Thomas, 1999)?

The Context of Leadership
Early investigations of leadership by authorities such as John Adair (1962, 1968) explored what it meant in particular contexts, whether the leadership of military units or the leadership of business organisations. However, there are many other arenas in which leadership issues might arise. For example, what form of leadership is required and from whom in relation to educational institutions, vocational bodies and professional associations and firms? What different forms of leadership might be exercised within an operating theatre? What does leadership mean within the creative arts?

Aspects of leadership can be handled differently, depending upon the context. In the world of higher education while a Vice-Chancellor and his or her team may be influential in business decisions, key academic decisions are likely to be taken by an academic board. Are there lessons here for companies, particularly those operating in knowledge dependent arenas? What can company boards and the governing bodies of universities learn from how each operate? Within the public sector, there are different models for dividing leadership responsibilities between elected politicians who hold Ministerial office and permanent officials. Might some aspects of these be relevant to a company or a professional firm that is considering how to operate more democratically?

An entrepreneur may be able to learn from a variety of contexts and different lessons will vary in their relevance according to the stage of development of a business. At the start-up stage there may be particular requirements, such as the need to articulate the vision and mission of the founders and review initial goals, objectives and priorities following contact with the market place, and to ensure these are understood by new people as they are inducted. Might Adair’s (1973) notion of action-centred leadership relate more to start-up entrepreneurs than to leaders of established organisations who may be more concerned with mitigating risks than tackling them, safeguarding a reputation rather than establishing one, and conforming to expectations rather than challenging them?

The Need for Leadership
Approaches to leadership sometimes appear to assume that the people of organisations are apathetic, disinterested and bored. It is as if they don’t know what they are doing or why, and they are sitting around in a dormant state waiting for a leader to come along who will breath life, purpose and motivation into them. Is this an accurate portrayal of people in many organizations today? What do some approaches to leadership tell us about the respect we have for others? In contexts where highly qualified and engaged people are involved, do we need leaders (Ingram & Emery, 2015)?

Are boards of established businesses failing to provide strategic direction? Are talented and motivated people just waiting for a leader to show them the light? Are they so empty or misguided that they need a corporation to provide them with a corporate culture and a set of values? In reality, some individuals lack inward direction and not all corporate visions, missions and goals are properly communicated. However, many people are competent, responsible and know what they are about. They may have joined a company because they support its aims and want it to succeed.

In start-up situations, rather than inherit people entrepreneurs have the opportunity to select their teams. They can choose those who demonstrate required qualities and have a strong interest in what they are setting out to do. They can avoid the apathetic and disinterested. Some of those who play games are time wasters. They become walking overheads in larger organisations. They avoid start-ups where they might feel more visible and exposed. Individuals looking for a quiet life and a steady income may also see a new venture as a less secure option, whereas the adventurous and ambitious eager for a challenge might be attracted to it.

Most entrepreneurs try to assemble teams with relevant qualities and experience. To what extent do confident, responsible and talented people who understand the purpose of an organisation and situation they are in need direction? Do those who are prepared to take ownership of issues and have the competence to address them need to be led? Can self-managed work groups and the trusted teams who are closest to customers and best know their requirements be left to get on with it? At what point does management and leadership become unnecessary interference? Can unwelcome and inappropriate involvement become a distraction and counter-productive?

Leadership, Creativity and Innovation
Many of the most pressing challenges facing companies and mankind may not be effectively addressed by incremental improvements to existing activities and excellence in the performance of them. More imaginative and innovative responses may be required. A key function of leadership is to encourage and support the free enquiry and creativity that will enable them to occur. Leadership is often associated with activities such as giving a lead, judging and selecting, yet creative thinking may be best enabled by standing back, inviting challenge and encouraging diversity and debate. In the case of some start-ups the innovation upon which the enterprise is based is the brainchild of a founding entrepreneur, who then needs to assemble a team with the complementary qualities that are needed to successfully commercialise, protect and generally exploit and further develop it.

In 1997 I set out ten essential freedoms for removing constraints and liberating latent talent by allowing people to work, learn and collaborate in ways, at times and places, and with support that best allow individuals and teams to give of their best and be creative and productive (Coulson-Thomas, 1997). When the conditions are right for the people and relationships involved they can flourish, and practical and desirable outcomes can emerge that address particular problems and/or meet the requirements of individual customers. The focus of the leader in such a context may be upon removing obstacles to the creative process rather than determining individual outcomes.

The challenge for start-up entrepreneurs is to prevent barriers and constraints from arising. At some point one may also need to cope with the retirement of a founding innovator. For later stage organisations, whose people and customers embrace a variety of cultures, nationalities, religions, situations, requirements and aspirations, successful organic evolution, growth and development can depend upon a multitude of local decisions and interactions. Where central decisions have to be taken, these may be best addressed by a relevant committee, or where appropriate a board rather than by a CEO or members of a senior management team who may not themselves be innovators.

In competitive and dynamic situations and where windows of opportunity may be limited, quick, and front-line responses may be required. Those responsible need to be able to easily access the help they require and increasingly this needs to be available on a 24/7 basis. Support requirements and what might enable people to be more effective can sometimes be best determined by those in the front-line. Individuals who are allocating resources need to ensure that staff involved are aware of available alternatives and that the most relevant and appropriate options are considered.

Chief Executive Officers (CEOs) and Leadership
The ultimate leadership prize for the ambitious is to be appointed a CEO. Why should anyone expect a new CEO who may need time to settle in and adjust to the role, while possibly being worried about whether he or she has taken a step too far, to quickly provide “leadership” that adds value to that given by continuing members of a board and management team? An external appointee may also be unfamiliar with a company’s situation and context and face the challenge of re-location. Are some expectations of so-called “leaders” unrealistic, undesirable and dangerous?

Employees with experience of organisation charts may visualise a CEO at the apex of a pyramid and master or mistress of all they survey from this lofty position. In reality, a CEO sits at the interface of two sets of relationships, those involving the people of a company and those with its board, including a board chair and independent directors, some of whom may have been involved in his or her appointment. There may also be investor and other stakeholder interests to accommodate.

Would it be in the best long-term interests of long-established organisations for more people to ignore instructions from newly appointed CEOs and other leaders and ensure these new arrivals share responsibility for important decisions until they have completed an induction process and demonstrated they fully understand the options, issues, constraints and other considerations involved? One often encounters companies who have been spared the negative consequences of bad board decisions and corporate initiatives because further down an organisation people have rolled their eyes and then either frustrated or ignored them.

Founder entrepreneurs can appoint themselves to head up a new venture. They build organisations rather than climb them. When not taking over an existing enterprise, rather than inherit a business a start-up entrepreneur has to create one. Rather than steer a company and keep it on track and ensure its survival, entrepreneurs often challenge an existing order and create new choices (Coulson-Thomas, 2001). The process they go through is often one of preparation rather than induction and settling in. While they have few people around them who can help, and with whom they can share responsibility, and it may be some time before a properly functioning board is appointed, a business can be very dependent upon its founder or founders. While they may invite comments and seek advice from others, owner managers and directors usually expect their staff to respect them.

Top-down Leadership
There are people who care and who are competent, responsible and talented. They may also be committed to the vision and purpose of an organisation, project or venture. They may quietly work for it to succeed. In an established organisation it can be irritating to find oneself reporting to an opinionated person who is paid a small fortune in comparison, and who has just returned from a leadership programme eager to build their personal reputation and practice what they have learned about leading people. Effective leadership, like good film direction, may need to be light-touch and subtle. However, in start-up situations one sometimes needs to be more direct.

How do traditional notions of top-down leadership apply to virtual, network and start-up organisations, where the key relationships can be with collaborating peers, partner organisations and potential customers rather than junior subordinates? Do they assume a relatively bureaucratic organisation with a leader at its apex? What if the priorities are communication, coordination and prospecting and people are in roles that do not enable them to issue instructions? Start-up founders cannot assume their peers and external parties will listen to them, let alone defer to them?

The nature of work and organisations continue to evolve. As technological developments, automation and expert systems replace people with intelligent apps, robots, drones and easy to use and low-cost 24/7 on-line and on-demand solutions, more leaders may find themselves presiding over options, systems and processes rather than people (Ford, 2015; Kaplan, 2015). What will this mean for their roles, how they should prepare for them and – where there is a separation of ownership and control – the qualities that those appointing them will seek?

In the past, has traditional leadership attracted the abnormal and the ambitious, people who feel inadequate or unloved, or who have something to prove, or who want to dominate others? Has it appealed to those who want to be listened to, rather than those who want to listen to others and serve and support them? To get ahead, has one needed to be ruthless, self-interested and single minded, rather than caring, open and devoted to a cause? Perhaps so, in relation to some traditional positions of power, such as those at the top of certain large organisations, but is entrepreneurial leadership becoming the norm among those seeking to build their own businesses?

Leadership and Entrepreneurship
Having greater independence and more control of one’s own life appears to have increased in popularity. Over the last twenty years, more courses in entrepreneurship have been established at business schools and other departments at universities, and they are attracting larger numbers of students. Falmouth University (2016) in Cornwall prepares people for entrepreneurship and careers in the creative arts. Undergraduate students are encouraged to set up and develop businesses with like-minded fellow students. They receive support in the development of their enterprises.

How do traditional views of leadership relate to start up entrepreneurs who may begin a business without anyone to lead? In many cases the few people they start an enterprise journey with may be supportive family members, friends or business partners, rather than dependent employees. Others who join them and risk their careers by putting their trust in an early stage venture may do so because they share a vision, see an opportunity, or believe in a cause. These can also be among the reasons why people seek employment with larger and more established businesses, but as already mentioned the latter may also attract those looking for greater certainty and security.

In what areas and to what extent are entrepreneurial owner-leaders of start-up enterprises different from other people who have either advanced on merit or used guile, cunning and political skills to reach a leadership position at the top of a large and bureaucratic organisation? Does it make sense to call start-up entrepreneurs “leaders”? Is there a separate category of “entrepreneurial leader”? Would it make more sense, and say more about the challenges they face in the early stages of a new venture, to just call them “entrepreneurs” and to use leadership terminology at a later stage?

According to the Peter Principle, people rise to a level at which they may be perceived as incompetent and so further advancement does not occur (Peter & Hull, 1969). Should one expect leaders at the top of organisations to be competent? How does one assess the contribution of people in leadership positions when corporate performance may be the aggregation of many other contributions? Paradoxically the effective leader whose leadership style helps, builds and supports others and who encourages them to take ownership may be less visible than headline grabbing peers. In comparison with those at the top of large and established organisations, the influence of many founder entrepreneurs is as visible as muddy finger prints all over their enterprises.

Shared and Collective Leadership
Some leaders do not inspire people, support them or enable them to excel. In larger and more bureaucratic organisations they sometimes centralise, constrain and consolidate. How can boards prevent too much power accruing to an individual who may be incompetent, deluded, mistaken, naïve or out of his or her depth? What checks and balances can be introduced? How can one reallocate roles and responsibilities or reclaim power from a strong CEO? Governance arrangements should address these issues and in such a way as to achieve a balance between governance, risk and performance considerations (ACCA, 2014).

Some leaders struggle and certain leadership roles may be difficult to fill. Offering more money to possible candidates may not be the answer. If the demands of leadership roles become too onerous, how does one achieve some form of shared leadership in which complementary people collectively cover all the different aspects of what needs to be done? Might sharing a leadership role better accommodate those who have family responsibilities or are seeking a different work-life balance?

There is a tendency to focus upon the advantages of effective leadership rather than the risks and consequences of inadequate or destructive leadership? Perhaps this is because people like to be associated with positives and to avoid association with negatives. If bad news and negative thoughts are unwelcome, and they do not win coaching assignments or sell books on leadership, should directors and boards themselves peer into dark corners and address downsides and risks?

The Role and Contribution of Boards
Where there is separation of ownership and control, directors play a central corporate governance role. In addition to providing strategic leadership and good governance, directors and boards should investigate the nature and exercise of leadership across an organisation. They can play a vital role in ensuring that checks and balances are in place to prevent an excessive concentration of power and ensure there is collective leadership. To avoid the dictatorship of a strong-willed and charismatic CEO one may need to strengthen the remits and powers of other executive directors, as well as ensuring that a board has a suitable and effective contingent of independent directors whose first duty is to the best long-term interests of a company.

A programme I delivered for the European Union involved the support of the entrepreneur owners of 50 small and medium sized enterprises (SMEs). My experience suggests many owner directors remain unconvinced that the benefits of appointing independent non-executive directors (NEDs) and instituting formal board meetings will exceed their costs and add significant value, although entrepreneurs who understand how to build an effective boardroom team can secure considerable advantage (Coulson-Thomas, 2007a & b). Some owner directors reported bad experiences of NEDs who had retired from head office roles with large companies and with little direct experience of serving customers or managing a cash flow. Potential NEDs sometimes seemed more interested in generating incremental income for themselves than they were in helping to build a business.

Founder owner entrepreneurs are well advised to be wary, as the wrong board appointments can introduce a malign element. A proportion of potential candidates may be primarily concerned with their own interests, especially if they encounter a start-up with potential. They might spend more time seeking an equity stake than enquiring about customers and offerings. Some may alert their friends and then seek to secure a controlling interest, replace a founding entrepreneur with one of their own nominees, and then make a short-term financial gain by floating or selling the company. Unwary entrepreneurs can be ejected from enterprises they started and denied their just rewards.

Excellence, Innovation and the Board
A start up phase can be dominated by considerations of customers, cash-flow and premises, but in later stages and as a company grows many boards need to also develop and widen their horizons. What sort of leadership should a board provide in relation to business excellence and areas such as innovation, quality and sustainability? What does excellence mean in the contemporary business environment and in relation to the board’s own performance? How should one assess and judge excellence, for example against a standard model produced in the past, or against issues, challenges and opportunities currently facing an organizations and how one is responding or should respond?

Directors should ask: do we need to excel at everything as some business excellence enthusiasts suggest, or should we just aim to excel at the critical success factors for competing and winning, while being “good enough” elsewhere? Will customers be prepared to pay for excellence in areas that do not directly affect them? A start-up entrepreneur with limited resources may need to think carefully about where and when and in relation to what opportunities excellence can be funded. In relation to change, knowledge and talent management and other areas are considerations such as relevance and affordability more important than “excellence”?

Should the focus be upon creating a culture of excellence and innovation, or providing the conditions and performance support for people from a diversity of backgrounds and cultures to excel where is matters. How does one encourage, unleash and support innovation across an organisation and its value chain, and ensure there are synergies between strategy, entrepreneurship and innovation? One also needs to capture innovation and learning in the form of human capital that can be captured, managed and exploited to grow shareholder value (Perrin, 2000). How might a responsible business also make innovation work for wider society? Do start-up entrepreneurs have a different take on such a question? Is a societal dimension a potential differentiator or a distraction?

How should a board and corporate leaders set about building more innovative, entrepreneurial and sustainable business models? What are the governance implications? How might one achieve more innovation and entrepreneurship in governance itself, including in terms of relating it to the situation, requirements and stage of development of particular enterprises? What approaches to corporate governance would better reflect the changing nature of organizations and the contemporary business environment? Do board agendas, corporate priorities and approaches to management, leadership and governance make sufficient reference to creativity and how it can best be stimulated, enabled and harnessed? Innovation is the result of creativity that leads to something that is adopted and which can hopefully be monetized. It is a result and creativity is the cause.

Leadership and Human Capital
Inventor entrepreneurs and business founders setting out to offer something new may themselves be the source of innovation. Their challenge may be to sustain it. There are many opportunities for knowledge entrepreneurship. In many cases the know-how required may already exist, waiting to be packaged and made available in a form that can be monetized by an alert entrepreneur (Coulson-Thomas, 2003). In other cases, it may have to be created or otherwise accessed if the potential rewards justify the effort involved. The initial people decisions of entrepreneurs can be critical.

Human capital has topped the list of issues of concern to CEOs (Conference Board, 2015). Founding entrepreneurs, CEOs and boards all need to ensure their companies have the human, financial and technological resources to achieve their corporate visions and goals. Many boards also face human capital challenges such as achieving greater diversity and raising productivity, while teamwork, group dynamics and creativity can be issues at all levels across an organisation.

Leaders are expected to maximise the value of an organisation’s human capital and derive as much benefit as they can from the team of people for whom they are responsible. Selection committees look for whether candidates for leadership roles have “people skills” and a “people orientation”. However, can a company be over invested in human capital as opposed to expenditure on technology or moving activities on-line? Can one be too people oriented? What is the role of human capital in the face of artificial intelligence (AI) and robotic revolutions (Ford, 2015; Kaplan, 2015)?

Many people assume human capital is a good thing, but humans can be expensive, variable in their performance and they are not always reliable and motivated. Are there better alternatives? How many HR professionals are so preoccupied with recruitment, employment and disciplinary issues that they have little time to consider the interface of people and technology and trade-offs between them. Is the combination of people and technology and understanding e-business opportunities the key to increasing the productivity and operational excellence of an existing business, and a route to cost-effective operation and rapid and international growth for the start-up entrepreneur?

Addressing Digital Opportunities
Just as some stars of silent films failed to survive the introduction of sound, so not all leaders may adapt to the requirements for excellence, innovation and success in the digital economy. Are these requirements sufficiently stressed in leadership development courses? Are business excellence and other models and approaches also too preoccupied with people considerations? Boards need to ensure their organisations embrace ‘new leadership’ with its emphasis upon helping and supporting. They must ensure key work-groups are equipped and enabled to adopt, integrate and benefit from greater connectivity, and big data, knowledge and information management systems, and provided with the 24/7 performance support they need to stay current and address new challenges and opportunities wherever and whenever they arise (Coulson-Thomas, 2012a & 2013).

Available and affordable digital technologies and capabilities are rapidly evolving. Many of their applications have long had the potential to be disruptive and terminal for unaware or disinterested laggards, whether in transforming supply chain relationships (Bartram, 1996) or transforming public services (Coulson-Thomas, 2012b). Developments in information and communication technologies in areas ranging from design tools to gamification have implications for the innovation process, the design, development, communication and support of new products and services, and relationships with customers, partners and users. What are the implications of the digital economy for leadership, entrepreneurship, working, learning, buying and selling, the nature and pace of business development, organization and governance?

Entrepreneurs and business leaders also need to be aware of sectoral issues and opportunities. Applications of technology to enhance agility, improve productivity, drive performance, support innovation and mitigate and manage operational, strategic and governance risks can vary by sector. So can aspirations, requirements and expectations. Continuing awareness is needed as to what customers and users might consider to be affordable, excellent, innovative and relevant. In some markets, senior executives and board members need to think more like entrepreneurs.

Entrepreneurial Leadership
In many sectors, the implications of various challenges and opportunities are uncertain. For example, in relation to financial services will traditional banks and their branch networks continue to be relevant? In an era of crowd sourcing, AI and automated and on-line transactions do we actually need banks as we know them today? Government interventions should be about creating public value (Moore, 1995), but are regulatory and licensing practices preventing a revolution in banking? While founder entrepreneurs may not have direct access to the resources that larger organisations can command, they have an interest in removing barriers to entry and removing restrictive practices and obstacles to competition. Whether individually or collectively, should they also seek to influence public decision makers and engage with wider society (Browne et al, 2015)?

It is over half a century since Peter Drucker (1969) wrote about the age of discontinuity and put the case for innovation and entrepreneurship. Many of today’s organisations and mankind generally face such a combination of challenges that perhaps survival cannot be taken for granted (Harari, 2014). Innovation, entrepreneurship and greater creativity are required. Corporate leadership has to become more entrepreneurial. Corporate leadership and entrepreneurship may have to converge.

Many established companies need entrepreneurs to help them to quickly adapt and evolve and remain relevant. Companies of all sizes need to find better ways of working together. In the digital economy more start-up companies have the potential to grow more quickly than before. Those who have wrestled with the problems of corporate bureaucracies may able to advise on how to avoid them. Those who have succeeded at renewal and re-invention may speak a language that a start-up entrepreneur would understand.

In time more leaders may move between established and start-up businesses where the priority is to articulate a vision or cause and operate more sustainably in order to reach and engage others, especially younger people. Those who fail to adapt and embrace the requirements for effective ‘new leadership’ will fall by the wayside. Innovation is required in terms of how we think about leadership and the nature of leadership that is required in relation to the changing nature of work, organisation, learning and entrepreneurship.

Note
This article is based on a paper prepared by Prof. Colin Coulson-Thomas for the Institute of Directors (India) 2016 Dubai Global Convention on Leadership for Business Excellence.

References
ACCA (2014), ACCA Best Practice Principles for Governance, Risk and Performance, London, Association of Chartered Certified Accountants, December

Adair, John (1962) [2nd edition 1997], Roundhead General: The Life of Sir William Waller, Stroud, Sutton Publishing

Adair, John (1968), Training for Leadership, London, Gower Press

Adair, John (1973), Action-Centred Leadership, London, McGraw-Hill

Bartram, Peter (1996), The Competitive Network, Bedford, Policy Publications

Browne, John, Nuttall, Robin and Tommy Stadlen, Tommy (2015), Connect: How Companies Succeed by Engaging Radically with Society, London, W H Allen

Conference Board, The (2015), The Conference Board CEO Challenge 2015, Washington, DC, The Conference Board

Coulson-Thomas, Colin (1997), The Future of the Organisation, Achieving Excellence through Business Transformation, London, Kogan Page

Coulson-Thomas, Colin (1999), Individuals and Enterprise, Creating entrepreneurs for the new millennium through personal transformation, Dublin, Blackhall Publishing

Coulson-Thomas, Colin (2001), Shaping Things to Come, strategies for creating alternative enterprises, Dublin, Blackhall Publishing

Coulson-Thomas, Colin (2003), The Knowledge Entrepreneur, how your business can create, manage and profit from intellectual capital, London and Sterling, VA, Kogan Page

Coulson-Thomas, Colin (2007a), Developing Directors, A handbook for building an effective boardroom team, Peterborough, Policy Publications

Coulson-Thomas, Colin (2007b), The Contribution of Directors and Boards to the Growth and Development of SMEs, ACCA Working Paper, London, ACCA, October

Coulson-Thomas, Colin (2012a), Talent Management 2: A quicker and more cost effective route to the high performance organisation, Peterborough, Policy Publications

Coulson-Thomas, Colin (2012b), Transforming Public Services: A quicker and more affordable route to high performance public organisations, Peterborough, Policy Publications

Coulson-Thomas, Colin (2013), Transforming Knowledge Management:A quicker and more affordable route to high performance organisations, Peterborough, Policy Publications

Drucker, Peter F (1969), The Age of Discontinuity: Guidelines to Our Changing Society, New York, Harper & Row

Falmouth University (2015), Falmouth University Undergraduate Prospectus 2016, Falmouth, Falmouth University, p 28

Ford, Martin (2015), The Rise of the Robots, Technology and the Threat of Mass Unemployment, New York, NY, Basic Books

Harari, Yuval Noah (2014), Sapiens: A Brief History of Humankind, London, Vintage Publishing

Ingram, Kyle and Emery, Cecile (2015), Leadership, Presentation at Imagining the future of HR conference, University of Greenwich, 28th January

Kaplan, Jerry (2015), Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence, New Haven, Conn., Yale University Press

Moore, M (1995), Creating Public Value: Strategic Management in Government, Boston, Mass., Harvard University Press

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First Publication
Published in the March 2016 issue of Effective Executive (Vol. XIX, No. 1, March, pp 7-18) a quarterly journal published by IUP Publications, a division of ICFAI. The citation is:
Coulson-Thomas, Colin (2016), Corporate Leadership and Start-up Entrepreneurship, Effective Executive (A quarterly Journal of IUP), Vol. XIX, No. 1, March, pp 7-18

Author
Prof. Colin Coulson-Thomas has helped entrepreneurs, companies and public and professional bodies in over 40 countries to harness more of the potential of directors, boards, management teams and corporate organisations in order to build a business, improve performance and simultaneously deliver multiple objectives. He is Chancellor and a Professorial Fellow at the School for the Creative Arts, Director-General, IOD India, UK and Europe Operations, holds a portfolio of board and academic appointments, leads the International Governance Initiative of the Order of St Lazarus, and is chair of the Audit and Risk Committee of United Learning which is the UK’s largest operator of academies and independent schools. At the time of first publication he was also a member of the General Osteopathic Council and chair of the council’s Education and Registration Standards Committee. Colin has served on public sector boards at national and local level. Author of over 60 books and reports he has held professorial appointments in Europe, North and South America, the Middle East, India and China. He was educated at the London School of Economics, the London Business School, UNISA and the Universities of Aston, Chicago and Southern California. A fellow of seven chartered bodies he secured first place prizes in the final examinations of three professions. His latest books and reports are available from www.policypublications.com.

Corporate Leadership, Business Innovation and Growth

Prof. Colin Coulson-Thomas
Many corporate leaders have roles in businesses which they themselves did not create. They may have had little contact with founder entrepreneurs. In competitive markets their challenges might appear to be survival and defending established market positions against competitors and new entrants. The immediate priorities might seem to lie in areas such as cost-cutting, retrenchment, improving efficiency and the renewal and/or transformation of an existing entity rather than growth.
What do or should innovation and growth mean for those leading established enterprises?

The growth and development of companies has often been a matter of actively finding or stumbling across a formula such as business excellence or a business model that works and then sticking with it and related corporate assumptions, values and norms while scaling up operations. In competitive and fast moving contexts a track record of past achievements may no longer be an indicator of future success. Resting upon one’s laurels and passing on war stories and lessons from the past can be a recipe for disaster where renewal, re-invention and innovation are required.

The last issue of Effective Executive examined corporate leadership and start-up entrepreneurship (Coulson-Thomas, 2016a), but what is the role of corporate leadership in relation to the subsequent growth and development of enterprises, and particularly in encouraging and supporting responsible innovation? How many of the innovators and inventors one finds in business start-ups are one-trick ponies? How many of them have the capacity to re-invent, move on from what they know to new fields and create the conditions in which continuing innovation becomes a way of life?

Whereas in the past growth might be relatively steady as incremental expansion occurred, whether due to attracting new customers or product, geographic and/or market diversification, is it now more uneven and uncertain as successive innovations occur in how business is done, in how value is delivered, in enabling tools and technologies and in how people connect, collaborate, organize, work and learn? Beneficiaries of breakthroughs at one point can become their victims the next. What will be the role of directors and boards and what issues should they should consider?

The Meaning of Excellence
In the 1980s there was much discussion of excellent companies, following publication of a best selling book In Search of Excellence (Peters and Waterman, 1982). Key questions for directors are excellence and innovation in what and, perhaps more importantly, excellence and innovation for whom? Someone has to pay for companies to be excellent and innovative. Why should customers fund excellence and innovation that is not relevant to them and/or which does not represent value for them? Some of them might be cynical and wary of changes that are different rather than better.

Does whether or not excellence is a good thing or a distraction depend upon what you are trying to be excellent in, or excellent at? Lets take an example. Are you trying to be excellent at what you are currently doing? Are you trying to perfect existing operations? Maybe you are, but what if public tastes and customer requirements are changing? What if innovation is creating new alternatives that people might prefer? Rather than improvement, should you be replacing what you are doing now with something better? Directors should be prepared to challenge. Can one have too much excellence? When does improvement become unnecessary gold plating?

Directors need to ensure focus. Is a company and its people trying to be outstanding at everything they do? If so, should investors applaud and celebrate, or should they sell their stock? Why should customers pay for companies to be excellent at everything they do? Most customers just want their suppliers to be excellent at whatever represents value for them. Should businesses aim to excel at critical success factors for key corporate activities and sources of differentiation and competitive advantage, but just try to be good enough at everything else?

Reviewing Business Excellence
Is it time we reviewed what we and others mean by an approach such as “excellence” and the areas covered by various models relating to an excellence journey? For example, what about innovation, sustainability or considerations relating to disability, inclusion and the environment? Are existing discussions, approaches and models too preoccupied with getting it right for particular organisations as opposed to a value or supply chain? What about relationships between people, groups and organisations, partnering and partnerships, and cooperation, co-creation and collaboration?

The value and potential of partnering has been identified from both a sales and a purchasing perspective (Hurcomb, 1998; FitzGerald, 2000). Why are so many business leaders defensive, closed and reluctant to trust and empower, even when they and their people deal with those who have shared interests? Far too often front-line sales and purchasing staff engage in a battle of wits, each trying to gain advantage in what is perceived as a zero-sum game, when by working together they might be able to co-create a solution that is more advantageous to both parties.

Do people considerations within business excellence models need to change? For example, are managers preoccupied with getting more out of people for the benefit of an employing organisation rather than with recruiting, retaining and working with talented people? When recruiting, should they put more emphasis upon what joining the organisation might do for those they are targeting? In the UK, a survey by High Fliers Research (2016) has found that university graduates are increasingly choosy when it comes to employment. They are leaving larger numbers of top jobs unfilled. What are the implications of this for what growth and development might mean in future? Are companies repelling the very people their futures depend upon?

Hindering or Helping Boards
In some sectors, the life cycles of requirements, offerings, technologies and markets have dramatically shortened. One needs to understand the interaction between them and relate innovation to the life cycle of an industry (Filson, 2002). Business leaders need to consider whether they will have time to be anything other than just good enough to be relevant and quickly deliver while fleeting windows of opportunity exist between step changes.

Rather than drive developments some boards inhibit or prevent them. Directors should consider whether they are hindering or helping creativity and innovation. Lets start with some questions relating to hindering innovation. Directors should think about them in relation to their board and their company: Is our strategy overly defensive? Do we try to protect past investments? Do we instinctively impose standard approaches and ways of working? Are we constrained by accounting conventions? Is our market intelligence focused on existing competitors?

Now lets turn to helping innovation. Again, there are questions that directors should relate to their board and their company: Do we invite challenge and promote freedom of thought? Do we encourage diversity? Are we willing to reassess, reinvent and write off past investments and replace them with better alternatives? Is the company willing to collaborate with entrepreneurial staff and set up new ventures with them? Are we scanning the business and market environment for new possibilities and new competitors?

There are many areas in which the attitudes, instincts and perspectives of board members and other business leaders can either constrain people or liberate them. There may be various occasions on which their judgements or a combination of factors can either hinder or help the companies for which they are responsible to survive and thrive. Courage may be required to challenge cherished beliefs, disturb a valued position or equilibrium or otherwise take a big step into the unknown.

Many of the most pressing challenges that face certain companies and mankind are unlikely to be addressed by incremental improvements to existing activities and excellence in the performance of them. More imaginative and innovative responses are required and a key function of leadership is to encourage and support the free enquiry and creativity that will enable them to occur. Leadership is often associated with activities such as giving a lead, judging and selecting, yet creative thinking
may be best enabled by standing back, inviting challenge and encouraging diversity and debate. Tolerating risk, well intentioned failure and uncertainty, providing reassurance when imaginative exploration fails to bear fruit and avoiding a blame culture can also help (Klein & Knight, 2005).

Freedom and Diversity
Can a board’s concern with areas such as efficiency and sustainability coexist with a desire for greater creativity and increasing engagement on an emotional level with individual customers? Does the functional focus of design need to be accompanied by more artistic approaches. Should a company’s offerings be regarded as works of art and developed to engage at a more profound level and reflect the individual and local cultures and identities (Davis and McIntosh, 2005)? What would this involve in terms of how people are selected, supported and managed or self-managed?

Does greater diversity and inclusion encourage creativity, innovation and transformational thinking (Tyner, 2016)? For organisations whose people and customers embrace a variety of cultures, nationalities, religions, situations, requirements and aspirations, successful organic evolution, growth and development can depend upon a multitude of local decisions and interactions. Where central decisions have to be taken, these may be best addressed by a relevant committee or, where appropriate, a board rather than by a CEO or individual members of a senior management team.

In competitive and dynamic situations and where windows of opportunity may be limited, quick and front-line responses may be required. Those responsible need to be able to easily access the help they need and increasingly this needs to be available on a 24/7 basis (Coulson-Thomas, 2012 a & b, 2013). Support requirements and what might enable people to be more effective can sometimes be best determined by front-line work groups. Those who are allocating resources need to ensure that people directly involved are aware of available alternatives and that the most relevant and appropriate options are considered.

Business leaders should also consider whether they allow people to work and learn in whatever ways best suit their roles, tasks and projects? In The Future of the Organisation I set out ten essential freedoms for removing constraints and liberating people by allowing them to operate and collaborate in ways, at times and places, and with support that best allows individuals and teams to give of their best and be at their most creative and productive (Coulson-Thomas, 1997). When the conditions are right, people and relationships can flourish. A succession of practical and desirable outcomes can address particular problems and/or meet the requirements of individual customers. Leaders can focus on removing obstacles to creativity rather than determining individual outcomes.

Can “excellence” as it is widely adopted in terms of documented and enforced corporate-wide standard models and approaches be an obstacle to diversity, the creative exploration of alternatives and innovation? There are questions directors can ask to help people challenge norms, break free of dull uniformity, transcend traditional limitations and create new options and choices (Coulson-Thomas, 2001). Are we casting the net widely enough in our search for solutions when so many breakthroughs are caused by relative outsiders who challenge complacent orthodoxy (Kuhn, 1962)?

Importance of Focus and Balance
Both focus and balance are required if many companies are to remain relevant, vital and competitive. Leaders need to ensure that people focus upon what is important and, particularly, upon what is important for customers and prospects. Directors also need to strike the right balance in the boardroom. Excellence and innovation need to be appropriate, affordable and sustainable.

The need for striking an appropriate balance between excellence and being good enough has already been mentioned. However, there are many other areas in which a balance may have to be struck (Coulson-Thomas, 2001). Directors need to strike the right balance between thinking and doing, between short-term pressures and longer-term considerations, between change and continuity, and between risk and return. They may need to be either proactive or reactive depending upon circumstances and opportunities. Being too far to one end of a spectrum or dichotomy, for example, being excessively cautious or packing a board with those who are risk averse, can be a problem.

Innovation can be a particular challenge in an established business (Moore, 2004). Success and a record of achievement can breed arrogance and complacency. A board needs to get the right balance between entrepreneurship and stewardship. One cannot be reckless and just throw money and other resources at challenges and opportunities. At the same time innovation, renewal and transformation may involve uncertainty and risk. Encouragingly, there are ways of being both entrepreneurial and prudent. There are steps that can be taken to enable responsible innovation.

Enabling Responsible Innovation
A family of research reports set out quicker, more affordable and less disruptive ways of simultaneously achieving multiple objectives (Coulson-Thomas, 2012a & b, 2013). The evidence presented shows how appropriate performance support can help ordinary people to excel at activities that are crucial for corporate success such as winning bids, building customer relationships, pricing and purchasing, and creating and exploiting know-how. Members of key work groups and customers can be supported directly in personalised ways and enabled to tackle problems, develop solutions and address their individual requirements as and when required 24/7. This can include when they are on the move via mobile devices.

People vary greatly in terms of their preferences for working and learning. Performance support can enable people to work and learn and produce, co-create and buy at times and places that best enable them to harness their talents and maximise their contributions. Both enablers and checks can be built into performance support that make it very easy for people to do what is desirable and appropriate and very difficult for them to do things that might be undesirable or harmful and which would breach a law, regulation, policy, guidelinne or code. They can be set free to network, collaborate, explore, create and responsibly innovate. They can be allowed to try things themselves that have previously been done by others.

To derive the full benefits of approaches such as performance support, the focus of many business leaders, directors and boards may have to change. The emphasis may need to shift from top-down directing, motivating and control to supporting people, particularly those in front-line and key work groups and helping them to excel at the things that matter most (Coulson-Thomas, 2012a & b, 2013). There are practical ways of enabling average performers to adopt and share the approaches of super-stars, and cost-effective means of helping people to quickly confront new challenges and seize opportunities. Excellence where it counts and responsible innovation are achievable.

Directors and boards face choices. They can plough ahead and wrestle with the various expensive, time consuming, single issue and corporate-wide initiatives that are found in many companies today. Alternatively, they can adopt quicker and simpler ways of helping people to simultaneously deliver multiple outcomes that benefit them, employing and supplying organisations, customers and the environment (Coulson-Thomas, 2007). There are other stakeholders who might also benefit from the new options and choices that people could provide if they were set them free to innovate responsibly. The issue is whether corporate leaders will provide the greater focus and shift of emphasis that is required, and ensure people have the performance support they need and deserve.

Innovation, Business Models and the Board
Should the focus of business leaders be upon creating a culture of excellence and innovation and/or providing the conditions and performance support for people from a diversity of backgrounds and cultures to excel where is matters? How does one encourage, unleash and support innovation across an organisation and its value chain, and ensure there are synergies between strategy, innovation and entrepreneurship? Do board agendas, corporate priorities and approaches to management, leadership and governance need to make more explicit reference to innovation and the stimulation, enabling and harnessing of creativity? Innovation is the result of creativity that leads to something that is adopted and which can hopefully be monetized. It is a result and creativity is the cause.

In relation to ensuring survival and growth a board should pay particular attention to a company’s business model (Coulson-Thomas, 2016b). How should directors and corporate leaders set about building more innovative, entrepreneurial and sustainable business models? What are the governance implications? How might one achieve more innovation and entrepreneurship in governance itself, including in terms of relating it to the situation, requirements and stage of development of particular enterprises? What might approaches to corporate governance better reflect the changing nature of organizations and the contemporary business environment?

Different business, organisational, operating and internationalisation models, from network organisations to e-business options, have existed for many years (Coulson-Thomas, 1992a & b). Boards need to ensure that an enterprise’s business model or models match corporate and customer aspirations and represent the quickest and most flexible and cost-effective way of responding to opportunities and delivering value. Directors should question whether existing models are competitive and likely to remain so, and if they are the most appropriate in the context of the markets a company is in and its circumstances.

An existing business model should not be taken for granted. In certain sectors, alternative models not only exist, but they can offer significant advantages such better ways of addressing customer requirements, a faster route to international expansion and new avenues for the creation of customer value. Directors need to both understand and question existing business models and decide when to improve or refresh them and/or when to move on to a more appropriate alternative.

The UK’s Companies Act (2006) requires a description of a company’s business model and strategy as part of the Strategic Report within it’s Annual Report. The Financial Reporting Council’s UK corporate governance code describes the required business model as “an explanation of the basis on which the company generates or preserves value over the longer term” (FRC, 2014). To report on a company’s business model directors need to understand it and should be prepared to question and discuss whether an existing model is appropriate and adequate and whether better models exist.

Having just invested heavily in an existing way of operating a board may finding itself presented with an alternative business model which offers significant advantages for the customer. Where the suggestion originates from within a board might be tempted to delay, but this course of action might result in a competitor or new player acting more quickly to secure first mover advantage. Sometimes directors need to be courageous and proactive when engaging in the creative destruction economist Joseph Schumpeter (1942) describes in his book Capitalism, Socialism and Democracy.

Business Model Decisions
As connectivity continues to improve, relative costs change and further innovations occur in communications, manufacturing, retailing, distribution, funding and other areas, questions and issues relating to business models may appear with greater frequency on board agendas. How and when and in what ways should a board address them? Should a company fight back through an existing business model or embrace a new one? Airlines faced this dilemma when confronted with “no frills” or budget rivals such as Southwest Airlines that had introduced a new business model (Porter, 1996). Established carriers looked for new ways of segmenting the market and differentiating their more expensive offerings. Some set up their own budget operations.

With multiple technological changes and other innovations creating new possibilities as well as threats there is a need for the continual upgrading of business models (Chatuverdi, 2016). Where an alternative business model or way of operating is materially different from what currently exists, should one try to adapt an existing organisation and its people, or would it be better to set up a new greenfield or start-up operation and/or offer the new model through a new business unit or legal entity? This was the issue faced by many financial institutions in relation to internet banking. Should one offer additional on-line and/or mobile device access options to existing customers and otherwise continue to operate an existing structure, or would it be better to establish a new and dedicated unit or entity that would just offer internet banking facilities?

As already mentioned, an internet retailer may not require expensive high street stores or local branches if people are willing to buy an offering on-line and without physically examining it or having a face-to-face conversation about it. A lower cost structure may enable an internet offer to be made at a reduced price. Book shops have had to re-think their offering to customers in order to compete with on-line stores and the special offers on high volume titles of other retailers. Some music stores have struggled for survival in an era when music can be downloaded. One response is higher margin items such as the more sophisticated headsets occupying additional store shelf space.

As some consumers switch from one business model to another, while others remain loyal to existing channels, a company that decides to offer multiple ways of purchasing its offerings may find its cost structure increasing more rapidly than its income. Publishers were faced with the dilemma of whether or not to fund more than one distinct channel to market when some of their consumers expressed a preference for an electronic alternative to traditional print media. Many customers now expect to be offered multiple options for receiving content, including when on the move via mobile devices.

Business Model Life Cycles
Just as sales teams may need to monitor where various offerings are in the life cycles of key products and services within a corporate portfolio, so directors should keep an eye on business model life cycles and remain alert to new and alternative models. As with product life cycles, innovation can sharply reduce expectations of a relatively long plateau stage and slow decline phase. The speeding up or termination of life cycles can be challenging for bureaucratic organisations with high crawl out costs. A company’s ability to restructure, redesign processes and adopt new technology may be inadequate and too slow to keep pace with shorter business model life cycles and windows of opportunity, changing customer requirements and competitive moves.

Sometimes it is new entrants and entrepreneurs with less invested in the past and current operations who are the first to introduce a new business model. Gulf Islamic Investments has changed its business model three times since the business was set up in 2008 (Gupta, 2016). In far too many companies competitive intelligence is focused upon developments and likely moves involving established competitors and improvements of an existing business model. Too little attention is paid to scanning the external environment for possible new entrants and alternative ways of operating. The innovation that turns corporate assets and strengths into liabilities and crawl out costs may be triggered by a new player with a very different and more cost-effective and flexible business model.

Companies whose senior management keep close to their most alert and demanding customers and their more open-minded and imaginative employees may be among the first to detect opportunities for changing a business model or introducing a new one. Smart companies work with customers and supply chain partners to identify and implement business model improvements and/or innovations (Bartram, 1996). Where there is a risk of creative employees leaving to set up their own operation based upon a new business model and thus becoming competitors, a company could consider working with them and sharing an equity stake in a new collaborative venture.

Some directors are reluctant to challenge established assumptions and abandon what has worked well in the past (Moore, 2004). They resist turning their backs on expensively acquired capabilities that have been a source of competitive advantage. If better alternatives are available past expenditures should be viewed as sunk costs. In fast moving environments it may be better to think in terms of incremental costs and revenues. On occasion, one may be forced to react to change. As key customers transition to new business models, suppliers may need to follow suit if they are to maintain a business relationship.

Accommodating Different Business Models
An aggregation of different fourth industrial revolution technologies can change how we do business (Bhushan, 2016). Sometimes technological changes and other innovations create a variety of new possibilities. A company that is reacting to the adoption of new business models by strategic and key customers may find that they are moving in different directions. A senior management team that is proactive in monitoring developments and exploring different business models may find that any single alternative model may not be the best solution for all business units, all markets or all areas of corporate operations. A board may feel that at some point it might be advantageous, advisable and possibly necessary to operate through a portfolio of business models.

Alternative business models can have very different support requirements. Existing people and capabilities may be more suited to certain models and less relevant for others. Some models may coexist and share facilities more readily than others. Decisions may need to be taken as to whether a company should develop new capabilities or subcontract an aspect or area of operations to an external supplier, or whether it should pursue an option alone or in collaboration with others who have complementary capabilities that are particularly suited to the operation of a new model.

Depending upon their nature and/or support requirements it might be necessary for a company to organise by business model rather than by market and/or type of offering. As a result, more organisation charts and diagrams may become three dimensional matrices. These new structures may pose management challenges for those who are not used to shared and parallel responsibilities. Choices may have to be made, for example whether or not to establish a separate division or entity for on-line sales, whether or not this should have its own fulfilment arrangements, and whether or not these should be in-house or contracted out.

Governance and Relationship Implications
The adoption of a new business model can give rise to governance, management and relationship issues (Coulson-Thomas, 2016b, Chaturvedi, 2016). Few if any of the existing directors and senior management team may have experience of operating one or more new business models. How one plans, monitors and controls different business models and the risks involved can vary according to their characteristics and the situation and context. Are there common elements and/or is a new approach to governance required?

In competitive markets the transition to a new business model may need to take place more quickly than a board can be refreshed. Where multiple new models have to be adopted to serve different key customers, customer groups move in different directions, or requirements differ across business units, it may not be possible to recruit directors with experience of how to direct and control them. Do new roles and responsibilities need to be delegated to a new and refreshed management team? Does the role of a head office need to be re-thought in relation to a new business model, or, in the case of a larger and more complex business, a portfolio of new business models?

A new business model may create diversification opportunities. What other products and services might it be be suitable for? Might it reach and allow access to further communities of customers and users? Are there new and additional roles that a company could play within a supply chain, or in the changing business models of major customers or business partners? Might collaboration with supply chain partners make it easier to adopt a new business model? A change of business model can impact upon some people, organisations and relationships more than others. One may need to take steps to understand and address resistance to change (Ford and Ford, 2009).

Leadership Implications of New Business Models
Anurag Bhushan (2016) believes innovation is the number one criterion that will define leadership. Hitherto many business leaders have spent much of their time instructing, guiding, monitoring and controlling subordinates, yet in many contemporary models of organisations there are far fewer people to command. In some contemporary business models is it a heretical thought to suggest that in comparison with developers of essential algorithms, apps and automated responses most employees are not that important? If a professional resigns, can one recruit another, or use an expert system, particularly if approaches, rules and case histories are well documented (Kaplan, 2015)?

As and when companies and their customers, suppliers or business partners change a business model, alert and responsible business leaders consider the possible impacts upon other parties. Will different business models still be compatible? What new challenges and opportunities will or might be created? Which of a company’s capabilities will be more or less relevant? What might the company be able to do differently? What additional capabilities and relationships will be required?

Is corporate leadership becoming less about the executive team and internal employees, and more about new possibilities, external interests, developments and trends, and relationships with key customers, strategically important user groups, institutional investors and regulators? Is it more about engaging, listening and understanding before responding and contributing to the co-creation of value? When appointing leaders, should one select those who are open to new business models and new options for organising, operating, working and learning, and best able to select the options that enable new challenges and opportunities to be addressed as and when they emerge?

Note
This article draws upon a speech delivered by Prof. Colin Coulson-Thomas in the Ball Room of The Meydan, Dubai, UAE during plenary session III on Tuesday 19th April, the first day of the Dubai Global Convention 2016 and 26th World Congress on Leadership for Business Excellence & Innovation organised by India’s Institute of Directors, and a theme paper he prepared for the event.

References
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Bhushan, Anurag (2016), Speech to 26th World Congress on Leadership for Business Excellence & Innovation, Ball Room, Hotel The Meydan, Dubai, UAE, Wednesday, 20th April

Chaturvedi, Pradeep (2016), Digitization, Innovation and Changing Role of Value Creating Board, in Ahluwalia, J S (Editor), Empowering Boards to become instruments of Innovation & Excellence, New Delhi, IOD Publishing, April, pp 36-42

Companies Act 2006 [UK] (2006), Chapter 46, Section 414C(8) (a) and (b)

Coulson-Thomas, C (1992a), Creating the Global Company, Successful Internationalisation, London, McGraw-Hill

Coulson-Thomas, C (1992b), Transforming the Company, Bridging the Gap between Management Myth & Corporate Reality, London, Kogan Page

Coulson-Thomas, Colin (1997), The Future of the Organisation, Achieving Excellence through Business Transformation, London, Kogan Page

Coulson-Thomas, Colin (2001), Shaping Things to Come, strategies for creating alternative enterprises, Dublin, Blackhall Publishing

Coulson-Thomas, C (2007), Winning Companies; Winning People, Making it easy for average performers to adopt winning behaviours, Peterborough, Policy Publications

Coulson-Thomas, Colin (2012a), Talent Management 2: A quicker and more cost effective route to the high performance organisation, Peterborough, Policy Publications

Coulson-Thomas, Colin (2012b), Transforming Public Services: A quicker and more affordable route to high performance public organisations, Peterborough, Policy Publications

Coulson-Thomas, Colin (2013), Transforming Knowledge Management:A quicker and more affordable route to high performance organisations, Peterborough, Policy Publications

Coulson-Thomas, Colin (2016a), Corporate Leadership and Start-up Entrepreneurship, Effective Executive (A quarterly Journal of IUP), Vol. XIX, No. 1, March, pp 7-18

Coulson-Thomas, Colin (2016b), Innovation, New Business Models and the Board, Director Today, Vol. II Issue IV, April, pp 7-11

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Filson, D. (2002), Product and process innovations in the life cycle of an industry, Journal of
Economic Behavior & Organization Vol. 49 (1), pp. 97-112

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FitzGerald, Paddy (2000), Effective Purchasing, the Critical Success Factors, Bedford, Policy Publications

Ford J. and Ford L. (2009), Decoding Resistance to Change, Harvard Business Review, Vol. 87 No. 4 , pp 99-103

Gupta, Pankaj (2016), Speech to 26th World Congress on Leadership for Business Excellence & Innovation, Ball Room, Hotel The Meydan, Dubai, UAE, Wednesday, 20th April

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Kaplan, Jerry (2015), Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence, New Haven, Conn., Yale University Press

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Kuhn, Thomas S. (1962), The Structure of Scientific Revolutions, Chicago, IL., University of Chicago Press

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Harvard Business Review 82 (7-8), pp. 86-92, 187

Peters, Tom and Waterman, Robert H. (1982), In Search of Excellence: Lessons from Americas Best Run Companies, New York, HarperCollins

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Tyner, Artika R (2016), Transforming Public Spaces: The Value-added of Diversity and Inclusion, huffingtonpost.com [http://www.huffingtonpost.com/dr-artika-r-tyner/the-value-added-of-diversity-and-inclusion_b_9032118.html], 21st January

First Publication
Published in the June 2016 issue of Effective Executive (Vol. XIX, No. 2, June, pp 9-21) a quarterly journal published by IUP Publications, a division of ICFAI. The citation is:
Coulson-Thomas, Colin (2016), Corporate Leadership, Business Innovation and Growth, Effective Executive, Vol. XIX No.2, June, pp 9-21

Author
Prof. Colin Coulson-Thomas has helped entrepreneurs, companies and public and professional bodies in over 40 countries to harness more of the potential of directors, boards, management teams and corporate organisations in order to build a business, improve performance and simultaneously deliver multiple objectives. He is Director-General, IOD India, UK and Europe Operations, holds a portfolio of board and academic appointments, and leads the International Governance Initiative of the Order of St Lazarus. He is currently also Chancellor of the School for the Creative Arts, a member of the advisory board of Bridges of Sports and chair of the Audit and Risk Committee of United Learning which is the UK’s largest operator of academies and independent schools. Colin has served on public sector boards at national, regional and local level. Author of over 60 books and reports he has held professorial appointments in Europe, North and South America, Africa, the Middle East, India and China. He was educated at the London School of Economics, the London Business School, UNISA and the Universities of Aston, Chicago and Southern California. A fellow of seven chartered bodies he secured first place prizes in the final examinations of three professions. His latest books and reports are available from www.policypublications.com.

Leadership, Excellence and Innovation

Prof. Colin Coulson-Thomas
There is an extensive literature on the qualities one needs to be an effective leader, but isn’t effectiveness in the boardroom more about what directors do, how they cope with challenges and address opportunities and the quality of their decisions? Isn’t their contribution and impact and where they are going more important than the sort of people they are and where they have come from? Isn’t it possible for individuals with a wide range of personal qualities and personality types to be successful leaders if they do the right things in the situation they are in?

While certain qualities such as integrity may underpin all that a board does, other attributes may or may not be relevant, appropriate or desirable depending upon the situation and context? When inappropriate they can alienate people, divide people and create rivalries between people. Is too much emphasis also sometimes put upon leadership potential. Without motivation it may remain latent and unrealised. Potential also needs to be appropriate and relevant to an opportunity.

The focus is often upon leaders rather than followers. How many young and ambitious people harbour dreams of becoming followers or look for books and courses on how to be a good follower? Potential leaders are encouraged to focus on their own development rather than upon developing others. Courses and coaching often emphasise how to motivate, monitor and inspire others rather than how to listen, help and support or engage, share and build relationships.
Excellence and the Board
What sort of leadership should the board provide in relation to business excellence and areas such as innovation, human capital development and the digital economy? Such issues are to be explored at the 2016 Dubai Global Convention on Leadership for Business Excellence and Innovation being organised by the Institute of Directors. It will provide an opportunity to consider what excellence and innovation mean in today’s business environment and in relation to a board’s own performance?

How should we assess excellence? Should it be against a standard model, or against the issues, challenges and opportunities facing our organizations and how we respond? Can one have a culture of excellence? For companies whose people and customers embrace a variety of nationalities, religions, situations, requirements and aspirations, successful organic evolution, growth and development can depend upon a multitude of local cultures, decisions and interactions.

A board needs to provide balance and focus. Should we aim to excel at everything, or just excel at the critical success factors for competing and winning, while being “good enough” elsewhere? Will customers pay for us to be excellent in areas that do not directly affect them? Are relevance and affordability more important than “excellence”?

Innovation and the Board
Some boards talk in general terms about creating a culture of excellence and innovation, rather than provide the conditions and support for people from a diversity of backgrounds and cultures to excel where is matters. How does one encourage, unleash and support innovation across an organisation and its value chain, and ensure there are synergies between strategy, entrepreneurship and innovation? How might a responsible business make innovation work for society?

How can directors and business leaders build more innovative, entrepreneurial and sustainable business models? What are the governance implications? How might they be more innovative and entrepreneurial in governance itself, including when relating it to the situation, requirements and stage of development of particular enterprises? What approaches might better reflect the changing nature of organizations and the contemporary business environment?

Do board agendas, corporate priorities and approaches to management, leadership and governance need to make more explicit reference to creativity and the stimulation, enabling and harnessing of creativity? Innovation is the result of creativity that leads to something that is adopted and which can be subsequently monetized. It is a result and creativity is the cause.

Leadership, Creativity and Innovation
Many pressing challenges facing companies and mankind may not be addressed by incremental improvements to existing activities. More imaginative and innovative responses may be required. Can contemporary leaders encourage and support the free enquiry and creativity that will enable them to occur. Leadership is often associated with taking decisions, yet creative thinking may thrive best where leaders stand back, invite challenge and encourage diversity and debate.

In my 1997 book The Future of the Organisation I set out ten essential freedoms for liberating people by allowing them to work, learn and collaborate in ways and at times and places that allow them to be at their most creative and productive. When the conditions are right for the people and relationships involved they can flourish. A succession of practical and desirable outcomes may emerge that address particular problems and/or meet customer requirements. A leader might need to focus on removing obstacles to the creative process rather than determining individual outcomes.

In competitive and dynamic situations, quick and front-line responses may be required. Those responsible need to be able to easily access the help they need and increasingly this has to be available on a 24/7 basis. Support requirements can sometimes be best determined by those in the front-line. Directors must ensure those involved are aware of available alternatives and the most relevant and appropriate options are considered.

Leadership and Human Capital
Human capital is a major concern of chief executive officers. Boards need to ensure their companies have the human, financial and technological resources to achieve corporate visions and goals. Many boards also face challenges such as achieving greater diversity and raising productivity, while teamwork and group dynamics can be an issue at all levels across an organisation.

Leaders are expected to maximise the value of human capital and derive as much benefit as they can from people for whom they are responsible. Selection committees expect candidates for leadership roles have “people skills” and a “people orientation”. However, can one over invest in human capital as opposed to technology or moving activities on-line and be too people oriented? What is the role of human capital in the face of artificial intelligence (AI) and robotic revolutions?

Humans can be expensive and variable in their performance. They are not always reliable and motivated. Are there better alternatives? Some HR professionals are so preoccupied with recruitment, employment and disciplinary issues that they have little time to consider the interface of people and technology and trade-offs between them. Is a combination of people and technology the key to increasing productivity and operational excellence?

The Need for Leadership
Approaches to leadership sometimes appear to assume that people are apathetic, disinterested and bored, don’t know what they are doing or why, and just waiting for a leader to come along who will breath life, purpose and motivation into them. Is this an accurate portrayal of life in organizations today? What do some approaches to leadership tell us about the respect we have for others?

Have boards failed to provide strategic direction? Are talented people waiting for leaders to show them the light? Are they so empty or misguided that they need an employer to provide them with a corporate culture and a set of values? In reality, while some individuals lack inward direction and not all corporate visions, missions and goals may have been properly communicated, many people are competent and responsible. They know what they are about. They may have joined a company because they support its endeavours and want it to succeed.

Confident, responsible and talented people may understand the purpose of an organisation and the situation they are in. They may be prepared to take ownership of issues and may have the competence to address them. Can self-managed work groups and trusted teams who are close to customers and know their requirements be left to get on with it? At what point does inappropriate management and leadership become unnecessary interference, a distraction and counter-productive?

The Digital Economy
Just as some silent film stars failed to survive the introduction of sound, not all leaders may adapt to the requirements for success in the digital economy. Are these requirements sufficiently stressed in leadership development courses? Are business excellence and other models too preoccupied with people considerations? Boards need to ensure that people are enabled to adopt, integrate and benefit from greater connectivity, big data and knowledge and information management systems.

Affordable digital technologies are rapidly evolving. Many of their applications have the potential to be disruptive and terminal for unaware or disinterested laggards. Developments in areas ranging from design tools to gamification have implications for innovation and the development, launch and support of new products and services and relationships with customers, business partners and users. What will their implications be for leadership, organization and governance?

The nature of work and organisations continue to evolve. As technological developments, automation and expert systems replace people with intelligent apps, robots and drones, and accessible and low-cost on-line services, more leaders may find themselves presiding over options, systems and processes rather than people. What will this mean for leadership roles, how people should prepare for them and the qualities that those appointing them will seek?

Addressing Sectoral and Contextual Issues
Directors also need to be aware of sectoral issues. Applications of technology to enhance agility, improve productivity, drive performance, support innovation and mitigate and manage operational, strategic and governance risks can vary by sector. So can customer aspirations, requirements and expectations. Continuing awareness is needed as to what is considered excellent and innovative.

Some sectors face an uncertain future. For example, in relation to financial services will traditional banks and their branch networks continue to be relevant? In an era of crowd sourcing, AI and automated and on-line transactions, do we actually need banks as we know them today? Are regulatory and licensing practices preventing a revolution in banking?

Does traditional top-down leadership assume a bureaucratic organisation with a leader at its apex? How does it apply to virtual and network organisations where key relationships may be with collaborating peers and partner organisations rather than junior subordinates? What if the priority is coordination and people are in roles that do not enable them to issue instructions to others?

Learning from other Sectors and Markets
Early investigations of leadership explored what it meant in particular contexts, whether the leadership of military units or the leadership of business organisations. However, there are many other arenas in which leadership issues might arise. For example, what form of leadership is required in relation to vocational bodies and professional associations and firms? What does leadership mean within the creative industries?

Aspects of leadership can be handled differently, depending upon the context. In the world of higher education, key academic decisions can be taken by an academic board. Are there lessons here for companies operating in knowledge dependent arenas? Could business leaders looking for more democratic models of management and governance learn from the public and voluntary sectors?

For directors eager to learn from developments and innovations elsewhere, how relevant is European, North American and Middle Eastern experience for other parts of the world such as Asia and Africa? Listening in Dubai to case study presentations by winners of the Golden Peacock Awards for Business Excellence and Innovation is one way of learning from other sectors. Follow-up networking can allow participants to explore the transferability of insights gained.

Leadership and Entrepreneurship
What can be learned from entrepreneurs? How do traditional views of leadership relate to those who start a business without anyone to lead? Some people begin an enterprise journey with the support of family members, friends or business partners rather than dependent employees. Others who join them may risk their careers and put their trust in an early stage venture because they share a vision, see an opportunity or believe in a cause. These can also be reasons why certain people are attracted to larger and more established businesses.

In what areas and to what extent are owner-entrepreneurs different from those who have either advanced on merit, or used guile, cunning and political skills, to reach a leadership position at the top of a large and bureaucratic organisation? Does it make sense to call start-up entrepreneurs “leaders”? Is there a separate category of “entrepreneurial leader”? Do leaders of established businesses need to become more entrepreneurial and compelling to attract the talent they need?

Compared with founder entrepreneurs whose influence might be as visible as muddy finger prints all over an enterprise, how does one assess the contribution of other people in leadership positions when corporate performance may be the aggregation of many other contributions. Paradoxically the effective leader whose leadership style helps, builds and supports others and encourages them to take ownership may be less visible than headline grabbing peers.

Shared and Collective Leadership
Some leaders do not inspire people, support them or enable them to excel. They centralise, constrain and consolidate. How can boards prevent too much power accruing to a determined individual who may be confident and energetic, but possibly also incompetent, deluded, mistaken, naïve or out of his or her depth? How can a board reclaim power from a strong CEO?

To avoid the dictatorship of a strong-willed and charismatic CEO one may need to strengthen the remits and powers of other executive directors, as well as ensuring that a board has a suitable and effective contingent of independent directors whose first duty is to the best long-term interests of a company. Boards can play a vital role in ensuring that checks and balances are in place to prevent an excessive concentration of power and ensure there is collective leadership.

Some leaders struggle. The demands of leadership roles can be onerous and they may be difficult to fill. Offering more money to possible candidates may not be the answer. Might some form of shared leadership allow complementary people to collectively cover different aspects of what needs to be done? Might a shared role better accommodate family responsibilities and work-life balance needs?

Changing Leadership Requirements
In addition to providing strategic leadership and good governance, directors should assess the nature and exercise of leadership across an organisation. Established companies may need entrepreneurs to help them to quickly adapt and evolve and remain relevant. In the digital economy start-up companies can grow quickly. Those who have wrestled with the problems of corporate bureaucracy may know how to avoid them. Those who have succeeded at renewal and re-invention may speak a language that an entrepreneur could understand.

In future more leaders may move between established and newer businesses where the priority is to articulate a vision or cause and/or operate more sustainably in order to reach and engage others. Innovation is required in terms of how we think about leadership and the nature of leadership that is required in relation to the changing nature of work, organisation, learning and entrepreneurship.

First Publication
Published in the March 2016 issue of Director Today (Vol. II, Issue III, March, pp 33-37) a monthly journal published by India’s Institute of Directors (www.iodglobal.com). The citation is:
Coulson-Thomas, Colin (2016), Leadership Excellence and Innovation, Director Today, Vol. II Issue III, March, pp 33-37

Author
Prof. Colin Coulson-Thomas, Director-General, UK and Europe of IOD India and Chancellor and a Professorial Fellow at the School for the Creative Arts, holds a portfolio of public and private sector board level appointments.

Leadership, Innovation and Business Growth

Prof. Colin Coulson-Thomas
Addressing the challenges and opportunities facing many companies requires more imaginative and innovative responses than incremental improvement. Business leaders need to encourage and support free enquiry and creativity. While leadership is often associated with top-down initiation, creative thinking may be best enabled by standing back, inviting challenge, encouraging diversity and debate, and removing obstacles rather than determining individual outcomes.

Some enterprises are the brainchild of a founding entrepreneur, who then assembles a team with the qualities needed to commercialise, protect and further exploit it. When founders retire future growth and development can depend upon a multitude of local decisions and interactions. What questions should directors raise to ensure leadership and innovation are relevant and appropriate?
Innovation and Business Growth
Many people lead businesses which they did not create. They may have had little contact with founder entrepreneurs. In competitive markets their challenges might appear to be survival and defending established market positions against competitors and new entrants. The immediate priorities sometimes seem to be cost-cutting, retrenchment, improving efficiency and the renewal and/or transformation of an existing entity rather than the development of a new business model.

The need for product and/or service innovation may be accepted, but what about innovation in ways of operating, working, learning or doing business? Past growth may have seemed relatively steady but today windows of opportunity can quickly open and close. Many companies experience discontinuities. They hit steps that cause a reassessment of business models and approaches and/or have periods of exponential growth followed by rapid decline. Staying in the game may require repeated innovation in terms of offerings, markets and operating models.

Creativity and Innovation
In competitive sectors continual reassessment, renewal and reinvention may be needed. The alertness, creativity, flexibility and openness, sensitivity and perspective this requires cannot be assumed. Corporate leaders may need to provide people with the freedom to alter how they operate and organise and question and challenge assumptions. They should be allowed to work, learn and collaborate in ways, at times and places, and with support that best allows them to give of their best and be creative and productive (Coulson-Thomas, 1997).

Where more than incremental adjustment is required, corporate leaders and their teams should look for opportunities to create new options and choices and develop alternative enterprises (Coulson-Thomas, 2001). They should always be alert to better ways of meeting requirements, satisfying aspirations and enabling others to achieve their visions. When diminishing returns set in, what appears to be a big step may be easier to achieve than squeezing more out of current operations.

Can greater diversity encourage creativity, innovation and transformational thinking? At the Palo Alto Research Centre of Xerox Corporation in the 1980s it was found that introducing into research groups degree majors from disciplines that approached problems differently increased creativity. The experience of PARC also suggests that creativity in a research setting needs to be matched by receptiveness to innovation among corporate decision makers if ideas are to be commercialised.

Different business, organisational and operating models have existed for many years. Boards need to ensure that business models match corporate and customer aspirations and represent the quickest and most flexible and cost-effective way of responding to opportunities and delivering value. Directors should question whether existing models are competitive and likely to remain so, and if they are the most appropriate in the context of the markets a company is in and its circumstances.

Innovation in What and for Whom?
Whether or not innovation is a “good thing” or a distraction depends upon what you are trying to be innovative in, or innovative at. For example, are you trying to perfect existing operations? What if tastes and requirements are changing, and if the innovation of others is creating new alternatives that people might prefer? When does improvement become unnecessary gold plating? Rather than improvement, should you be replacing what you are doing with something better?

Be prepared to challenge and focus. Are you and your colleagues trying to be outstanding at everything you do? If so, why should customers pay for this? Most customers just want their suppliers to be excellent at whatever represents value for them. Should businesses just aim to excel at critical success factors for key corporate activities and sources of differentiation and competitive advantage, and try to be good enough at everything else?

Hindering or Helping Innovation
In some sectors, the life cycles of requirements, offerings, technologies and markets have dramatically shortened. One needs to understand the interaction between them and relate innovation to the life cycle of an industry (Filson, 2002). Will there be time to be anything other than just good enough to be relevant and quickly deliver while windows of opportunity exist between revolutions?

Are you hindering or helping creativity and innovation? Lets start with some questions relating to hindering innovation. Think about them in relation to your board and/or company: Is your strategy overly defensive? Do you try to protect past investments? Do you instinctively impose standard approaches and ways of working? Are you constrained by accounting conventions? Is your market intelligence focused on existing competitors?

Now lets turn to helping innovation. Do you invite challenge, promote freedom of thought and encourage diversity? Are you willing to reassess, reinvent and write off past investments and replace them with better alternatives? Does the company collaborate and set up new ventures with entrepreneurial staff? Does it scan the business environment for new possibilities and competitors?

The attitudes, instincts and perspectives of business leaders can either constrain people or liberate them, and their judgments can either hinder or help the companies for which they are responsible to survive and thrive. Courage may be required to challenge cherished beliefs, disturb a valued position or otherwise take a big step into the unknown.

Innovation and a Company’s Business Model
There may be better ways of addressing customer requirements, a faster route to international expansion and new avenues for the creation of customer value. Directors should understand and question existing business models and decide when to refresh them and/or move on to a different one. Could the business community learn from the creative arts? Despite agreed musical rules and standard practices, interpretation is possible. In jazz, improvisation and creativity may be actively encouraged (Barrett, 1998). Might business improvisation allow personalised responses?

Innovation in retailing is relentless. High streets have had to discover a new purpose or die as customers desert specialist shops in favour of edge-of-town supermarkets whose markets have in turn been eroded by discount retailers and on-line shopping. Fulfilment of sales not already won by players such as Amazon may now be outsourced to them. Owners of many physical shops search for alternative uses of their premises. On occasion, assets can quickly become liabilities.

Some internet entrepreneurs operate from home, or a mobile device in a back pack as they travel to the next wireless hot spot to update their websites and check for sales and outstanding orders. Many on-line businesses are operated by small teams and have a modest physical footprint. WhatsApp employed only 55 people in 2014 when Facebook paid some $19 billion to acquire it.

Directors and Business Models
The UK’s Companies Act 2006 requires a description of a company’s business model and strategy within it’s Annual Report. The Financial Reporting Council’s corporate governance code describes the required business model as “an explanation of the basis on which the company generates or preserves value over the longer term” and reiterates that it needs to be reported along with the strategy for delivering the company’s objectives (FRC, 2014).

To describe a business model directors need first to understand it. When considering if it is appropriate and whether better models exist, they may experience some tension between generating and preserving value, but the clue as to what a response should be lies in the words “over the longer term”. Preserving value does not necessarily mean protecting an existing model. Remaining relevant and continuing as a valued supplier may require a succession of models over time.

Having just invested in an existing business model, a board could find itself presented with an alternative that offers significant advantages for the customer. Delaying a response might result in a competitor or new player acting quickly to secure first mover advantage. Sometimes directors need to be courageous and proactive when innovating and engage in the “creative destruction” Joseph Schumpeter described in his 1942 book Capitalism, Socialism and Democracy.

How does one encourage creative discussion across a network of communities that may be diverse in nationality, religion and political views? Some groups are relatively open, while others are more closed. In some countries, circles and communities, challenging a prevailing view, orthodoxy or established assumption might cause offence. One may need to actively ensure freedom of enquiry where conformity is, or is becoming, the norm (Williams, 2016).

Business Model Decisions
As connectivity continues to improve, relative costs change and further innovations occur, how and when and in what ways should business leaders respond? Should a company fight back through an existing business model or embrace a new one? Airlines faced this dilemma when confronted with “no frills” or budget rivals. Established carriers looked for new ways of segmenting the market and differentiating their more expensive offerings. Some set up their own budget operations.

Where a new way of operating is materially different from a currently model, should one try to adapt it, or would it be better to set up a greenfield operation and offer it through a new business unit or legal entity? Many financial institutions faced this issue in relation to internet banking. Should one offer on-line and/or mobile device access to customers via an existing structure, or establish a dedicated entity that would just offer internet banking facilities?

People may be willing to buy or transact on-line without visiting a physical location or a face-to-face meeting. Lower cost structures can enable internet offers to be made at reduced prices. Book shops have had to re-think their offer to customers to compete with on-line stores and the special offers on high volume titles of other retailers. Some music stores have struggled for survival as more music is downloaded. One response is to devote extra shelf space to higher margin headsets.

As some consumers switch to a new business model, while others remain loyal to existing channels, a company may incur the higher costs of multiple ways of purchasing its offerings. Publishers faced the dilemma of whether or not to fund multiple channels to market as more people sought electronic alternatives to print media. Many customers now expect multiple options for receiving content, including when on the move via mobile devices.

Some innovations can have a drastic impact upon existing activities, roles and relationships. People may be concerned about the consequences of their decisions for others and their future prospects. Tolerating risk, well intentioned failure and uncertainty; providing reassurance when imaginative exploration fails to bear fruit; and avoiding a blame culture can all help (Klein & Knight, 2005).

Business Model Life Cycles
Just as sales teams monitor the life cycles of key products and services, so directors should keep an eye on business model life cycles and remain alert to alternatives. As with products, innovation can sharply reduce expectations of a relatively long plateau stage and slow decline phase. As the life-time of a generation of technology shortens, one may need to move on before laggards catch up and launch a succession of new options for early adopters (Rogers, 1983).

The speeding up or termination of life cycles can be challenging for bureaucratic organisations with high crawl out costs. A company’s ability to restructure, redesign processes and adopt new technology may not keep pace with shorter business model life cycles and windows of opportunity, changing customer requirements and competitive moves.

New entrants and entrepreneurs with less invested in current operations may be more inclined to introduce a new business model. Too often competitive intelligence monitors established competitors and improvements to existing business models rather than scanning for new entrants and alternative ways of operating. The innovation that turns assets and strengths into liabilities and crawl-out costs may be triggered by a new player with a more effective and flexible business model.

Do you stay close to alert and demanding customers and open-minded and imaginative employees, and work with them and supply chain partners to identify and implement business model improvements and/or innovations? Where there is a risk of creative employees leaving to set up their own operation based upon a new business model and thus becoming competitors, a company should consider working with them and sharing an equity stake in new collaborative ventures.

On occasion, one may be forced to react to change. As key customers transition to new business models, suppliers may need to follow suit if they are to maintain a business relationship. Thought may also need to be given to how best to help others to adjust. The provision of support and successful adjustment may increase willingness to make further changes.

Accommodating Different Business Models
Sometimes technological changes and other innovations create a variety of possibilities. New business models of strategic and key customers may evolve in different directions. A single model may not be the best solution for all business units, markets or corporate operations. It might be advantageous, advisable and/or necessary to operate through a portfolio of business models. Will people accommodate the different perspectives and ways of looking at situations involved?

Alternative business models can have very different support requirements. Existing people, capabilities and facilities may be more suited to some models than others. Certain models may coexist more readily than others. Should a company develop new capabilities or subcontract to external suppliers? Should it pursue options alone or in collaboration with complementary partners? Should a separate entity be set up for on-line sales and fulfilment arrangements be contracted out?

A change of business model can impact upon some more than others. One may need to take steps to understand and address resistance to change (Ford and Ford, 2009). Some directors are reluctant to abandon what has worked well in the past. They resist turning their backs on expensively acquired capabilities that have been a source of competitive advantage. If better alternatives are available past expenditures should be viewed as sunk costs. In fast moving environments it may be better to think in terms of incremental costs and revenues.

Governance and Relationship Implications
The adoption of a new business model can give rise to governance, management and relationship issues. Few if any of the existing directors and senior management team may have experience of operating one or more new business models. How one manages different business models can vary according to their characteristics and the situation and context.

Where an existing team is struggling to innovate and reinvent one may need to look elsewhere for inspiration. How many of them have experience of other sectors? Is the board open to external and unorthodox ideas? Throughout history significant breakthroughs in thinking have been caused by relative outsiders who have challenged established views (Kuhn, 1962).

In competitive markets the transition to a new business model may need to take place more quickly than relevant experience and capabilities can be acquired. Do new roles and responsibilities need to be delegated to a refreshed management team? Does the role of head office units need to be re-thought in relation to a new business model, or a portfolio of new business models?

A new business models can create diversification opportunities. What other products, services and customers might it suit? Are there new roles that a company could play within a supply chain or the changing business models of major customers or business partners? In relation to collective responses, co-creation and multiple and virtual networks what steps should directors take to encourage more creative collaboration (Bennis and Ward, 1997)?

Leadership Implications of New Business Models
Some corporate leaders may have to rethink the nature of contemporary leadership, the relative importance of different qualities, the composition of their teams and how these are managed. They may need to ensure diversity, a mix of internal and external experiences and perspectives, and access to the lateral thinking skills required to develop better alternatives (Sloane, 2003).

Some business leaders require new skills. Hitherto they have spent much of their time instructing, guiding, monitoring and controlling subordinates, yet in some business models there are few people to command, new key players such as developers of essential algorithms, apps and automated responses, while many professionals could be replaced by expert systems (Kaplan, 2015).

When companies and their customers, suppliers or business partners change a business model, business leaders should consider the implications. Will different models be compatible? What new challenges and opportunities might be created? What might a company be able to do differently? What additional capabilities and relationships will be required?

Leadership is becoming less about the executive team and internal employees, and more about new possibilities, external interests, developments and trends, and relationships with key customers, strategically important users, institutional investors and regulators? Leaders need to engage, listen and understand before responding and contributing to the co-creation of value. They must be open to new business models and options for organising, operating, working and learning, and able to select the options that enable new challenges and opportunities to be addressed as they emerge.

Note
This article draws upon a paper and speech prepared by Prof. Colin Coulson-Thomas for a plenary session on the first day of the Dubai Global Convention 2016 and 26th World Congress on Leadership for Business Excellence and Innovation organised by India’s Institute of Directors.

References
Barrett, Frank J (1998), Creativity and Improvisation in Jazz and Organisations: Implications for Organisational Learning, Organisation Science, Vol. 9 No. 5, pp 605-622

Bennis, Warren G. and Ward, Patricia (1997), Organizing Genius: The Secrets of Creative Collaboration, Reading, MA, Addison-Wesley

Coulson-Thomas, Colin (1997), The Future of the Organisation, Achieving Excellence through Business Transformation, London, Kogan Page

Coulson-Thomas, C (2001), Shaping Things to Come, strategies for creating alternative enterprises, Dublin, Blackhall Publishing

Filson, D. (2002), Product and process innovations in the life cycle of an industry, Journal of
Economic Behavior & Organization Vol. 49 (1), pp. 97-112

Ford J. and Ford L. (2009), Decoding Resistance to Change, Harvard Business Review, Vol. 87 No. 4 , pp 99-103

FRC (Financial Reporting Council) (2014), The UK Corporate Governance Code, London, Financial Reporting Council, September

Kaplan, Jerry (2015), Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence, New Haven, Conn., Yale University Press

Klein, Katherine J. and Knight, Andrew P. (2005). Innovation implementation: Overcoming the challenge, Current Directions in Psychological Science, 14, pp 243-246

Kuhn, Thomas S. (1962), The Structure of Scientific Revolutions, Chicago, IL., University of Chicago Press

Rogers, E. M. (1983), Diffusion of Innovation, New York, Free Press

Schumpeter, Joseph A. (2014) [1942], Capitalism, Socialism and Democracy (2nd ed.). Floyd, Virginia: Impact Books

Sloane, Paul (2003), The Leaders Guide to Lateral Thinking Skills, London, Kogan Page

Williams, Joanna (2016), Academic Freedom in an Age of Conformity, Confronting the Fear of Knowledge, London, Palgrave MacMillan UK

First Publication
Published in the Summer 2016 issue of Management Services (Vol. 60 No. 2, pp 36-43) the quarterly journal of the Institute of Management Services. The citation is:
Coulson-Thomas, Colin (2016), Leadership, Innovation and Business Growth, Management Services, Vol. 60 No. 2, Summer, pp 36-43

Author
Prof. Colin Coulson-Thomas has helped entrepreneurs, companies and public and professional bodies in over 40 countries to harness more of the potential of directors, boards, management teams and corporate organisations in order to build a business or deliver better services, improve performance and simultaneously deliver multiple objectives. In addition to board and academic roles, he is Director-General, IOD India, UK and Europe, leads the International Governance Initiative of the Order of St Lazarus and is Chancellor of the School for the Creative Arts and chair of the Audit and Risk Committee of United Learning. Colin has served on public sector boards at national and local level. Author of over 60 books and reports he has held professorial appointments in Europe, North and South America, Africa, the Middle East, India and China. He was educated at the London School of Economics, the London Business School, UNISA and the Universities of Aston, Chicago and Southern California. A fellow of seven chartered bodies he secured first place prizes in the final examinations of three professions. He can be contacted at colin@coulson-thomas.com. His latest books and reports are available from www.policypublications.com.

Entrepreneurship and the Board: Questions for Directors

Prof. Colin Coulson-Thomas
As the name suggests, directors should provide strategic direction and purpose. Sometimes in the boardroom if feels as though one has to swim against currents to move in a desired direction against prevailing trends and work hard to achieve corporate goals. There is a growing disconnect between existing capabilities and practices and shifting aspirations, requirements and preferences. More than a change of direction might be required. The challenge could be to find new routes to different destinations rather than a better way of getting to an existing one.

Emerging Requirements
Do existing strategies need to be reviewed, or are new strategies needed? Could existing capabilities be used in different and better ways, or are additional ones required? Can existing elements be used in a different combination, or are new elements essential? Should different possibilities be tried, or are new elements required over and above current options? There may be ideas that could be moved from one market or sector to another. Sometimes the ingredients are available, but the right recipe is missing. The bonfire may even be built, but a match or a spark is needed to light it.

Policy makers can face similar challenges to those confronting directors. Jobs are being displaced by a range of developments from further automation, greater adoption of robotics and artificial intelligence to the wider use of drones, 3D printing and other technologies. Finding sufficient replacement jobs is a challenge for many economies, whether the demographic profile is an ageing population or more young people looking for work. India needs to offer some ten million new jobs each year for new entrants to its work force. Where will they come from?

Who will create tomorrow’s jobs? Will it be large companies that are focused upon improving existing operations and replacing people with technology, in order to speed up responses and remain competitive? Will public sector infrastructure and public works programmes on a scale to absorb large numbers of young people be affordable? In an era of automation, technological advance and e-government, how many people will be required to deliver public services? In India, as agrarian, retail and distribution revolutions occur, who or what will support those who are displaced?

Existing Arrangements and Institutions
Some institutions have been slow or unable to respond. Will their reputations decline? Is there growing distrust of current elites? Are many of those in power perceived as mainly concerned with their own self-interests? Directors are often in the news for receiving large pay increases. How are they regarded? In some countries, large companies have held off on major investments and public bodies have struggled to cope or determine a convincing way forward. It is small companies and entrepreneurs who have been creating new jobs.

The democratisation of means of expression and routes to entrepreneurship can erode the relative power of those who have been able to control others, whether in a command and control structure or an authoritarian regime. Is this causing a reaction against what are seen as self-motivated and protective establishments, whether unaccountable bureaucrats or corporate boards? Is there a lack of trust in business and other leaders? In insecure and uncertain times, when developments are difficult to predict and prescriptions raise more questions than answers, why should shareholders or electors have confidence in them? How should directors respond? Is entrepreneurship the answer?

Do the people and processes of major companies enable them to work and collaborate with smaller enterprises? If those running larger businesses are reluctant to either let go or invest in new ventures, to what extent can entrepreneurs and smaller businesses, many of which are owner-managed and lack an effective board, fill the gap in terms of wealth and job creation? Must the two go together in the sense that without incomes people may be unable to become active consumers?

Entrepreneurs and Entrepreneurship
The term entrepreneur is often associated with someone who starts a business involving a significant degree of risk, which may extend to the possibility of incurring a loss in order to make money. Being entrepreneurial is similarly linked with managing an enterprise in a way that incurs risk in order to achieve a positive financial return, while entrepreneurship could be considered the process involved. Classic entrepreneurs are creative individuals, such as Chester Carlson who invented the xerographic process, or Sir James Dyson a pioneer of better and bagless vacuum cleaners. Others start a business by applying an existing model in a new location or context.

The number of new business start-ups is increasing. Even though they may not be founding entrepreneurs, can others be entrepreneurial in how they set about building an established business or generating additional income streams? How relevant are entrepreneurs, entrepreneurship and being entrepreneurial to the boards of long established companies and larger, listed and family companies? Are they primarily of interest to small businesses and early stage enterprises?

Sometimes those who do not consider themselves to be natural entrepreneurs can capitalise upon the desire of others to start a business. A company that is short of capital could encourage others to take out a franchise, rather than itself fund the opening of new outlets or the rolling out of an innovation. A management buy-out could be a way of divesting an activity which while promising is not considered a strategic fit and might distract people from a mainstream business.

Entrepreneurship Helps and Hinders
Traditionally directors have had to balance creativity and prudence. As most new products fail, steps need to be taken to ensure responsible risk taking. The challenge is to ensure the prevention of downsides does not preclude upside gains. To what extent do boards need to be entrepreneurial? What can directors and boards do to help ensure that people in the companies they are responsible for are entrepreneurial? Are there open routes through which fresh ideas and proposals for new ventures can be raised? Are experts and professionals a hindrance or a help? Do they follow fashion or think for themselves? Their preferred or recommended ways of doing things may work, but do they also discourage and inhibit the search for better alternatives?

Diverse and fluid networks of relationships that organically evolve and adapt can be more conducive of entrepreneurship than a rigid and tightly controlled organisational machine. To what extent can existing businesses transition from current models, that remain stubbornly bureaucratic and are still often run on a top-down command and control basis, to incubators of new enterprises? What do directors and boards need to do to support this process of transformation and reinvention?

Can sheer scale inhibit individual creativity and expression? Boards need to consider what value a company’s capabilities can and should add in relation to proposals for new income streams. Should the creation of smaller units to progress particular ideas be encouraged? Should each of these be allowed more freedom in terms of how they operate? Should central departments be specifically required to provide enterprise support to new ventures? Will this require new capabilities or contracted in support? Should employees be offered an equity stake in businesses they are building? What would the implications be for staff who are not involved with new enterprises? Increasingly, more companies may resemble portfolios of innovation-based entrepreneurial ventures.

Reviewing Governance Arrangements
In relation to governance arrangements, board behaviours and legal and regulatory requirements, is there too much emphasis upon compliance at the expense of building businesses and encouraging enterprise? Does the focus of legislators and regulators appear to be mainly upon penalties for non-compliance as opposed to incentives for innovation, enterprise and wealth creation? Is the emphasis upon reporting the past rather than creating the future?

When choosing new directors, should one look for lawyers and accountants, or people who have set up and run businesses, and/or those with an understanding of how digital technologies can best be used? In some quarters are entrepreneurs seen as cowboys? Are boards concerned with controlling them rather than supporting them? Can the assumptions, attitudes, and perspectives of current board members and existing governance arrangements bridge the gap between their past experience and the aspirations of contemporary internet entrepreneurs drawn from a different generation?

New structures, processes and support mechanisms may be required to encourage responsible entrepreneurship. How relevant are lessons drawn from the experiences and track records of many directors to contemporary and future challenges? Do they relate to opportunities that may arise in a very different market and technological environment? Existing business models and forms of organisation may or may not be appropriate for what is to come.

What is an entrepreneurial company? Should it be organised differently from others? Does it require particular governance arrangements? Do all companies need to be entrepreneurial? What would this mean for the selection of directors? What are the implications for the structures of boards and how they operate? In dynamic and fast moving contexts, does waiting for the next monthly board meeting to discuss a change of direction, policy or priority make sense?

Entrepreneurial Vision and Purpose
A search for purpose appears intrinsic to the human condition. Individuals seek a purpose in life. A challenge for boards is to ensure a company’s purpose is one that people relate to. It should engage, so that individual and corporate purpose are aligned. It should have meaning, not just for people in organisations, but for others as well. Hence, some leaders seek to turn their organisations into a cause that motivates others. Should the vision and purpose of an organisation be explicitly both entrepreneurial and responsible?

Entrepreneurship and falling barriers to enterprise and innovation allow many more people to contribute to the solution of social and technological issues, such as affordable ways of collecting and recycling the vast amounts of waste, particularly plastic debris, that float on the surface of the sea. Ocean currents both deposit waste on beaches and concentrate it at certain points. Some of the most imaginative responses and solutions have been from small teams and young entrepreneurs.

Further areas of blue and white collar work may be undertaken by robots and intelligent systems. People who might have become knowledge workers or professionals may recognise that such roles no longer offer the prospect of lifetime employment. More adventurous spirits among them may be attracted to entrepreneurship, a relatively creative and unstructured arena of activity in which they are less likely to be replaced by a machine or system.

Creative individuals and teams are often eager and willing to explore. Some are like early pioneers in the old west of the United States. While there is an open and moving frontier, they are ever ready to move on as others catch up. We need to make sure that in their search for security and greater predictability, those concerned with governance do not put down so many anchors in the form of structures and standards that more enterprising spirits are held back. This could result in companies falling behind in competitive races to innovate and differentiate.

Entrepreneurship and Family Businesses
Directors and managers may need to adjust their approaches to cope with a wider range of aspirations, perspectives and contributions as more dependent employees become entrepreneurial partners. With family companies, new governance structures may be required to reconcile family control with the desire of new venture teams for equity participation. In some fields one does not always need large resources to start up and growth can be rapid. Potential entrepreneurs who feel spurned or under-valued may be able to operate an e-businesses from home and quickly scale it up.

Family members may be attracted by the prospect of building their own business in areas that interest them and without becoming involved in family politics. While older generations might stress a sense of duty to a family business, their descendents may put a higher value on personal freedom and having more control over one’s life. The increasing life spans of people in developing countries is creating new options for how people can use a significantly larger number of active and healthy years. Fewer people may wish to devote the whole of a longer working life to a family company when they see their contemporaries changing direction as their interests evolve. Some might wish to dip in and out of family company roles at different points in their life.

The existence of associated income streams might enable family members to experience a range of options if a family company can become a valued enabler rather than a straight-jacket from which some might wish to escape. Certain individuals may wish to establish a new enterprise to reflect a personal interest, or found a lifestyle business, perhaps as a means of changing tack or adopting a different way of working. The agreement of other family members might be required to achieve the same result through a family business and this might not be forthcoming.

Entrepreneurship and Reinvention
Without entrepreneurship many existing companies may find it difficult to reinvent themselves to meet new challenges and opportunities. Without social entrepreneurship it might be difficult to transform public services to more flexible models. Many existing organisations need to find new ways of embracing entrepreneurship, whether encouraging and supporting internal intrapreneurs or collaborating with external entrepreneurs.

Many directors and boards should acknowledge their limitations, open up and recognize the importance of co-creation. Some are obstacles to progress and a source of delay as others wait for them to take decisions. New routes for raising and handling suggestions may be required. How directors undertake their roles may need to change. Perhaps they should set objectives and give others greater freedom to decide how, when, where and with whom to work and the means they use to achieve corporate aims. The emphasis may need to shift from compliance, standards and control to establishing the conditions in which enterprise and entrepreneurship can thrive.

Rather than contract out to a cheaper provider, directors could call for new ideas and better ways of achieving certain outcomes. Rather than itself deciding, a board might break a creativity logjam its own practices have built by ensuring that processes are in place for the objective and informed screening and evaluation of submitted ideas and the determination of the best way of taking them forward, whether internally or externally, and the commercial arrangements that should apply. Organisations that are transparent and fair are more likely to secure the trust of existing and potential entrepreneurs. They may also find it easier to attract entrepreneurs and retain an interest in entrepreneurial ventures. Entrepreneurship should not be viewed as a governance problem. It can be a source of creative and profitable solutions.

First Publication
Published in the July 2016 issue of Director Today (Vol. II, Issue VII, July, pp 23-25) a monthly journal published by India’s Institute of Directors (www.iodglobal.com). The citation is:
Coulson-Thomas, Colin (2016), Entrepreneurship and the Board: Questions for Directors, Director Today, Vol. II Issue VIl, July, pp 23-25

Author
Prof. Colin Coulson-Thomas holds a portfolio of board, academic and international roles, is IOD India’s Director-General, UK and Europe and Chancellor and a Professorial Fellow at the School for the Creative Arts. He has advised directors and boards in over 40 countries.