CHICAGO– In a conclusion that may especially apply to the leaders of the largest credit unions, one new analysis suggests that to generate new growth, CEOs must stop thinking of themselves as chief managersand instead start thinking of themselves as “refounders.”
Writing on Harvard Business Review’s website, hbr.org, David Kidder, co-founder and CEO of Bionic and author of two best-selling books, and John Geraci, an entrepreneur working with Bionic and co-founder at Outside.inc, noted that in 2001 the companies with the highest market aps were blue chips such as General Electric, Microsoft, ExxonMobil, Walmart, and CitiGroup. Today that list is dominated by Apple, Alphabet, Microsoft, Amazon, and Berkshire Hathaway, Alibaba, Facebook, and Tencent.
“They are for the most part young firms led by founders and their teams, bold leaders who continually prioritize new growth over efficiencies to their core businesses,” observed Kidder and Geraci. “Many things have happened in the intervening years to contribute to this shift, but the signal is undeniable. The market now rewards the long-term vision and continual investment in new growth represented by these younger enterprises.”
Large enterprises have responded mainly by applying the methods of startups such as lean experimentation, design thinking, and agile development, according to Kidder and Geraci, who described those tactics as “merely Band-Aids.”
“The change that enterprises need to undergo in order to regain their growth trajectories is more profound, and it must start at the very top,” they said. “To generate new growth, CEOs must stop thinking of themselves as chief managersand start thinking of themselves as refounders. Refounders are leaders who, despite not having started the company, think with the mindset of a founder. They do not focus their energies on incremental growth through endless optimization, but instead look to leverage their company’s assets to build new offerings, move into new markets, and create next-generation solutions.”
As an example, the two authors pointed to Satya Nadella, who when he took over as CEO of Microsoft in 2014 immediately began refocusing the company on growth. “If you don’t jump on the new,” he proclaimed, “you don’t survive.”
“Nadella challenged the company to see beyond its legacy products like Windows, invested heavily in new technologies like AI and SaaS, purchased LinkedIn to plug Microsoft services into the company’s social graph, and more,” Kidder and Geraci said. “Through it all, he has emphasized the importance of long-term thinking, taking a test-and-learn approach, and obsessing over customer satisfaction, among other values. The market has rewarded Nadella’s moves and his mindset: Since he took the helm, the company’s share price has more than doubled, and in 2016, after years of stagnation, Microsoft regained its place on the top-five market cap list.”
'Think in Terms of TAP'
What leaders in mature markets must do, according to Kidder and Geraci, is think in terms of total addressable markets (TAM), which allows them to size a potential business and plan accordingly. Refounders, they wrote, think in terms of total addressable problems (TAP).
“They ask, ‘How many people have a problem that this solution could address?’ Besides exposing existing markets, a TAP mindset uncovers potential opportunities before there’s a market for them. For example, in the 1980s a standard TAM view of cell phones would have suggested a modest market consisting of mainly lawyers, business leaders, and doctors — after all, they were the demographic using the first generation of phones. A TAP view, by comparison — asking “Who has problems that a mobile phone could address?” — would have suggested larger potential markets, ranging from everyone trying to make ad hoc plans with friends to entire populations without landlines looking to get their first phone connections. A TAP worldview allows you to discover future markets instead of playing only in developed ones.”
Other themes explored by Kidder and Geraci include:
- Don’t Seek Consensus
- Embrace Productive Failure
- Use New Metrics
- Develop a Portfolio Strategy
For the complete posting, go here.