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Introduction to the 5th Edition - 2000

Philip Sadler, Consultant Editor and Former Principal of Ashridge Management College

'If you want to escape the gravitational pull of the past, you have to be willing to challenge your own orthodoxys, to regenerate your core strategies and rethink your
most fundamental assumptions about how you are going to compete.'

C. K. Pralahad.

Introduction

Back in the late 1960s and early 1970s a number of original thinkers such as Peter Drucker, Daniel Bell and Alvin Toffler drew attention to certain emerging trends that were going to result in radical changes to the structure of Western industrial economies and society. Among these trends the most important were:

• the decline of 'smokestack' manufacturing industries and the growth of services, both in terms of employment and share of gross domestic product;
• the rise in the proportion of women in the active workforce;
• the increase in the proportion of the workforce who could be described as 'knowledge workers';
• the way in which information technology was ushering in a new industrial revolution;
• the increasing globalization of markets;

These thinkers were not using crystal balls and peering into the future. They were looking at trends that were already established. Their ability to see how important these were and to draw out their implications was a function of the fact that they were, in Pralahad's words, able to escape the gravitational pull of the past. Regrettably, this is a mental capacity shared by very few people in the profession of management. Most of us cling to the conventional wisdom of the past in the same way that Linus clings to his security blanket.

In the year 2000 one of the business techniques seen as 'the latest great idea' is 'knowledge management'. Its importance to industry is well summed up by the following statement by the chairman of one of Britain's major companies:

'The competitive advantages on which our success depends all rest in the last resort on Knowledge . Knowledge has no marginal cost. It costs no more to use it in the 70 countries in which we operate than in one. Knowledge is not cheap. we spend many millions in acquiring it. But without this expenditure we could not survive'.

Quite so. But the point of including this quote is that the statement was made in 1972! Why has it taken over 25 years for this essential truth to percolate through into mainstream management thinking? The answer is that most of us are mental prisoners of old mindsets. We were brought up to believe (particularly those among us who trained in accountancy) that a company's assets lay in its tangible property, such as its premises, plant and equipment and cash in the bank. We still tend to conduct business in that way, but things are gradually changing. The market valuation of companies is more and more based on the judgement of investors as to the likelihood of future earnings, and this in turn is based on an assessment of the extent to which the company's knowledge base is being updated and renewed.

Nevertheless, the ability to exploit this understanding for competitive advantage would have been very much greater back in the 1970s, when the central role of knowledge management had not become an accepted part of management thinking. Today, knowledge management is the flavour of the month. Those with imagination and who think creatively are seeking to be ahead of the game. They are searching for tomorrow's big idea. To be ahead of the game calls for the ability to think outside the box - indeed the ability to recognize that the box does not exist except in our minds. For managers to be able to think in this way their development needs to include processes that enhance and bring out their inherent ability to think creatively. Hence the theme for this edition of International Executive Development Programmes.

The Electronic Revolution

As we enter the twenty-first century, there is a rush on the part of business to exploit the new opportunities thrown up by the Internet. Investors are scrambling to invest in dot.com companies that have yet to make a profit. Blue chip companies, in what has become known as the old economy, are reeling as their shares go into relative decline. It might be thought that here, indeed, is a great opportunity for creative thinking - seeking as yet untapped opportunities that others have not yet perceived. Maybe that is so, but it is at times like these, when almost everybody is looking in one direction, that the creative mind starts looking elsewhere.

Clearly, the revolution in information technology has come about largely as a result of some highly creative thinking on the part of relatively few people. Yet its application to e- commerce may not, in the end, constitute its most important impact on our world. We may find that even greater consequences follow from its impact on the design of organizations and on the way they function. In traditional organization hierarchies some of the layers of management were not there to make decisions or supervise operations; their function was rather to act as relays for information, rather like boosters on a telephone cable to collect, amplify, interpret and disseminate information. Modern technology does a better job and tomorrow's technology will do it even better. A new principle, the span of communication, is taking the place of the old span of control. The number of people reporting to an executive is now limited only by the subordinates' willingness to take responsibility for their own communications and relationships. Those subordinates can be located in any part of the world. Being connected replaces being in control.

Sustainability - The Major Challenge of the New Millennium

If we turn from opportunities to threats, the dangers associated with climate change and depletion of natural resources may finally reach the top of the agenda in the coming decade. At the World Economic Forum at Davos earlier this year, this issue came first in a delegate vote on the most important issues currently facing business - ahead of problems to do with the world's financial systems. This is a set of issues that calls out for a creative approach.

One company, that is harnessing creative thinking in the interests of environmentally friendly manufacturing is Interface, a global business with sales over $1 billion and over 7000 employees, manufacturing carpets at 26 sites on four continents. In the words of the company's founder and chairman, Ray C. Anderson:

At Interface we seek to become the first sustainable corporation in the world, and, following that, the first restorative company. It means creating the technologies of the future - kinder, gentler technologies that emulate nature's systems. I believe that is where we will find the right model.

Interface has a series of programmes aimed at eliminating waste and the emission of toxic substances, developing sources of renewable energy, recycling of materials and minimizing transportation impacts. How are these programmes being fulfilled? By involving and empowering all 7000 employees and by giving them training in how to generate ideas. Some of the achievements resulting from the power of creative thought being released includes:

• By reducing the edging either side of the carpet that guides it through the machine, usage of raw material has been cut by 1 per cent.
• By requesting that the company's suppliers switch to pallets the same size as those used by Interface for dispatch, the disposal of thousands of pallets a year has been avoided.
• In the UK alone, which uses one million boxes a year, specifying thinner cardboard without compromising quality has significantly reduced raw material input.
• An Icelandic wool broadloom carpet has been developed using 100 per cent un-dyed Icelandic wool, scoured using natural geothermal energy, woven using 100 per cent renewable electricity, backed in either cotton or jute and stiffened using starch.

Fostering Creativity in Others

As the example above shows, for creativity to flourish in an organization it is not enough for executives to be able to come up with original thoughts and ideas. It is equally important that they should recognize, value and champion those of others. Indeed, it can sometimes be dangerous when a chief executive has a rich flow of new ideas since he may not be entirely objective when evaluating them. An executive who uses his position of power to champion his own ideas runs two risks. One is that the idea is not, in fact, as good as he thinks. The other is that, although the idea is good, it will meet with resistance if members of the organization, whose efforts will be required to implement it, do not feel a sense of ownership.

Fostering creativity in others, however, calls for some special leadership skills. Most people have learned from experience to be cautious in putting forward an idea that is at all radical. Conforming to the expected mould is far more comfortable and risk-free. The cartoon showing a company boss sitting at a conference with his direct reports and saying 'I want your frank and honest ideas; don't hold back, even if it costs you your job' strikes home with all of us.

"Leaders work in an environment that sees creativity as a threat, especially creativity defined as a deviant response. The deviant response is something that could ruin an organization as easily as it could move it forward. So organizations tend to be designed for survival, not for creativity and managers are embedded in an organization that runs contrary to most of the things we know about creativity. In fact, most organizations might have a sign that says "stamp out creativity". Many organizations deal with creativity by isolating it, controlling it, judging it and at times, eliminating it."

The articles that follow have been chosen to cover four key questions:

The first, by Kim James, discusses the nature of creativity and its determinants. The second, by Elspeth McFadzean, looks at ways of encouraging creative thinking. The third, by John C. Groth and John Peters, describes research into the factors that block creativity. The final article by Ian Roffe looks at the implications of all these factors for training and development.