We’ve experienced a slew of “system” failures in the last years—corporate, regulatory, financial and technological—with disastrous results. Toyota suffered a huge hit to its sales and corporate prestige. The damage to the Gulf of Mexico is still being tabulated. And we’re even now trying to fully restart the economy after it was crippled by the subprime mortgage failure.
When catastrophe strikes – whether it is huge and public like in the examples above, or smaller and less visible like when a patient suffers needless harm while receiving medical care—the knee-jerk reaction is to blame individuals for being complacently ignorant about how to avoid failure or for being simply too greedy to care. I maintain that this is a wrong interpretation, which leads to the wrong reaction of penalizing the “culprits” and creating even more rules to bar villainy.
The truth is that we’ve come to depend on systems infinitely more complex than previously was the case. Cars, once products of iron and steel, are composed of myriad materials tightly intertwined with advanced computer networks and data processing. One rarely just “goes to see the doctor” now. Rather, you interact with a healthcare system comprised of doctors, nurses, technicians, pharmacists, and others who each contribute their expertise to your care. The good news is that we enjoy products and services of far greater quality, affordability and availability than was ever the case.
The challenge is devising a new approach to managing systems so complex that “thinking our way” to adequate, let alone perfect, designs is impossible. We are now in an age in which management must instead focus on constant discovery and innovation – relentlessly learning better ways to do work and learning that there is better work to do.
Companies which embrace this approach are the ones that consistently hit new milestones, improving their systems at every step along the way. These “high-velocity organizations” are led with a focus on generating and sustaining broad-based, internally generated improvement, innovation and invention. Those that don’t follow this approach are usually the ones chasing, but not catching their rivals. They are the ones that lose relevancy or, even worse, contribute to systemic failures.
Fortunately, this new approach to leadership can be learned even in the most complex of situations. It is based on skills that can be taught, practiced, mastered, and applied with great effect. Better yet, it doesn’t just depend on the inspiration of a genius.
Rather, it starts with the way that managers typically think of themselves, which is usually as decision-makers. However, in this world of ever increasing complexity, making decisions only gets you so far. No set of decisions will actually get you the right answer, so this is where developing new skills, which I call disciplines of innovation or core capabilities, becomes crucial.
The first step is to design systems of “dynamic discovery” so that they reveal operational problems and weaknesses as they arise. While this might mean