Business and finance journalist, Matt Packer discusses key news stories with the Institute of Leadership & Management (ILM) head of research, policy & standards, Kate Cooper.
When it comes to appointing leaders in a business, choosing a seasoned expert seems like a given, whether this be someone from within the company or an external hire.
But what kind of experience is most important? Does knowledge of the sector trump management experience? And what about a person’s ability to handle failure?
Making wise decisions based on previous track record can perhaps be easier said than done.
A massive new US healthcare partnership set up by three of the world’s biggest corporations will be led by a man with no prior corporate experience. The yet-to-be-named organisation is the brainchild of Jeff Bezos at Amazon, Warren Buffet at Berkshire Hathaway and Jamie Dimon at JP Morgan – and will exist to provide health cover for the firms’ combined workforce of 1.2 million people.
Instead of headhunting a seasoned CEO from America’s vast roll call of private healthcare companies, Bezos, Buffet and Dimon have secured the services of Dr Atul Gawande: a Boston-based surgeon who has achieved recognition in his field for research and writing focused upon novel methods of healthcare delivery.
Indeed, Gawande’s most prominent leadership role so far is his position as head of Boston think tank Ariadne Labs, which is dedicated to looking at traditional healthcare-delivery modes in critical and innovative ways.
Gawande sketched out his mission by saying: “My job […] is to figure out ways that we are going to drive better outcomes, better satisfaction with care and better cost efficiency with new models that can be incubated for all.”
Gawande noted that the current problems with US healthcare are that “doing the right thing is incredibly complicated”, and patients are routinely given “the wrong care in the wrong way at the wrong time”.
Outside the box
In a column for Inc.com, venture capitalist, founder and business author Sean Wise describes the decision to pick an inexperienced CEO as a “genius move”, and argues: “Hire from within when things are going well … Hire from outside when things aren’t going well, or when doing ‘the same old thing’ simply isn’t working.”
Is Wise right to be so confident, or are there risks attached to this hiring strategy, too?
Kate Cooper says: “This is a really good example of the potential to disrupt, to introduce new thinking and to harness the intellect of someone who understands the systems, processes and complexities of the industry. But Gawande’s tenure will stand or fall on his willingness and ability to be receptive to those who understand the industry’s workings from within.”
Visionary, strategic thinking, Cooper notes, is of course important. “However,” she points out, “very often in cases where disruptors emerge to challenge existing practices, a gap will open up between the strategic vision that is compelling a leader to do things differently, and the people who are charged with actually delivering on those ideas.”
Cooper says: “what we must hope for is that Gawande doesn’t become impatient or take the view that a lack of progress automatically indicates a lack of willingness on the part of his people to implement his ideas. It appears that he has a firm grasp on the complexity of the offer that he is about to square up to – after all, he has acknowledged that daunting influx of more than a million patients. But the very fact that he is determined to find new ways of solving old problems suggests that his ambition is at least aiming to equal to the scale of the brief he has taken on.”
She adds: “Is it risky? Yes. But unless some new approaches flow into this industry – and there are lessons for us here in the UK, too – the consequences will be dire. We have to look to technology to provide us with innovative solutions, open up new ways of working and disrupt in the way that Uber, AirBnB and eBay have disrupted their respective sectors. So let’s hope that Gawande has the tenacity and patience that will enable him to stay the course, the listening skills required for building a loyal team – and the knack for recruiting people who will help him disrupt existing frameworks and improve the service on offer.”
For some, taking risks is uncomfortable, dangerous and simply not worth it. However, the creative disruption caused by a multitude of startups is often built on shunning the status quo and daring to do something different, no matter what the consequences. This entrepreneurial spirit embraces the failure sometimes associated with risk not as a sign to quit but as a learning experience to be better next time.
Fascinating insights into this never-say-die spirit have emerged from a Business Insider interview with US entrepreneur Eddy Lu: co-founder of meteorically successful online sneakers market GOAT (short for Greatest of All Time).
In the piece, Lu explains why he and his business partner Daishin Sugano took the path into startup culture following stints at Lehman Brothers, saying “I realised I’m not a good employee”, and lamenting: “I dreaded every Sunday afternoon when I was working at a big corporate job. I never felt that ever since we started doing our whole entrepreneurship journey.”
However, he and Sugano have bumped up against more than their fair share of failures in the course of that journey, spending more than a decade working through a series of costly flops across a range of sectors.
Initially, they tried a tech route by developing 99-cent phone apps that nobody wanted. Then they moved through golfing apparel and a cream-puff franchise. In its early days, GOAT was almost sunk by a Black Friday promotion that backfired, because its warehouse didn’t have enough stock and the firm’s social media channels were flooded with negative feedback.
Asked about the key to wading through those setbacks, Lu says: “Definitely be resilient. I mean, GOAT’s had extreme success, thankfully, but it took a long time to get there, and it’s really easy to give up. It’s really easy to burn out being a startup founder … it’s probably very unlikely you’re going to get it right on the first time. Or the second time. Or the third time.” He adds: “my belief is, let’s try something, and if it doesn’t work, we can always change.”
With that in mind, how should entrepreneurs record or log the lessons that stem from their failures, so that they can build an ordered body of knowledge that may help them towards success further down the line?
Kate Cooper says: “My question here is, do we need to turn our experience into an ordered body of knowledge and in some way externalise it – or is that essentially what our brains already do? Every time we have an experience, our minds order it and rationalise it in all the ways that neuroscience has emerged to explain. It also depends heavily upon our level of identification with the project. If you over-identify with the product or service that you’re hoping to deliver, then it’s only natural you’ll take the failure personally.”
Cooper notes: “what really stands out from the experiences of Lu and Sugano is that they didn’t take their setbacks personally at all. Instead, they saw them as great learning opportunities. From the interview, it looks as though they are motivated by – or even addicted to – the whole notion of ideas that work. Therefore, if they’re mired in an idea that isn’t working, they’re compelled to find another one that will.
“In many ways, Lu and Sugano’s travails show that they have programmed their brains to see that failure is not the end; that you can come back from it. It’s not a personal affront. You can be more resilient on the other side and better equipped to spot the pitfalls. It’s all down to how you process failure – if, indeed, you do process it at a conscious level.”
Cooper points out: “another interesting aspect to this story – which ties into the inherent romance of startup culture – is the approach that entrepreneurs take towards innovation itself. You can have a clever, new and innovative idea that feels utterly fresh, and yet that concept can run aground if customers don’t get it and there’s insufficient momentum to give it legs as a business concept. But by the same token, you can apply innovative thinking to a model that already exists – so you’re basically modifying it – and yet you can break that model, thereby sabotaging something that already worked.
“You’re looking at two, very different types of pain there.”
She adds: “I would think it’s highly likely that there are entrepreneurs out there who have experienced both types of pain in the course of their careers. And you can be sure that they will remember those feelings for some time to come. With each experience of failure, an entrepreneur will become incrementally better at predicting what’s likely to go wrong. But what every entrepreneur must grasp is that to operationalise an idea is a very different – and far more challenging – process than simply having that idea.”
For more on these topics, listen to Episode 5 of the ILM podcast in partnership with LID Radio:
About the authors
Matt Packer is a business and finance journalist who provides expert comment for organisations such as CPA Global, Inemmo Leadership Development Consultancy, The Institute of Leadership & Management and the Chartered Management Institute.
Kate Cooper is head of research, policy and standards at the Institute of Leadership & Management (ILM). She has appeared on BBC Television, BBC Radio 4, has a regular column in Dialogue magazine, is a key note speaker at conferences and provides expert commentary on a range of topics arising from the Institute’s research agenda.