I recently had the honor to represent Infosys on a panel discussion on 'Leadership 2020: Leading Business Simplification' for SAPRadio's 'Game-Changers' program. The SAP moderator led with an observation that Boston Consulting Group (BCG) has found that companies who effectively manage complexity see at least a 25% increase in profit margins. She suggested that simplification was the #1 issue facing businesses today.
When it was my turn to speak, I noted that simplification was only part of the issue, and was joined in top-of-mind C-level concerns by imperatives for agility and innovation. This is very much in line with Infosys' New and Renew strategy. Leaders - whether in Infosys or in client organizations - need to be able to simultaneously lead a thrust towards simplification, in the 'Renew' elements of their operation, and a thrust towards agility and innovation, in the 'New' elements. This is a complex leadership challenge. The lesson from our panel discussion, on which all the panelists agreed, was that it took skills ranging from vision and trend-spotting, to decisiveness, to empathy, to courage and iconoclasm. In other words, it took leadership skills distinct from managerial skills.
Leading simultaneous simplification, agility, and innovation also poses a complex organizational design challenge. The type of structures, staffing models and policies that optimize scale and operational efficiency are antithetical to those needed to optimize innovation. Just like many start-ups struggle when they first try to scale and routinize their start-up operations, because they were designed for another purpose, many of today's giant corporations - whose designs are optimized for scale and standardization - are struggling to find ways to foster agility and innovation. How can you have both in the same corporate entity? In fact, can you have both?
On the radio show, I likened it to a comparison of T-Rexes and Velociraptors. T-Rexes, who roamed the earth around 66 million years ago, were the super-predators of the dinosaur world, superlatively designed killing and eating machines. Gigantic, powerful, and ruthless, they dominated the Cretaceous landscape. Velociraptors -- small, agile, and fast (not much larger than a human, in fact) -- were a different model. So what happened evolutionarily? For any of you who do not know, there was a massive extinction event around 65 million years ago that wiped out the dinosaurs. T-Rexes did not evolve into something even larger and more powerful; in fact, they were the end of their line, and they were superceded in the evolutionary trace by what we know today as crocodiles, lizards and, yes, birds. Small and adaptable won out. The danger of being big was that the T-Rexes were perfectly designed for a particular environment, but unable to adapt swiftly when the environment changed.
There is a lesson for business in that paleontological record. Corporations have to find a way to have both types of organizations - simplified, scaled and standardized operations with world class operational efficiency for things that require it in the status quo, plus small, agile innovation engines that can help them evolve - all under the same corporate banner. They are doing that in several ways. Some are literally creating differentiated organizations with radically-different structures, staffing and policies tailored to different strategic needs. Others are forming networks with start-ups and innovators to introduce speed and agility. Others are literally splintering and disaggregating into smaller independent pieces. Infosys, of course, is helping clients do all of these things.
The challenge for any large, successful organization is how to lead through the organizational and human complexity associated with concurrent needs for 'New' and 'Renew' -- how to simultaneously foster both simplification and innovation, how to both optimize the status quo and evolve nimbly towards an emerging future. The winners will figure out how it's done. I'm confident we've got the insight and skills to help our clients make that turn. I'm also confident we'll be among that group ourselves. We just we need to realize it may take new leadership models, and new organizational models, to make it happen.