Mr Hinssen, as a serial entrepreneur and author, you have popularised the term of “radical innovation”. Can you tell us what radical innovation is all about?
In the last century, we have gotten pretty good at incremental innovation. We have constantly been trying to improve things, going for example from Six Sigma to quality control and even further. I think that, what we are facing and beginning to see now, is that change is occurring more rapidly and in a more elementary way than before. New technologies are appearing and become relevant muchfaster. Speed is an undeniable characteristic here and tothis must be added intensity. Markets are changing and being disrupted more profoundly than ever before. This combination of speed and intensity requires more agility and a better way of understanding what is coming at us. I believe, that many different sectors will be impacted in the next couple of years which will be even more instrumental than the digital revolution in the last ten years.
How should organizations, especially companies from industrial and manufacturing sectors, adapt to this ‘new’ kind of innovation in an ever-changing, digital environment?
First, it is essential to have a better radar screen of what is actually happening. We used to be very good at looking what goes on in our respective sectors, but this is probably not enough anymore. My father used to work in petrochemicals and was specialised in valves. As a kid, I always wondered how you could spend an entire life focussing on one thing or, in this particular case, on turning one thing on and off again. Later, I have had the chance to speak at Valve World where the focus was also on turning something on an off, yet the possible threats and opportunities are coming from outside our sector. Technologies might appear which we will have to figure out what to do with. So, I think our sensors must broaden and our horizons expand.
Second, we need to find a mechanism that allows us to turn everything we found while broadening our sensors into practical experiments. Recently, I have started to talk about the hourglass model. When looking at the shape of the hourglass, there is a top and a bottom part. The bottom part is what I like to call « scale and run »: you scale something really fast and then you run it in the most efficient way. Many companies are very good at this. Now, the top part is having that wide lens, that radar screen to understand and interpret information, then experiment and boil it down to what you want to scale. I would say that most companies don’t have a well-developed top part of the hourglass and might need different skills, competencies and cultures to help with that. I believe it is essential that companies figure out that top part, which I call the sensor, as well as the experimental phase. The challenge is to find an alignment between that top and bottom part in this ever-changing world. The cycle of change is a mindset that needs to be incorporated into the culture of an organisation. Learning from failures might be difficult since we are used to a mentality of absolute certainty. This cultural mind shift poses a real challenge for the 21rst century.
Technology is advancing rapidly, and businesses everywhere are being disrupted. Do you believe the agile methodology to be the answer to business transformation?
More than just a mechanism and a process, agility is a mental state of mind. I think it means we must constantly be alert and try and experiment. In my opinion, we need to start being comfortable with making decisions without necessarily having all the answers. Obviously, this will be tricky because it calls for a cultural shift. We come from generations of managers who would have had all the facts and then made the decisions. That does not seem to work well anymore, hence the necessity to find new ways: experiment, try out, get out of our comfort zone and learn from our mistakes. This particular aspect of agility, more than following the agile manifesto or implementing the lean start up methodology, is the real challenge. In a nutshell, the cultural dimension of agility is of paramount importance.
What solutions does your new book, called “The Phoenix and the Unicorn” present? Why does Europe have so little “Unicorn” companies, compared to the US and China, for example?
The premise of the book is that the last decade was that of the Unicorns. There has been much talk and we have read a great deal about them. Unicorns were not that familiar here in Europe, where we pretty much missed out on the last decade. We did not build our own Google or Facebook and I think one of the reasons for it is that Europe’s fragmentation worked against us. To become a successful unicorn, a company needs to grow very quickly. Now, it is a lot easier to do so for instance in the US where you have 350 million potential users, than, let’s say, in a fragmented language and cultural landscape such as Europe.
In my opinion, opportunities for the next decade might not lie in completely new companies but rather in those who are able to reinvent themselves, which is precisely what the Phoenix is all about. Though it might be intense and difficult, the process of reinventing itself could make the company come out stronger than ever. When analysing the Phoenixes, certain characteristics stand out. First, a sense of urgency. European companies may not feel it right now but if disruption becomes mainstream and goes beyond the digital realm over to food, health, agriculture and even energy, there is enormous potential for European companies to reinvent themselves.
Second, the realisation that the company needs new skills and competencies and maybe even a new cultural dimension and openness. I think this will probably require a different type of leadership style namely one where you have the guts to take decisions without having all the ingredients. Of course, this shows a certain vulnerability. One of my favourite Phoenixes is Microsoft. 20 years ago, the company was in trouble but now is stronger than ever with a leadership that is not afraid to show that although they do not have all the answers, they are figuring it out together as a team. This new leadership style requires the cooperation of everyone involved in the company and the ecosystem to help in the process. I strongly believe this is the new type of leadership that we need in order to tackle these VUCA times.
How do you explain the shortage of talents, observed across European countries? What is the solution to bring together the demands of modern companies with the qualifications of today’s job seekers?
It is high noon and we need to step up the game. We are not getting enough people interested in the competencies and skills that are necessary for the future. This is very much a volume game. China is producing 4.7 million engineers a year, so we definitely have to do something in Europe if we want to try and match that scale. Especially when it comes to jobs in industry, I think we might not have presented them in the sexiest way. Even though it is important to talk about financial reward, I think we need to move beyond that and focus on the opportunity to be part of something bigger, something meaningful that can create an impact. Being an engineer myself i know the wonderful feeling of creating something or building something. So, I think the enormous joy and personal satisfaction you get from it is an important feature that we need to put into that narrative. With all the challenges we are facing, be it on the environmental, technical or geopolitical plane, there is a chance to create something that is going to have a lasting effect on people’s lives and on society itself. If we can convince young people that this is worthwhile, I think we are moving in the right direction. Nevertheless, we will have to triple down on our efforts because right now, we are not reaching enough people nor are we convincing them. This is essential because without talent, it is impossible to win this war.